2025 (3) TMI 722 - HC - Income Tax

Validity of order passed denying principles of natural justice petitioner has not been provided with sufficient opportunity of personal hearing before passing the impugned order - HELD THAT - It is settled law that violation of principles of natural justice is a failure of due process. If any order is passed against the petitioner with demand that order has to be passed after giving an opportunity of personal hearing to the petitioner otherwise it will amount to depriving the interest of the petitioner and the same amounts to violation of principles of natural justice. In the case on hand the impugned order was passed without giving opportunity of personal hearing to the Petitioner and therefore the same is liable to be set aside.

Summary

ISSUES PRESENTED and CONSIDERED

The primary legal issue considered was whether the assessment order dated 22.05.2023 was passed in violation of the principles of natural justice due to the lack of a personal hearing and adequate opportunity for the petitioner to respond to the notices issued by the tax authorities.

ISSUE-WISE DETAILED ANALYSIS

1. Violation of Principles of Natural Justice

Relevant Legal Framework and Precedents

The principles of natural justice require that any order affecting the rights of a party must be passed after providing an opportunity for a personal hearing. This ensures fairness and due process, preventing arbitrary decisions.

Court's Interpretation and Reasoning

The Court emphasized that the lack of a personal hearing before the issuance of the assessment order constituted a violation of natural justice. The Court noted that the petitioner was not afforded a sufficient opportunity to present their case, which is a fundamental requirement in administrative proceedings.

Key Evidence and Findings

The petitioner argued that they were unable to file a reply to the show cause notice due to the portal being closed and that they had requested an adjournment on medical grounds. The respondents contended that multiple opportunities were provided to the petitioner, and the failure to respond was not attributable to the department.

Application of Law to Facts

The Court found that the petitioner's inability to upload their reply due to the portal closure and the alleged lack of response to their adjournment request indicated procedural irregularities. The Court deemed these circumstances sufficient to establish a breach of natural justice principles.

Treatment of Competing Arguments

The respondents argued that the petitioner had ample opportunity to respond to the notices and that the assessment order was justified. However, the Court found that the procedural deficiencies, particularly the lack of a personal hearing, outweighed the respondents' arguments.

Conclusions

The Court concluded that the assessment order was passed without adhering to the principles of natural justice, warranting its setting aside and remand for reconsideration.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

"It is settled law that violation of principles of natural justice is a failure of due process. If any order is passed against the petitioner with demand, that order has to be passed after giving an opportunity of personal hearing to the petitioner otherwise, it will amount to depriving the interest of the petitioner and the same amounts to violation of principles of natural justice."

Core Principles Established

The Court reinforced the necessity of providing a personal hearing in administrative proceedings affecting a party's rights, underscoring the importance of procedural fairness and due process.

Final Determinations on Each Issue

The Court set aside the impugned assessment order dated 22.05.2023 and remanded the matter back to the respondents for reconsideration. The Court directed the respondents to reactivate the departmental portal to allow the petitioner to file their reply and to provide a personal hearing before passing a new assessment order. Additionally, the Court imposed a condition for the petitioner to pay a sum of Rs. 2,000 to a specified institution as part of the procedural directives.