2025 (2) TMI 457 - HC - Income Tax

Validity of order passed u/s 154 - violation of principles of natural justice - HELD THAT - As gone through the order which has been passed by the Joint Commissioner of Income Tax. The procedure said to be adopted by the respondents is not known to jurisprudence of any nature. When already application under Section 154 of the Act has been decided on 30.12.2024 without recalling the said order a fresh order on 06.02.2025 could not have been passed. Court had only noted the contention in its order dated 22.01.2025 pertaining to the order being laconic and there was no direction to pass a fresh order and the indications made that as the order is being passed on the directions of the Court no opportunity of hearing was required is to say the least most unwarranted and factually incorrect. Neither there was any direction nor the requirement of providing opportunity before passing a fresh order stood obviated only on account of filing of the writ petition before this Court. The challenge laid in the writ petition regarding the order passed on 30.12.2024 being laconic stands admitted and therefore the said order cannot be sustained and is accordingly quashed. So far as the order dated 06.02.2025 is concerned the same having been passed without recalling the earlier order and in violation of principles of natural justice also cannot be sustained. Consequently the order passed on 06.02.2025 is also quashed. Petitioner shall appear before the authority on 19.02.2025 and it would be required of the authority to provide opportunity of hearing to the petitioner and thereafter pass a fresh order on application under Section 154 of the Act in accordance with law.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the orders dated 30.12.2024 and 06.02.2025 passed under Section 154 of the Income Tax Act, 1961 are valid?2. Whether the orders violated principles of natural justice and procedural fairness?Issue-Wise Detailed Analysis:1. Relevant legal framework and precedents:The relevant legal framework in this case is the Income Tax Act, 1961, specifically Section 154 which deals with rectification of mistakes. The principles of natural justice and procedural fairness are fundamental legal concepts that require fair treatment and adherence to established procedures in administrative decisions.2. Court's interpretation and reasoning:The Court found that the procedure adopted by the respondents in passing a fresh order on 06.02.2025 under Section 154 of the Act was not in accordance with established legal principles. The Court noted that the order dated 30.12.2024 had already been decided and could not be revisited without proper justification. The Court emphasized that the respondents did not have the authority to pass a fresh order without recalling the earlier order and without providing the petitioner with an opportunity to be heard.3. Key evidence and findings:The key evidence in this case was the orders dated 30.12.2024 and 06.02.2025 passed by the Joint Commissioner of Income Tax. The Court found that these orders were not in compliance with the law and violated the principles of natural justice.4. Application of law to facts:The Court applied the legal principles of procedural fairness and natural justice to the facts of the case. It determined that the orders passed by the authority were procedurally flawed and lacked proper justification. The Court emphasized the importance of providing the petitioner with an opportunity to be heard before making any decisions that affect their rights.5. Treatment of competing arguments:The Court considered the arguments put forth by the petitioner regarding the lack of justification and procedural fairness in the orders passed by the authority. The respondents attempted to justify their actions by stating that the orders were passed in compliance with the Court's directions. However, the Court found these arguments unpersuasive and ruled in favor of the petitioner.Significant Holdings:1. The Court quashed the orders dated 30.12.2024 and 06.02.2025 passed under Section 154 of the Income Tax Act, 1961.2. The Court emphasized the importance of adhering to principles of natural justice and procedural fairness in administrative decisions.3. The Court directed the petitioner to appear before the authority for a fresh hearing and ordered the authority to pass a new order in accordance with the law.In conclusion, the Court found that the orders passed by the authority were procedurally flawed and lacked proper justification. The Court emphasized the importance of providing the petitioner with an opportunity to be heard and directed the authority to pass a new order in compliance with the law.