2021 (7) TMI 589 - HC - Income Tax

Validity of order passed by PCIT u/s 264 - Non-consideration of submissions of the assessee - as submitted by the petitioner that his objection has got strong material which goes to the root of the case and non-consideration of the same before passing the impugned order is a gross violation of principles of natural justice - HELD THAT - Contention of the respondents that it was time barring matter is not acceptable in view of the fact that the relevant assessment order to be revised was received by the petitioner on 4 th February, 2020 and as per the statute, limitation is two years from the date of receipt of such assessment order, so, the time for passing the impugned order was becoming barred on 3rd February, 2022 and in view of this fact, the respondent Commissioner could have easily considered the aforesaid objection of the petitioner on 29th March, 2021. There was enough time available to the Commissioner but hastily he passed the impugned order on 29th March, 2021. The impugned order dated 29th March, 2021 passed by the Commissioner is set aside on the ground of violation of principles of natural justice by not considering the aforesaid objection dated 26th March, 2021 of the petitioner before passing the impugned order in spite of having enough time for passing the impugned order, order dated 29th March, 2021 being Annexure-P/5 to the writ petition, with a direction upon the Ld. Commissioner/respondent no. 2 to consider afresh the case of the petitioner and pass a reasoned and speaking order.

Summary

Issues:
Challenging order under section 264 of the Income Tax Act, 1961 for not considering petitioner's objection before passing the order.

Analysis:
The petitioner challenged the order dated 29.3.2021 passed by the Principal Commissioner of Income Tax, Kolkata-2 under section 264 of the Income Tax Act, 1961, alleging a violation of natural justice as the objection dated 26th March, 2021 was not considered before passing the order. The respondent Income Tax authority argued that despite receiving a show-cause notice and fixing a time limit for response, no reply was received from the petitioner until 26th March, 2021. The draft order was approved for uploading on 29th March, 2021, citing it as a time-barring matter. The court noted that the relevant assessment order to be revised was received by the petitioner on 4th February, 2020, and the limitation period was two years from that date, expiring on 3rd February, 2022. The court found that there was sufficient time available for the Commissioner to consider the petitioner's objection before passing the order on 29th March, 2021, and concluded that the objection should have been taken into account.

The High Court set aside the impugned order dated 29th March, 2021, on the grounds of violation of principles of natural justice for not considering the petitioner's objection before passing the order. The court directed the Commissioner to reconsider the petitioner's case, pass a reasoned order strictly in accordance with the law, and provide an opportunity for a hearing to the petitioner or its authorized representative within eight weeks from the date of the court's communication. Importantly, the court clarified that it did not delve into the merits of the case, leaving the respondent Commissioner free to decide on the objection by applying judicial discretion.

In conclusion, the writ petition challenging the order under section 264 of the Income Tax Act, 1961 was disposed of by the High Court, emphasizing the importance of adhering to principles of natural justice and providing an opportunity for the petitioner to present their case before passing any consequential orders.