2018 (8) TMI 1317 - HC - Income Tax

Recovery of tax dues - garnishee orders were also passed because respondents have got specific target to recover the tax amount. - Demand notice - Only three days time was given to the Assessee to reply this show cause notice. - Principle of natural justice - adequate opportunity of being heard Held that - There cannot be an achievement of target in breach of law. Reasonable time ought to have been given to the Assessee to give reply to the show cause notice and at least within the time limit of preferring appeal no such garnishee order ought to have been passed by the respondents. Such speed the respondents must show in their own work for recovery of tax in the matters which are already concluded. Thus it appears that in a hot haste the respondents have decided the show cause notice and without waiting for the appeal period garnishee orders have been issued and the period of payment of demand has also been curtailed. This much speed was not necessary in the facts of the present case. The order set aside - matter remanded back for fresh adjudication - Decided in favor of assessee.

Issues Involved:
1. Validity of the garnishee orders dated 07.03.2018 and 08.03.2018.
2. Validity of the demand notice dated 26.02.2018.
3. Breach of principles of natural justice.
4. Adequacy of time given to respond to the show cause notice.
5. Necessity of speed in passing orders and issuing garnishee orders.
6. Remand of the matter for fresh adjudication.
7. Recording of remarks in the confidential report of the concerned officers.

Detailed Analysis:

1. Validity of the Garnishee Orders Dated 07.03.2018 and 08.03.2018:
The garnishee orders dated 07.03.2018 and 08.03.2018 were challenged on the grounds that they were issued in haste without providing reasonable time for the petitioner to respond to the show cause notice. The court observed that the respondents had a specific target to recover the tax amount and acted in breach of law by not allowing adequate time for the petitioner to reply. The court emphasized that such speed was unnecessary and that the respondents should show similar urgency in their own work for recovery of tax in concluded matters.

2. Validity of the Demand Notice Dated 26.02.2018:
The demand notice dated 26.02.2018 was issued on the same day as the ex-parte order, without waiting for the appeal period. The court found that the ex-parte order was passed without giving the petitioner adequate opportunity to be heard, thus breaching the principles of natural justice. The court held that whenever there is a breach of principles of natural justice, a writ is tenable.

3. Breach of Principles of Natural Justice:
The court cited several Supreme Court judgments emphasizing the importance of adhering to the principles of natural justice. The principle of "audi alteram partem" (no one should be condemned unheard) was highlighted, stating that notice must be precise, unambiguous, and provide adequate time for the party to respond. The court concluded that the ex-parte order was passed without providing the petitioner an adequate opportunity to be heard, thereby violating the principles of natural justice.

4. Adequacy of Time Given to Respond to the Show Cause Notice:
The show cause notice issued on 19.02.2018 gave the petitioner only three days to respond. The petitioner requested reasonable time to file a reply, but the respondents passed an ex-parte order on 26.02.2018 without considering the request. The court found that reasonable time should have been given to the petitioner to respond to the show cause notice.

5. Necessity of Speed in Passing Orders and Issuing Garnishee Orders:
The court criticized the respondents for acting in haste by passing the ex-parte order and issuing garnishee orders without waiting for the appeal period. It was noted that such speed was unnecessary in the given circumstances and that the respondents should show similar urgency in their own work for recovery of tax in concluded matters.

6. Remand of the Matter for Fresh Adjudication:
The court quashed and set aside the orders dated 26.02.2018, 07.03.2018, and 08.03.2018. The matter was remanded to respondent no. 2 with a direction to receive the petitioner's reply to the show cause notice within four weeks and adjudicate upon it after giving adequate opportunity of being heard to the petitioner.

7. Recording of Remarks in the Confidential Report of the Concerned Officers:
The court directed the Commissioner of the Income Tax Department to record remarks in the confidential report of officers who issue show cause notices with only three days' time to reply, as this increases the court's workload.

Conclusion:
The writ petition was allowed, and the impugned orders were quashed. The matter was remanded for fresh adjudication with directions to ensure adherence to the principles of natural justice. The court also emphasized the need for recording remarks in the confidential reports of officers who act in haste.

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