2021 (6) TMI 302 - AT - Income Tax

Rectification of order - Right to be heard - Double payment of Tax - Exemption from levy of Income Tax u/s 96 of the Right To Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act 2013 - compensation received on account of compulsory acquisition of land - HELD THAT - All actions which strike at the non negotiable axiom namely justice should not only be done but seen to be done are expected to be adhered to when the State acts exercising its vast powers over its citizens. The actions are expected to be carried out in fairness. These are the bare minimum standards which are expected to be adhered to. Fair play pre supposes as has been oft laid down fair notice of charge and place of hearing opportunity of effective hearing to address the charge and speaking order addressing the reasons for agreeing or disagreeing with the claims put forth. Audi alterem partem which is one of the foundational and fundamental bed rocks of natural justice means and includes that no one should be condemned un heard. Though these Rules are not necessarily codified however they have evolved over the years and are read into not only when statutory provisions so provide but also in quasi administrative decisions whereby the rights / interests of the party is adversely effected. Thus even in the absence of a clear legislative mandate the Courts have repeatedly held that the procedure required to be adhered to envisage a right to be heard. No doubt a party may choose to waive the right to be heard and instead choose to rely on written submissions. However it is the duty of the Court to ensure that the waiver so made is consciously made with full knowledge and understanding i.e; with the foreknowledge that the right to be heard exists. The record is silent on this aspect. Accordingly since there is nothing on record to show that the right to be heard was consciously and knowingly waived the impugned order is restored back to the file of the CIT(A) with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Said order was pronounced at the time of virtual hearing itself in the presence of the parties via Webex.- Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Correctness of the order of CIT(A) pertaining to the 2015-16 assessment year.
2. Taxability of compensation received on account of compulsory land acquisition.
3. Addition under the head Income from Other Sources and double taxation.
4. Clubbing of grounds of appeal.
5. Failure to appreciate revised computation of income.
6. Exemption from income tax under Section 96 of the RFCTLAAR Act.
7. Right to add or amend any ground of appeal.

Analysis:
1. The appeal challenged the order of the CIT(A) for the 2015-16 assessment year. The Tribunal noted that the impugned order was passed without hearing the assessee, contravening the principles of natural justice. The written submissions made by the assessee were considered, but the application for rectification was dismissed without a proper hearing. The Tribunal emphasized the importance of the right to be heard, stating that no one should be condemned unheard. It directed the CIT(A) to pass a speaking order after giving the assessee a reasonable opportunity to be heard, emphasizing fairness and transparency in the process.

2. The issue of taxability of compensation received on account of compulsory land acquisition was raised. The appellant argued that the compensation amount was exempt from income tax under Section 96 of the RFCTLAAR Act. However, the Tribunal did not delve into this issue due to the procedural irregularity of not hearing the assessee. The matter was directed to be reconsidered by the CIT(A) after affording the assessee a proper opportunity to present their case.

3. The addition under the head Income from Other Sources and the alleged double taxation were contested. The Tribunal observed that the CIT(A) had failed to appreciate the inadvertent payment of tax on the entire compensation amount, leading to potential double taxation. This issue was also remanded back to the CIT(A) for a fresh adjudication with the assessee's input.

4. The clubbing of grounds of appeal by the CIT(A) was challenged. The Tribunal did not delve into this issue in detail due to the overarching procedural lapse of not granting the assessee a fair hearing. The matter was referred back to the CIT(A) for appropriate consideration.

5. The failure to appreciate the revised computation of income was raised as a ground of appeal. The Tribunal did not provide a detailed analysis of this issue but directed the CIT(A) to reexamine this aspect after affording the assessee a proper opportunity to present their case.

6. The exemption from income tax under Section 96 of the RFCTLAAR Act was a key contention. The Tribunal did not delve into the merits of this argument due to the procedural flaw of not hearing the assessee. The issue was instructed to be reconsidered by the CIT(A) after granting the assessee a fair hearing.

7. The appellant sought leave to add or amend any ground of appeal. The Tribunal did not specifically address this request in detail but allowed the appeal for statistical purposes, emphasizing the importance of fair procedures and the right to be heard in tax matters.