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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 ..... t least in the instant case, it stands established the request from the petitioner was made before the Appellate Authority but the Appellate Authority did not give opportunity of hearing to the petitioner.
Therefore, this Court is of the considered view that there is a violation of principle of natural justice and if the defect of principle of violation of natural justice has occurred in the initial stage of proceedings, it cannot be cured at the stage of appeal. No doubt, the petitioner has a right to avail the statutory appellate remedy but when the impugned order was passed by the respondent No. 2 in violation of principle of natural justice, it cannot be alleviated. WP allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... lanatory notes the finance (No. 2) Act, 2014 which inserted the Explanation to Section 10 (23C) (iiiab), clarifies that the amendment shall be applicable from Assessment Year 2015 onwards and that the same will be applicable only prospectively. 5. The income tax returns filed by the petitioner for the assessment years 2011-12, 2012-12, 2015-16, 2016-17 and 2017-18 were selected for scrutiny and proceedings were initiated by the respondent No. 3. The respondent No. 3 proceeded to pass adverse orders denying the benefit of exemption under Section 10 (23C) (iiiab) of the Act to the Petitioner. For the Annual Year 2011-12 and 2012-13, respondent No. 3 also retrospectively applied rule 2BBB of the Rules. 6. Being aggrieved by the orders of the respondent No. 3, the petitioner filed appeal before respondent No. 2 seeking for the orders to be set aside on the ground that the AO had erred in rejecting the exemption claimed by the petitioner under Section 10 (23C) (iiiab). The respondent No. 2 however passed orders against the petitioner for the Annual Year 2011-12, 2012-13, 2015-16, 2016-17 and 2017-18 on 29.12.2023 without giving any regard to the grounds raised or opportunity of person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o bestow, convey, make known, recount, impart' to give by way of information". The passing of the impugned order, or its contents were never made known to the petitioner and information regarding the same was not given until the petitioner realized the same due to receiving the reminder letter pertaining to a Show Cause notice initiating penalty proceedings. Contention of the counsel for the petitioner is that the petitioner had specifically requested an opportunity of being heard in the interest of natural justice. In the impugned order, respondent No. 2 has stated that the appellant has not availed any opportunity adding/altering grounds of appeal before the date of hearing and that the same was not availed. It is submitted that even if the uploading of the impugned order the portal is considered valid service/communication of the impugned order, the appeal was filed by the petitioner on 01.02.2018 and it was decided six years later ie. on 29.12.2023 without giving opportunity of hearing to the petitioner which is violation of Clause of Section 250 of the Income Tax Act, 1961. He has relied upon the matter of Union of India and Others Vs. Uppuleti Devi Prasad and Others, W.P. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the respondent No. 2 therefore have prevented the petition from availing its right of being heard. He has further placed his reliance on the judgment of the Apex Court in the matter of Umanath Pandey V. State of Uttar Pradesh, 2009 (327) ELT 241 (SC), wherein it has been observed that the principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administration authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice. It has been observed as under: "8. the adherence to principles of natural justice as recognized by all civilized States if of supreme importance when a quasi-judicial body embarks on determining disputes between the parties, or any administrative action involving civil consequences if in issue. These principles are well settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that no one should be condemned unheard. 10. Principles of natural justice are those rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 and the penalty proceedings initiated against the petitioner pertaining to the Assessment year 2011-12. It is submitted that the Assessing Officer concluded the assessment order and called for initiation of proceedings under Section 271 (1) (c) of the Income Tax Act, 1961. Against the assessment order, the petitioner filed appeal under Section 246A of the income Tax Act before the Commissioner of Income Tax (Appeal) on 09.01.2019 wherein the CIT (A) has categorically mentioned that "considering the totality of the facts and circumstances of the case and following the ratio laid down in the case of DIT (E) Vs. Tata Institute of Social Science (supra), since the Government grants received by the appellant was 46.61% ie. below 50% as laid down in rule 2BBB of the Income Tax Rules, 1962, it is held that the appellant is not eligible for claim of exemption under Section 10 (23C) (iiiab) of the Act as the appellant failed to fulfill the requirement of section of wholly or substantially financed by the Government. Hence, the action of the AO is upheld." 16. He further contended that the order passed by the Commissioner of Income Tax (Appeals) under Section 250 of the Income Tax is app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, the high Court declines to interfere at the instance of the appellant having noticed the above clinching facts. No fault can be found with the approach of the High Court in refusing to exercise its writ jurisdiction because of the conduct of the appellant in pursuing multiple proceedings for the same relief and can also because the appellant had an alternative and efficacious statutory remedy to which he has already resorted to. This view of the High Court has found favour with Dipak Mishra J. We respectfully agree with that view." 18. He has further placed his reliance in the matter of Indo Colchem Ltd. Vs Deputy Commissioner of Income Tax (2023) 149 Taxman.Com 30 (Gujrat) has held that Noticing the fat that much water has flown after the objections were raised against the notice of reopening was issued and as the petitioner is already before the Appellate Authority, this Court does not deem it appropriate and detain his petition as the petitioner cannot ride on two horses. Without entering into the merits of the case, the Appellate Authority to consider all aspects including the one which has been raised before this Court. 19. In the matter of Tirupathi B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax authority ought to have allowed the said application by arranging for video conferencing argument. At least in the instant case, it stands established the request from the petitioner was made before the Appellate Authority but the Appellate Authority did not give opportunity of hearing to the petitioner. Therefore, this Court is of the considered view that there is a violation of principle of natural justice and if the defect of principle of violation of natural justice has occurred in the initial stage of proceedings, it cannot be cured at the stage of appeal. No doubt, the petitioner has a right to avail the statutory appellate remedy but when the impugned order was passed by the respondent No. 2 in violation of principle of natural justice, it cannot be alleviated. 24. In the Institute of Chartered Accounts of India Vs. L.K. Ratna and Others, AIR 1987 SC71, Apex Court has held that the existence of an alternative statutory remedy does not undo the violation of natural justice in the first stage. A defect of natural justice existing in the trial stage, cannot be cured by giving an opportunity of hearing at the appellate stage. It is the contention of the counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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