2024 (2) TMI 845 - HC - Income Tax

Revision application filed u/s 264 - main contention of the petitioner is that there has been violation of principles of natural justice as no opportunity was granted to the petitioner for presenting his reply and making his submissions in person. HELD THAT - Upon a perusal of the documents, it appears that though the matter was fixed for March 10, 2021 but no order was passed by the officer concerned on that date. In fact, the matter was posted for a subsequent date wherein no notice was given to the assessee. The documents reveal that on March 10, 2021 there was no noting whatsoever done by the officer concerned. In fact, it was not even noted that the petitioner did not appear on that date. As the revision application was filed by the petitioner under Section 264 of the Act, the officer concerned ought to have granted a further opportunity to the petitioner to appear since the matter was not heard out and decided on that date. One need not elaborate on the virtues of hearing in person before an adverse order is passed against an assessee. In light of the same, the officer concerned should have granted another opportunity to the petitioner and only thereafter passed an order that was adverse to the petitioner. Not having done so, there appears to be a violation of principles of natural justice. Order is quashed and set-aside with a direction given to the officer concerned to issue notice for hearing to the petitioner and hear out the matter within a period of two months from date.

Issues: Violation of principles of natural justice in passing order under Section 264 of the Income Tax Act, 1961

Issue 1: Violation of principles of natural justice

The petitioner filed a petition under Article 226 of the Constitution of India, challenging the order dated March 23, 2021, passed by the Principal Commissioner of Income Tax-2, Agra, in a revision application under Section 264 of the Income Tax Act, 1961. The petitioner contended that there was a violation of principles of natural justice as no opportunity was granted to present a reply and make submissions in person. The petitioner's counsel submitted that although a notice was issued for the petitioner to appear on March 10, 2021, the petitioner could not attend and did not file an application for adjournment. The Department's counsel argued that as no application for adjournment was filed, the order was passed ex-parte. However, upon review, it was found that no order was passed on March 10, 2021, and the matter was posted for a subsequent date without notice to the assessee.

Issue 2: Adherence to procedural fairness

The Court observed that the officer should have granted the petitioner a further opportunity to appear since the matter was not heard and decided on the initial date. The Court emphasized the importance of allowing the assessee to be heard in person before an adverse order is passed. It was concluded that by not providing another opportunity to the petitioner, there was a violation of principles of natural justice. Therefore, the Court quashed and set aside the order dated March 23, 2021, directing the officer to issue a notice for a hearing to the petitioner and to hear the matter within two months. The Court specified that no adjournment would be granted to the petitioner, and failure to participate would allow the officer to pass an ex-parte order. The entire process was mandated to be completed within three months from the date of the judgment.

Conclusion:

The High Court of Allahabad allowed the writ petition, emphasizing the importance of procedural fairness and adherence to principles of natural justice in matters concerning orders under Section 264 of the Income Tax Act, 1961. The Court's decision highlighted the necessity of granting the petitioner a fair opportunity to be heard before any adverse order is issued, ensuring a just and transparent process in tax matters.

← Previous Next →