2024 (9) TMI 1335 - HC - Income Tax

Validity of order passed u/s 264 - written submissions filed by the petitioner not considered before passing order - denial of principle of natural justice - HELD THAT - A perusal of the postal cover produced at Annexure-E would indicate that though the impugned order is purported to have been passed on 20.11.2023, but the impugned order is seen to have been dispatched only on 29.11.2023, subsequent to the written submissions filed by the petitioner. In view of this ambiguity and discrepancy that is apparent on the face of the record, as regards the purported date of the impugned order and date of dispatch by the respondent No.1, matter is required to be reconsidered afresh by considering written submissions filed by the petitioner on 23.11.2023. A perusal of the written submissions filed by the petitioner would also indicate that the same are relevant and necessary for the purpose of adjudication of the issues involved in the petition and since the same would have bearing/impact on the claim of the petitioner, the impugned order deserves to be set-aside. Also the material on record demonstrates that the petitioner had made investment and availed the benefit of Income Declaration Scheme under Section 183 of the Finance Act, 2016, which would have an impact on the claim of the petitioner and the said aspect having not been considered by the respondent, is yet another circumstance that would vitiate the impugned order, which deserves to be set-aside and the matter remitted back for reconsideration afresh in accordance with law. So also, the additional written submissions filed on 14.11.2023 having not been considered fully and in the proper perspective. Impugned orders in so far as it relates rejecting the claim of the petitioner are hereby set-aside.

Summary

Issues:
Petitioner seeks to quash orders under section 264 for AY 2013-14, 2014-15, and 2015-16, as well as an order by the 2nd Respondent for AY 2013-14. The petitioner argues that the orders were not considered properly, violated principles of natural justice, and failed to account for income declared under a specific scheme.

Analysis:

1. Consideration of Written Submissions:
The petitioner contended that the impugned order under Section 264 of the Income Tax Act was not duly considered as it was dispatched after receiving additional written submissions. The High Court found ambiguity in the order's date and dispatch, leading to a need for reconsideration. The court emphasized the importance of the petitioner's submissions for a fair adjudication and set aside the order.

2. Violation of Natural Justice:
The petitioner raised concerns about information obtained from external sources not being disclosed for the petitioner's response, violating principles of natural justice. The court noted that reliance on undisclosed information was unjust and ordered the impugned order to be set aside on these grounds.

3. Income Declaration Scheme Consideration:
The petitioner's participation in the Income Declaration Scheme was highlighted as crucial for the case. The court agreed that the scheme's impact on the petitioner's claim was significant and should have been factored into the decision. The failure to consider this aspect led to the order being quashed and remitted for fresh consideration.

4. Rejection of Petitioner's Claim:
The impugned order partially rejected the petitioner's claim, prompting the petitioner to seek its set-aside. The High Court agreed to quash the order to the extent it rejected the claim, while confirming the parts upholding the claim. The matter was remitted to the respondent for reconsideration, allowing the petitioner to present additional pleadings and documents for further review.

In conclusion, the High Court allowed the petition, setting aside the orders that prejudiced the petitioner and directing a fresh consideration of the case. The judgment emphasized the importance of procedural fairness, proper consideration of submissions, and adherence to principles of natural justice in administrative decisions under tax laws.