2020 (9) TMI 866 - AT - Income Tax

Rectification application u/s 154 - application moved u/s 154 by the CIT(A) without giving assessee proper opportunity of hearing - HELD THAT - CIT(A) has not passed any speaking order in respect of the mistakes pointed out by the assessee. As per assessee, there was legal as well as factual mistakes in the order passed by the ld. CIT(A) which were pointed out by the assessee and the same has already been reproduced in the written submissions of the assessee mentioned above. Passing a speaking order or reasoned order is considered as third limb of natural justice. As per India legal system, the maxims Nemo debet esse judex in propria causa and Audi alterem partem are considered the two limbs of natural justice and passing of speaking order or reasoned order is considered as a third limb of natural justice. Characteristics of a speaking order is that, it should contain adequate and sufficient reasons in support of the decision. The principles of nature justice and fair play inaction requires recording of reasons and as per the order passed by the ld. CIT(A) while rejecting the application of the assessee U/s 154 we see that the ld. CIT(A) has not passed any reasoned or speaking order . Be that as it may, taking into consideration the legal proposition as discussed by us above, we restore the matter back to the file of the ld. CIT(A) to be adjudicated and decided application U/s 154 of the Act afresh in accordance with law after passing a speaking order after providing due and reasonable opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes

Summary

Issues:
1. Dismissing of application moved u/s 154 without proper opportunity of hearing.

Analysis:
The appeal was filed against the order of the ld. CIT(A) for the A.Y. 2011-12. The main issue raised by the assessee related to the dismissal of the application moved u/s 154 of the Act without providing a proper opportunity of hearing. The assessee had not filed the return of income initially and objections were raised against the notice issued by the A.O. The A.O. made additions on account of long term capital gain. The ld. CIT(A) upheld the additions made by the A.O. and dismissed the application u/s 154 filed by the assessee. The assessee contended that legal and factual mistakes were present in the order passed by the ld. CIT(A) and pointed out these errors in the application u/s 154.

The assessee challenged the order of the ld. CIT(A) for not providing an opportunity of hearing while deciding the application u/s 154. The ld. CIT(A) did not pass a speaking order and did not consider the mistakes pointed out by the assessee. The ITAT observed that passing a speaking order is essential for natural justice and fairness. It was emphasized that a speaking order should contain adequate reasons supporting the decision. Therefore, the matter was restored back to the ld. CIT(A) for fresh adjudication of the application u/s 154 after providing a reasonable opportunity of hearing to the assessee. The appeal of the assessee was allowed for statistical purposes.

In conclusion, the ITAT directed the ld. CIT(A) to reevaluate the application u/s 154 of the Act after passing a speaking order and providing a fair opportunity of hearing to the assessee. The importance of a speaking order in ensuring natural justice and fairness in decision-making was highlighted, leading to the allowance of the appeal for statistical purposes.