2019 (4) TMI 1036 - HC - Income Tax

Interest u/s. 220(2) - claim for waiver made under Section 220(2A) rejected - principle submission on behalf of the petitioner herein is that there was no effective hearing granted to the petitioner before the impugned order of rejection came to be passed by the second respondent - HELD THAT - Petitioner has not been heard by the second respondent while passing the impugned order, rejecting his claim for waiver made under Section 220(2A) of the Income Tax Act. When specific proviso has been provided under Income Tax Act, affording personal hearing to the assessee, the same has to be adhered to by the authority to exercise his power under the provisions of the Act. In this case, it appears that the second respondent has not afforded effective or reasonable opportunity to the petitioner and simply passed a cryptic order on 29.01.2019, which is the subject matter of challenge in the present writ petition. This Court therefore is of the view that the second respondent has passed the impugned order violating the provisions of the Income Tax Act. As rightly contended by the learned counsel for the petitioner that on this ground alone, the writ petition is liable to be allowed. The second respondent is directed to dispose of the waiver application by granting reasonable opportunity of personal hearing to the petitioner and pass orders on merits and in accordance with law, within a period of eight weeks from the date of receipt of a copy of this order.

Summary

Issues involved:
Challenge against the order rejecting waiver of interest under Section 220(2) of the Income Tax Act due to lack of effective hearing.

Analysis:
The petitioner filed an application seeking waiver of interest under Section 220(2A) of the Income Tax Act due to financial constraints. The first respondent had earlier approved an installment scheme for the petitioner, which was successfully completed. However, the second respondent rejected the waiver application without granting an effective hearing to the petitioner, violating the mandatory provision of affording the assessee an opportunity to be heard as per the Income Tax Act.

The learned counsel for the petitioner argued that the lack of personal hearing for the petitioner or its representative before passing the rejection order by the second respondent was a clear violation of the second proviso of Section 220(2A) of the Income Tax Act. It was contended that the order passed without a hearing is against the mandatory provisions of the Act, warranting interference solely on this ground.

In response, the respondents contended that the order was passed on merits and followed the required procedure. However, the court found that the second respondent had indeed failed to provide an effective or reasonable opportunity for the petitioner to be heard before passing the order. The court held that the second respondent's actions violated the provisions of the Income Tax Act, especially the requirement for affording personal hearing to the assessee before making a decision on waiver applications.

Consequently, the court set aside the impugned order rejecting the waiver application and remanded the matter back to the second respondent for fresh consideration. The second respondent was directed to follow the procedure under Section 220(2A) and provide a reasonable opportunity for personal hearing to the petitioner. The second respondent was instructed to dispose of the waiver application within eight weeks from the date of the court's order, ensuring compliance with the law.

In conclusion, the writ petition was allowed without costs, and the connected miscellaneous petition was closed, emphasizing the importance of adhering to procedural requirements and providing a fair hearing to the parties involved in such matters.