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TMI Blog2025 (2) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... ated against the petitioner pertaining to the assessment year 2015-16 were decided in a manner prejudicial to the natural justice. 3. Facts of the case in brief is that the petitioner concerned is engaged in advancement of learning, teaching, research and diffusion of knowledge in the field of law. The income tax return filed by the assessee for the assessment year 2015-16 was reopened for assessment. That the respondent No. 2 denied exemption under Section 10 (23C) (iiiab) of the Income Tax Act, 1961 to the petitioner on the ground that it was not substantially financed by the Government. The petitioner had preferred an appeal to the Respondent No. 2 who dismissed the appeal without considering the contentions put forth in the written submission of the petitioner and without affording opportunity to the petitioner for hearing. The respondent No. 2 decided the appeal 6 years after the date of institution of the appeal and without serving a copy of the impugned order to the petitioner. The respondent No. 3 has initiated penalty proceedings against the pertinent. Thus, being aggrieved by the revenue oriented approach of the respondents and a continuous violation of the principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned orders were passed against the petition which is a violation of the principles of natural justice. All these orders were passed ex parte after a considerable delay of 4-6 years and without consideration of any of the grounds submitted by the petitioner. Thus, the petitioner filed rectification applications before the Respondent No. 2 stating inter alia that it had not considered any of the submissions of the petitioner and the impugned orders were in clear violation of principles of natural justice. Hence the above writ petitions have been filed. 7. Contention of learned Senior counsel for the petitioner is that the proceedings before respondent No. 2 were in violation of the principles of natural justice. It is submitted that Section 250 of the Income Tax Act, 1961 provides for "Procedure in Appeal". Section 250(7) mandates that upon disposal of the appeal, the Commissioner (Appeals) must communicate the order passed to the assessee. An extract of the provision is produced here below: "(7). On the disposal of the appeal, the Commissioner (Appeals) shall communicate the order passed by him to the assessee and to the Principal Chief Commissioner or Chief Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied the opportunity of being heard in the appellate proceedings was conduct unbecoming of a government servant. 10. The opportunity of personal hearing is a statutory mandate under Section 250 (1) and 250 (2) of the Income Tax Act, 1961 and the same has not been complied with before passing the impugned order. It is submitted that the impugned order has also been passed in contravention of Section 250 (6A) which mandates that the appeal must be decided within 1 year. Even though the clause grants some flexibility by usage of the phrase "where it is possible, may hear and decide", the impugned order has been passed six years after the date of institution of appeal. It is submitted that despite these additional grounds being raised, the Respondent No. 2 stated in the impugned order that the petitioner had not availed opportunity to add grounds of appeal. He has relied upon the decision of the Apex Court in the matter of M.P. Power Management Company Ltd. Jabalpur Vs. Sky Power Southeast Solar India Private Limited and Others. (20230 2SCC 703, wherein it has been observed that when the impugned decision is not based on any principle or displays mere whim of the authority, it shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by a judicial, quasi judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice." 12. In another decision of the Apex Court in the matter of Dharampal Satyapal Ltd. Vs. Deputy Commissioner of Central Excise, 2015 (320)ELT 3 (SC) followed by the decision of the Supreme Court in C.B. Gautam Vs. Union of India (1993) 1 SCC 78 holding that the principle of natural justice is applicable even though it was not statutorily mandated. It is submitted that non-consideration of the arguments and not informing the petitioner of the impugned order violates the principles of natural justice and the impugned order is therefore liable to be set aside. 13. Another contention of the counsel for the petitioner is that the wordings of Rule 2BBB as well as the explanation to the Section 10 (23C) (iiiab) are ambiguous and in light of this ambiguity, they must be interpreted liberally in favour of the assessee. It is submitted that both the Rule 2BBB and the explanation to Section 10 (23C) (iiiab) use the words "shall be considered as being substantially financed by the Government for any previous year'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) or sub-section (2) shall be filed within 60 days of the date on which the order is sought to be appealed after being communicated to the assessee or to the Commissioner. He submits that when the petitioner has not filed any appeal against the order of the CIT(A) dated 29.12.2023, The Assessment Unit Income Tax Department issued a show cause notice for penalty under Section 271 (1) (c) of the Income Tax Act, 1961 on 22.04.2024. The petitioner filed its reply on 25.05.2024 to the show cause notice under Section 271 (1) (c) of the Act wherein it has been mentioned that the Assessee is already in the process of filing appeal at Income Tax Appellate Tribunal, Raipur against the order passed by the Income Tax Department and will furnish the form 36 as soon as the process will be completed. He further submits that instead of filing of appeal against the order of CIT (A) dated 29.12.2023, the petitioner had filed application for rectification under Section 154 of the Income Tax Act for rectification of error/mistake in the order dated 29.12.2023on 28.06.2024 and simultaneously the petitioner has filed this writ petition against the order of the CIT (A) dated 29.12.2023. He s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the petitioner has an alternative and effective remedy by way of an appeal before the ITAT. Accordingly, the present writ petition is disposed of with liberty to the petitioner to urge all his contentions and submissions before the ITAT." 20. Counsel for the respondent submits that the petitioner had alternative remedy available and he may raise the issue before the Appellate Authority and therefore, he submits that the petitions filed by the petitioner may e dismissed and the same can be raised before the Appellate Authority. 21. Heard learned counsel for the parties and perused the material available records with utmost circumspection. 22. On perusal of the record, it appears that the income Tax return filed by the petitioner for the Assessment Year 2011-12, 2012-13, 2015-16, 2016-17 and 2017-18 were selected for scrutiny and proceedings were initiated by the respondent No. 3 to pass adverse orders denying the benefit of exemption under Section 10 (23C) (iiiab) of the Income Tax Act to the petitioner. It is also admitted fact that the assessment year 2011-12, 2012-13, 2015-16, 2016-17 and 2017-18 was also retrospectively applied Rule 2BBB of the Rules. Aggrieved by the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid discussion, given the aforesaid facts and circumstances, it was incumbent upon the respondent to accord a personal hearing to the petitioner. Since the petitioner has filed the rectification application, in the event the impugned order is set aside and the matter is remitted back to the respondent for re-consideration afresh, the petitioner would unconditionally withdraw the rectification application. 26. Thus, this Court is of the view that the principles of natural justice to the aforesaid extent, particularly, when the Act itself provides for a procedure for the same stands violated. The impugned order dated 29.12.2023 is set aside and it is directed that the petitioner shall appear before the Appellate Authority/respondent No. 2 on 28th February 2025 who shall fix the date of personal hearing to the petitioner and following shall have the right to be heard at the time of hearing of the appeal: (i) the petitioner, either in person or by an authorized representative (ii) the Assessing Officer, either in person or by a representative. The Appellate Tribunal shall thereafter decide the case within a period of 45 days from the date of hearing of the appeal. The petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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