2023 (3) TMI 1243 - HC - Income Tax

Rejection of request for NIL TDS in terms of Section 197 - Denial of natural justice - Application submitted by the petitioner seeking NIL TDS has been rejected by the respondents by addressing a communication in this regard at Annexure-A - grievance of the petitioner that no separate order, much less any speaking order has been passed by the respondents and the attachment to the aforesaid communication only indicates that the claim of the petitioner has been summarily rejected and the same being violative of principles of natural justice, the petitioner is before this Court by way of the present petition. HELD THAT - As rightly contended by petitioner, the material on record discloses that except the impugned communication at Annexure-A dated 28.02.2022 enclosing a copy of the attachment, which discloses that the claim of the petitioner has been summarily and unilaterally rejected by the AO without assigning any reasons, the impugned communication and order are clearly non-speaking, cryptic, unreasoned and laconic and passed without application of mind and in violation of principles of natural justice and consequently, the same deserves to be quashed and the matter be remitted back to the concerned respondent for reconsideration afresh in accordance with law. Petition is hereby allowed.The impugned order and the impugned communication/e-mail along with the accompanying screen shot is hereby set aside.

Summary

Issues:
1. Rejection of application for NIL rate of TDS under Section 197 of the Income Tax Act, 1961.
2. Lack of a speaking order and reasons for rejection.
3. Violation of principles of natural justice in the rejection process.

Analysis:
1. The petitioner sought relief through a writ of Certiorari to quash the order rejecting the application for NIL rate of TDS under Section 197 of the Act for the relevant financial year. The rejection was communicated via email without providing reasons, leading to the petitioner's grievance and the petition before the court.

2. The court noted that the rejection lacked a separate or speaking order, only being communicated through an attachment, which was deemed non-speaking, cryptic, and in violation of principles of natural justice. The respondents failed to provide any justification for the rejection, prompting the court to set aside the impugned order and remit the matter back for fresh consideration with an opportunity for the petitioner to present additional documents and have a personal hearing.

3. The court emphasized the importance of a reasoned decision-making process in matters such as these to ensure fairness and compliance with legal principles. By allowing the petition, the court rectified the lack of transparency and directed the respondents to reconsider the application with due diligence and adherence to the law, including providing the petitioner with a fair chance to present their case. This judgment highlights the significance of procedural fairness and the requirement for authorities to provide adequate justifications for their decisions in legal proceedings.