2024 (12) TMI 1009 - HC - Income Tax

Denial of principles of natural justice - Petitioner has not been provided a meaningful much less a reasonable opportunity - shorter period to reply to SCN - HELD THAT - No doubt, the petitioner as per this show cause notice was to be afforded an opportunity of personal hearing. But all this exercise of giving opportunity to file documents and thereafter an opportunity of personal hearing was wrapped up in 48 hours. The parameters of principles of natural justice cannot be covered by any straight jacket formula. It would vary depending upon the circumstance involved. Likewise, what would be reasonable opportunity would also depend upon the fact situation. Opportunity of hearing , as per Black s Law Dictionary, Tenth Edition means, the chance to appear in a Court or other Tribunal and present evidence and argument before being deprived of a right by governmental authority. The opportunity to be heard is a fundamental requirement of procedural due process. It ordinarily includes the right to receive fair notice of the hearing, to secure the assistance of counsel, and to cross-examine adverse witnesses. The petitioner was deprived of its right of fair hearing as contemplated under the law given the fact that vide notice dated 27.03.2024, less than 24 hours time was granted to it to produce the documentary evidence on 28.03.2024 by 4 30 p.m. and equal time, i.e., less than 24 hours time was granted for addressing oral arguments by calling upon it on the very next day, i.e., 29.03.2024, on which date, it was finally decided. We are clearly of the view that order dated 29.03.2024 imposing penalty is not sustainable and subsequently even the demand notice issued u/s 156 is also not sustainable and accordingly both, penalty order and demand notice, are quashed and set aside. The matter is remanded back to the authority with a direction to afford a meaningful opportunity to the petitioner to file its response along with documentary evidence and further provide the petitioner an opportunity of personal hearing.

Summary

Issues:
- Lack of meaningful opportunity for the petitioner to present its case.
- Violation of principles of natural justice in the assessment proceedings.
- Imposition of penalty without adequate opportunity for the petitioner to be heard.
- Unsustainability of penalty order and demand notice under the Income Tax Act.
- Remand of the matter for providing a meaningful opportunity to the petitioner.

Analysis:

The High Court addressed the issue of the petitioner not being provided a meaningful opportunity to present its case. The assessment proceedings against the petitioner were finalized, and a penalty was initiated without proper consideration of the petitioner's appeal. The Court noted that despite the dismissal of the appeal, the imposition of the penalty was delayed until a sudden show cause notice was issued, allowing very limited time for response and oral arguments.

The Court emphasized the importance of principles of natural justice, highlighting that the petitioner was not afforded a reasonable opportunity to be heard. It was observed that the timeframe given to the petitioner to produce documentary evidence and present oral arguments was unreasonably short, depriving the petitioner of a fair hearing as required by law.

Referring to legal definitions, the Court explained the concept of "opportunity of hearing" and "due process," emphasizing the fundamental right to fair notice, assistance of counsel, and cross-examination of witnesses. The Court concluded that the petitioner was denied its right to a fair hearing due to the inadequate time provided for submitting evidence and addressing oral arguments.

Consequently, the Court declared the penalty order and demand notice unsustainable, quashing them both. The matter was remanded back to the authority with a directive to afford the petitioner a meaningful opportunity to file responses, submit evidence, and have a personal hearing within a specified timeframe of two months from the judgment date.

In conclusion, the petition was disposed of, and any pending miscellaneous applications were also addressed in light of the Court's decision to set aside the penalty order and demand notice, emphasizing the importance of providing a fair and adequate opportunity for the petitioner to present its case in compliance with principles of natural justice.