2019 (4) TMI 1582 - HC - Income Tax

Application u/s 220(3) for extend the time for payment or allow payment by instalments - discretion in the AO to grant some relief u/s u/s 220(3) - request for providing copy of entire order sheet of Assessment Proceedings - recovering 20% of is mandatory - HELD THAT - This provision vests discretion in the Assessing Official to grant some relief to the Assessee who falls within its parameters. This discretion is to be exercised according to the rules of reason and justice. It is not a Mughal discretion. When a Citizen makes an application and seeks personal audience, the law requires due consideration thereof after affording an opportunity of hearing, even when the provision in so many words does not speak of granting of such opportunity, since the principles of Natural Justice being part of Article 14 are inbuilt in every public power subject to all just exceptions. Even God is said to have given an opportunity of hearing to Adam and Eve before punishing them for eating the forbidden fruit. That being so, denial of personnel hearing is fault some, to say the least. The contention to the contrary is very difficult to countenance. Furnishing of entire order sheet relating to the Assessment Proceedings in question ought to have been favorably considered by the Respondent herein inasmuch as ours is an Open Governance, i.e. moving in the era of transparency. Petitioner was seeking the copies of the public records relating to his own affairs and not of others. No provision of law is quoted to deny such a relief. Petitioner is more than justified that, the said record is necessary to the Assessee to decide as to whether the Assessment Order is legally challengeable with a fair degree of success and therefore, withholding such records virtually amounts to scuttling the right of the Assessee to seek legal redressal against the Assessment Orders. It is open to the Assessee to show that the said Circulars are not binding axioms needs to be considered by the Respondent-Assessing Official in whom the discretion is vested u/s 220 (3). This Court ordinarily will not undertake the said exercise, since power is vested in a persona designata. - matter is remitted for consideration afresh after affording an opportunity of hearing to the Petitioner or his agent

Summary

Issues:
1. Non-consideration of application under Section 220(3) of the Income Tax Act, 1961.
2. Quashing of the impugned order dated 13.02.2019.
3. Request for the entire order sheet relating to the Assessment Proceedings.
4. Recovery of 20% of the amount due from the attached Bank Account.
5. Interpretation of Section 220(3) of the Act.

Issue 1: Non-consideration of application under Section 220(3) of the Income Tax Act, 1961:
The petitioner, an Income Assessee, filed an application seeking relief under Section 220(3) of the Income Tax Act, 1961, but the Respondent rejected the application without affording an opportunity of hearing. The petitioner argued that the Respondent's actions were unjustified and sought a writ of certiorari to quash the impugned order. The High Court emphasized that the Assessing Officer has discretion under Section 220(3) to grant relief to the Assessee, which must be exercised in accordance with principles of reason and justice, including affording an opportunity of hearing. Denial of a personal hearing was deemed fault some, and the High Court referred to the importance of natural justice in such matters.

Issue 2: Quashing of the impugned order dated 13.02.2019:
The High Court, after considering the arguments presented, issued a Writ of Certiorari quashing the impugned order dated 13.02.2019. The matter was remitted for fresh consideration, emphasizing the need to afford an opportunity of hearing to the Petitioner or their agent in accordance with the law. The Court directed that no coercive steps should be taken against the Petitioner for enforcement of the Demand Notice until a copy of the entire Assessment Proceedings is furnished to the Petitioner, allowing them a fair opportunity to decide on the challengeability of the Assessment in question.

Issue 3: Request for the entire order sheet relating to the Assessment Proceedings:
The Petitioner requested the entire order sheet relating to the Assessment Proceedings, emphasizing the importance of transparency in governance. The High Court agreed that the Petitioner's request should have been favorably considered, as it is essential for the Assessee to determine the legality of challenging the Assessment Order. Withholding such records was deemed to impede the Assessee's right to seek legal redressal against the Assessment Orders.

Issue 4: Recovery of 20% of the amount due from the attached Bank Account:
The contention that recovering 20% of the amount due under the Assessment Order from the attached Bank Account of the Assessee, in line with CBDT Circulars, was deemed valid. However, the High Court noted that it is open to the Assessee to challenge the binding nature of such Circulars. The Court highlighted that the Assessing Official should consider the Assessee's arguments in this regard, as the discretion under Section 220(3) of the Act is vested in the Assessing Official.

Issue 5: Interpretation of Section 220(3) of the Act:
The High Court clarified that Section 220(3) of the Act provides the Assessing Official with the discretion to grant relief to the Assessee, subject to conditions imposed in the circumstances of the case. The Court emphasized that this discretion must be exercised based on reason and justice, including affording an opportunity of hearing to the Assessee. The Court cited a case from the High Court of Panjab and Haryana to support the importance of natural justice in such matters.

This detailed analysis of the judgment addresses the various issues involved in the case, highlighting the legal interpretations and decisions made by the High Court in response to the Petitioner's grievances.