Natural justice breach in section 80-O approval rejection required reconsideration after proper hearing

Denial of an effective opportunity of hearing before rejecting approval under section 80-O of the Income-tax Act, 1961 vitiated the decision because it breached the principles of natural justice. The Delhi High Court found that the assessee had not been properly heard before the Chief Commissioner concluded that the case did not qualify for approval. The rejection could not therefore be sustained, and the matter was directed to be decided afresh after giving a proper hearing.

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Issues: Whether the denial of an opportunity of hearing before rejecting approval under section 80-O of the Income-tax Act, 1961 vitiated the decision and required the matter to be reconsidered.

Analysis: The record showed that the assessee had not been effectively heard before the Chief Commissioner decided that the case did not qualify for approval under section 80-O. The lack of hearing amounted to a breach of the principles of natural justice.

Conclusion: The decision rejecting approval under section 80-O could not be sustained and the matter was directed to be decided afresh.

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