2018 (3) TMI 898 - HC - Income Tax

Application for rectification made u/s 154 rejected - exemption u/s 10(10C) as an ex-SBI employee rejected - rectification applications rejected without grant of personal hearing - Held that - As admittedly, the impugned order on rectification has been passed in breach of principles of natural justice, i.e. without granting the petitioner a personal hearing, the impugned order dated 2nd May, 2016 is quashed and set aside. The petitioner s rectification applications dated 30th September, 2009 and 4th December, 2015 is restored to the Assessing Officer for fresh disposal after taking into account, the decision of this Court in Commissioner of Income-Tax-III, Pune Vs. Shri. Ramesh Dattatraya Kulkarni (2015 (5) TMI 75 - BOMBAY HIGH COURT) and Circular issued by the Central Board of Direct Taxes in this regard.

Summary

Issues Involved:
Challenge to order rejecting rectification application under Section 154 of the Income-Tax Act, 1961 without a personal hearing.

Analysis:
1. The petitioner, a retired employee of the State Bank of India, filed a petition challenging the order dated 2nd May, 2016 passed by the Assessing Officer rejecting her rectification application under Section 154 of the Income-Tax Act, 1961. The petitioner claimed that she was entitled to exemption under Section 10(10C) of the Act as an ex-SBI employee, citing a previous judgment by the Bombay High Court. The impugned order was passed without granting the petitioner a personal hearing, which was a breach of natural justice principles.

2. The High Court, after considering the petitioner's arguments, quashed and set aside the order dated 2nd May, 2016, as it was passed in violation of principles of natural justice. The Court directed the Assessing Officer to reconsider the petitioner's rectification applications dated 30th September, 2009 and 4th December, 2015, in light of the previous judgment and circular issued by the Central Board of Direct Taxes. The Assessing Officer was instructed to dispose of the rectification applications expeditiously, preferably within four weeks, after granting a personal hearing to the petitioner.

3. The Court emphasized the importance of granting a personal hearing to the petitioner, especially considering her status as a retired employee. The judgment concluded by disposing of the petition in the terms mentioned, without any order as to costs. This case highlights the significance of adhering to natural justice principles and ensuring a fair opportunity for individuals to present their case before administrative decisions are made in matters concerning taxation and exemptions under the Income-Tax Act, 1961.