Section 281 permission cannot be cancelled by a cryptic order without notice, reasons, or disclosure of adverse material.

Permission under section 281 of the Income-tax Act protects an assessee's dealing with property and must be dealt with fairly on full and relevant disclosure. Where permission has already been granted, any revocation must be supported by disclosed reasons, relevant material, and an opportunity of hearing before cancellation. An order that is cryptic, omits the adverse material relied on, and gives no prior notice breaches natural justice. A later attempt to justify the cancellation in a counter affidavit does not cure the defect in the original order. The Karnataka HC held the cancellation invalid for want of reasons and hearing.

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Issues: Whether the withdrawal of permission granted under section 281 of the Income-tax Act, 1961, without prior notice, disclosure of adverse material, or reasons in the order, was valid.

Analysis: Permission under section 281 is a statutory safeguard affecting an assessee's right to deal with property, and an application for such permission must be considered fairly on the basis of full and relevant disclosure. If permission has been obtained on insufficient information, the authority may correct the error, but the decision to revoke an already granted certificate cannot be made arbitrarily or by a cryptic order. The person affected is entitled to know the material relied upon and to be heard before revocation. A mere later attempt to justify the cancellation in the counter affidavit cannot cure the absence of reasons and hearing in the impugned order.

Conclusion: The cancellation of the certificate was invalid for breach of natural justice and lack of disclosed reasons, and the petitioner succeeded to that extent.

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