Proper hearing required before withdrawing investment allowance; one-day notice was held too short and the order was quashed.

Withdrawal of investment allowance under sections 154 and 155(4A) of the Income-tax Act could not be sustained where the assessee was given only one day to reply to the show-cause notice. The short notice period was held inadequate for an effective response, and the rectification order was interfered with for denial of proper hearing. The withdrawal was quashed and the matter remitted for reconsideration after giving the assessee a proper opportunity of hearing.

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Issues: Whether the order withdrawing investment allowance under sections 154 and 155(4A) of the Income-tax Act, 1961 could be sustained when the assessee was given only one day to respond to the show-cause notice.

Analysis: The challenge turned on the adequacy of the opportunity afforded before the rectification order was passed. The notice period was found to be too short for an effective reply, and even the Department fairly accepted that such a short time could not permit a proper response. The order was therefore liable to be interfered with on the ground of denial of proper hearing.

Conclusion: The withdrawal of investment allowance could not be sustained and was quashed. The matter was directed to be reconsidered by the concerned authority after giving the assessee proper opportunity of hearing.

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