2024 (5) TMI 1179 - HC - Income Tax

Revision u/s 264 - Pr. CIT dismissed the application - Manner of passing of impugned order by PCIT J K, Jammu - whether was in accordance with procedural fairness and rules of natural justice? - petitioner filed a petition u/s 264 as stated that no prior notice calling for information or attending hearing or notice of demand was ever received by him and put up an explanation with respect to the subject matter of said show cause notice - Principal Commissioner dismissed the petition on the grounds that the petitioner had nothing further to add beyond the petition. HELD THAT - This Court is of the opinion that the manner of passing of the impugned order by the responded No. 2 fell short of fairness of procedure. Firstly, in absence of the representation from the petitioner's end, the petition came to be disposed of without citing reason as to why the petitioner's reason for adjournment was not granted for putting the petitioner on caveat that on account of refusal of adjournment, the case was to be taken up for hearing on merits on the next date. Even if the petitioner s presence was not to be of any purpose in the estimate of the respondent No. 2-Pr. CIT for enabling adjudication of the revision petition on its merits, we find that the order impugned does not contain any reason whatsoever as to on what basis the respondent No. 2- Pr. CIT came to uphold the validity of the order of the Assessing Officer questioned by the petitioner in the revision petition, more particularly when from the report submitted by Assessing Officer before the respondent No. 2, the enlisted notices issued to the petitioner were for and at the address with which the petitioner claims to have no relation. We find that even if on the merits of the case the petitioner may not succeed to evade the consequences as envisaged in terms of the communication dated 17.07.2017 of the Income Tax Officer ward 3(2), Srinagar, but still upon an opportunity of being heard in meeting the requirement of rules of natural justice would have stood well served taking the matter to its logical end. Thus, we set aside the impugned order of the respondent No. 2-Principal Commissioner Income Tax, J K Jammu and direct rehearing of the matter by the respondent No. 2-Principal Commissioner Income Tax, J K Jammu. We direct the petitioner to present himself before the respondent No. 2-Pr. CIT on 2nd of November 2023.

Summary

Issues:
1. Procedural fairness and rules of natural justice in passing the impugned order by the Principal Commissioner of Income Tax.
2. Adequacy of notices and communication sent to the petitioner.
3. Compliance with the principles of natural justice in the revision process.
4. Validity of the impugned order dismissing the petition under Section 264 of the Income Tax Act.

Analysis:
1. The High Court addressed the issue of procedural fairness and rules of natural justice in passing the impugned order by the Principal Commissioner of Income Tax. The Court noted that the petitioner was not given a fair opportunity to present their case as the order was passed without proper representation from the petitioner. The Court highlighted the importance of providing reasons for decisions and ensuring that all parties have a chance to be heard, emphasizing the need for procedural fairness in such matters.

2. The Court examined the adequacy of notices and communication sent to the petitioner during the assessment process. It was observed that several notices were sent to an incorrect address, leading to a lack of response from the petitioner. The Court noted discrepancies in the addresses used for communication and highlighted the importance of ensuring that notices reach the correct recipient to uphold the principles of natural justice.

3. The judgment delved into whether the revision process complied with the principles of natural justice. The Court emphasized the need for the respondent to consider all relevant factors, including procedural aspects, before dismissing the petitioner's revision petition. It was noted that the respondent failed to address key procedural issues, indicating a lack of thorough consideration in the revision process.

4. The Court evaluated the validity of the impugned order that dismissed the petition under Section 264 of the Income Tax Act. It was observed that the order lacked detailed reasoning and did not adequately address the petitioner's concerns. The Court highlighted the respondent's failure to address procedural discrepancies and emphasized the importance of a fair and thorough review process in such matters.

In conclusion, the High Court set aside the impugned order and directed a rehearing of the matter by the Principal Commissioner of Income Tax. The Court instructed the petitioner to appear before the Commissioner for the proceedings to be resumed and concluded within a specified timeframe, emphasizing the importance of upholding procedural fairness and ensuring a thorough review process in matters of tax assessment and revision.