2017 (10) TMI 97 - HC - Income Tax

Rectification of application u/s 154 - petitioner s application u/s 264 requesting CIT to delete the addition made to the total income for the assessment year 2000-2001 was dismissed for non-prosecution - Held that - A cursory perusal of the order dated 30.03.2005 shows that there is no finding rendered by the 1st respondent on the merits of the matter except stating that the reports of the Assessing Officer and the Additional Commissioner of Income Tax have been perused and the records have been gone through. This is insufficient to show that there was application of mind to the facts of the case. In any event if the 1st respondent had considered the matter on merits then reasons should have been assigned in the order dated 30.03.2005. In the absence of any reasons assigned it has to be held that the merits of the matter were not gone into by the 1st respondent. The observation that there was no necessity to afford an opportunity of personal hearing is incorrect for the simple reason that the predecessor in office in her discretion had afforded an opportunity of personal hearing. That being so the successor officer cannot state that there is no necessity to afford an opportunity of personal hearing when his predecessor had thought it fit to do so. Thus this Court is of the view that the petitioner should not be non-suited on technicalities. Accordingly the writ petition is allowed and the orders dated 05.06.2006 & 30.03.2005 are set aside and the 1st respondent is directed to hear the petition filed under Section 264 of the Act and take a decision on merits

Summary

Issues:
Petitioner aggrieved by rejection of petition under Section 154 read with Section 264 of the Income Tax Act, 1961 due to non-prosecution. Allegation of failure to receive hearing notice leading to rejection. Lack of findings on merits in the order dated 30.03.2005. Dispute over necessity of affording personal hearing.

Analysis:
The petitioner challenged the order rejecting the petition filed under Section 154 read with Section 264 of the Income Tax Act, 1961, seeking deletion of an addition to total income. The rejection was based on non-prosecution as the petitioner failed to appear for scheduled hearings despite notices. The petitioner contended that the hearing notice dated 04.03.2005 did not reach them, resulting in non-appearance. Subsequently, a rectification petition was filed, emphasizing the lack of opportunity for a hearing. The court noted the importance of providing an opportunity for a fair hearing in such matters.

Upon review, it was observed that the 1st respondent did not provide any substantial findings on the merits of the case in the order dated 30.03.2005. The petitioner argued that the lack of reasons assigned in the order indicated a failure to consider the matter on its merits. The court highlighted the necessity for a reasoned decision when dealing with such issues, emphasizing the requirement for a thorough examination of the facts before reaching a conclusion.

The court further criticized the 1st respondent's assertion that there was no need for a personal hearing during the revision petition under Section 264 of the Act. It was pointed out that the predecessor officer had exercised discretion in granting a personal hearing, indicating its importance. The successor officer was deemed incorrect in disregarding the significance of providing an opportunity for a personal hearing, especially when the predecessor had deemed it necessary.

In light of the above considerations, the court ruled in favor of the petitioner, setting aside the orders dated 05.06.2006 and 30.03.2005. The 1st respondent was directed to reconsider the petition under Section 264 of the Act, ensuring a decision based on merits and in compliance with the law, while affording the petitioner an opportunity for a personal hearing. The judgment emphasized the avoidance of technicalities to uphold the principles of fairness and justice in such proceedings.