2022 (4) TMI 1394 - HC - Income Tax

Order passed by PCIT u/s 264 dismissing the revision petition filed by the appellants - order was an ex parte order since according to the PCIT despite notice being sent to the assessee through e-mail none appeared for the hearing - intra court appeal filed by the appellant/writ petitioner - Single Judge had dismissed the writ petition by the impugned order primarily on the ground that the earlier writ petition filed by the appellant was dismissed and, therefore, the appellant cannot also again challenge the assessment order indirectly by questioning the order passed by the PCIT u/s 264 - as argued violation of principles of natural justice and as the appellant was not granted adequate and effective opportunity by the assessing officer HELD THAT - PCIT had committed an error in rejecting the revision petition on the ground that already the appellant had filed the writ petition and challenged the assessment order and the same has been dismissed. The dismissal of the writ petition was not on the merits of the assessment. Therefore, the PCIT committed an error in making such observation. The learned writ court has also faulted the assessee for having not filed a regular appeal as against the order of the assessment by approaching the Commissioner under Section 246(A) of the said Act. It may be true that the appeal might have been time barred but nevertheless the appellant assessee cannot be foreclosed from availing the revisional remedy under Section 264 of the said Act which is an independent remedy provided to an aggrieved person in terms of the provisions of the Act. Therefore, the decision is required to be taken by the PCIT on merits of the matter. Though there is allegation made that the notice have been sent to the e-mail address which was not in operation, we do not propose to go into the correctness of the said submission as we are of the considered view that an adequate opportunity should be granted to the assessee to pursue the revision petition filed under Section 264 of the Act and since the revision petition has been manually presented, the assessee has also to be afforded an opportunity of personal hearing. We are of the view that PCIT has to take a decision on merits and in accordance with law. For the reasons given hereinabove, the appeal stands allowed and the order passed by the PCIT, Kolkata -1 dated 15.12.2021 under Section 264 of the Act is set aside and the revision petition is restored to the file of the said authority. Consequently, the order passed in the writ petition is set aside

Issues:
1. Challenge against the order of the Principal Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961.
2. Dismissal of writ petition challenging assessment order.
3. Violation of principles of natural justice.
4. Correctness of the order passed by the Single Judge.
5. Error in rejecting the revision petition.
6. Failure to file a regular appeal under Section 246(A) of the Act.
7. Allegation of notice sent to an inactive email address.

Analysis:
1. The appellant filed a writ petition challenging the order of the Principal Commissioner of Income Tax (PCIT) under Section 264 of the Income Tax Act, 1961. The PCIT had dismissed the revision petition, leading to the appellant's appeal. The High Court found that the PCIT's order was ex parte, as the appellant did not appear for the hearing despite notice. The appellant had previously challenged an assessment order, claiming no notice was received, and the email address used was inactive, which was dismissed by a Single Judge.

2. The Single Judge dismissed the writ petition, stating that since the earlier petition challenging the assessment order was dismissed, the appellant could not indirectly challenge it through the PCIT's order under Section 264. The High Court observed that the Single Judge did not address the merits of the assessment in the previous order and faulted the PCIT for rejecting the revision petition based on the earlier dismissal without considering the assessment's merits.

3. The High Court analyzed the violation of principles of natural justice claimed by the appellant. The Single Judge had found no violation, but the High Court emphasized the need for the PCIT to grant the appellant a fair opportunity to pursue the revision petition. The Court highlighted the importance of a personal hearing and a decision on merits in accordance with the law.

4. The High Court allowed the appeal, setting aside the PCIT's order and restoring the revision petition. The Court directed the PCIT to issue a written notice to the appellant, conduct a personal hearing, allow representation by an authorized representative, consider all documents, and pass a speaking order on merits and in accordance with the law. The Court emphasized the importance of affording the appellant a reasonable opportunity to be heard.

5. The High Court emphasized that the PCIT should not foreclose the appellant from availing the revisional remedy under Section 264, even if a regular appeal may have been time-barred. The Court stressed that the PCIT must decide on the merits of the matter and provide a fair opportunity for the appellant to present their case.

6. The High Court's decision highlighted the necessity for the PCIT to consider the revision petition on its merits and in accordance with the law, emphasizing the importance of granting the appellant a fair opportunity to pursue the remedy provided under the Act. The Court's detailed analysis focused on ensuring procedural fairness and adherence to legal principles in tax matters.

7. In conclusion, the High Court's judgment underscored the significance of due process, fair hearings, and adherence to legal procedures in tax disputes. The Court's decision aimed to uphold the appellant's right to a proper consideration of their case and a fair opportunity to present their arguments before the tax authorities.

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