2024 (5) TMI 226 - HC - Income Tax

Violation of principle of natural justice - non-granting opportunity of hearing to the petitioner - adjournment prayer made by the petitioner ignored - HELD THAT - AO has not granted opportunity of hearing to the petitioner though petitioner has prayed for same which is not in dispute as per the screenshot placed on record . It appears that the petitioner has also personally met the respondent Assessing Officer and requested for time to file reply to the show-cause notice, however the same is not reflected in the impugned order nor the AO has referred to in the affidavit-in-reply. In view of the above undisputed fact of not granting opportunity of hearing to the petitioner, the impugned assessment order is hereby quashed and set aside and the same is remanded back to the Assessing Officer to pass fresh de novo order after giving opportunity of hearing to the petitioner from the show-cause notice stage. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.

Summary

Issues involved:
The petitioner challenged an assessment order and demand notice on the grounds of lack of opportunity for a hearing despite a request for adjournment.

Judgment Details:

Issue 1: Lack of Opportunity for Hearing

The petitioner, engaged in trading shares and securities, filed income tax returns which were processed under Section 143(1) of the Income Tax Act, 1961. Subsequently, the case was selected for scrutiny assessment, and a show-cause notice was issued regarding unsecured loans. The petitioner requested an adjournment to gather materials for a reply, but the assessment order was passed without considering this request. The Court found a violation of the principle of natural justice as the petitioner's plea for an adjournment was not addressed. The assessment order was quashed, and the case was remanded back to the Assessing Officer to pass a fresh order after granting a hearing to the petitioner.

Key Points:
- The petitioner's request for adjournment for a hearing was not considered before passing the assessment order.
- The Court emphasized the importance of granting a fair opportunity of hearing as per the principle of natural justice.
- The assessment order was set aside, and the case was remanded for a fresh order with a proper hearing granted to the petitioner.
- The Court clarified that the decision was based solely on the breach of natural justice principles and did not delve into the merits of the case.
- The Assessing Officer was directed to complete the process within 12 weeks from the date of the order.