Court quashes P-4 order, grants petitioner opportunity to present evidence. Fair hearing emphasized.

The court quashed the exhibit P-4 order and directed the second respondent to afford the petitioner an opportunity to be heard and present evidence within three months. The court emphasized the importance of providing a fair chance for the petitioner to dispute the liability and present evidence supporting his claim that no amount was due from him to the defaulter.

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Issues:
1. Realization of income-tax due from a center for Science and Technological Studies.
2. Proceedings initiated under section 226(3) of the Income-tax Act, 1961.
3. Dispute regarding the amount due from the petitioner to the defaulter.
4. Lack of opportunity for the petitioner to establish the nature of the amount shown in the balance sheet.
5. Quashing of exhibit P-4 order and directing the second respondent to afford the petitioner an opportunity to be heard.

Analysis:
The petitioner was aggrieved by the proceedings initiated by the second respondent for the realization of income-tax due from a center for Science and Technological Studies. The petitioner contended that the amount shown in the balance sheet as a loan was actually a grant adjusted in the subsequent financial year. Despite the petitioner's objections and submission of evidence, the second respondent issued a certificate directing the petitioner to pay the sum. The court noted that the petitioner was not given an opportunity to establish the nature of the amount shown in the balance sheet, leading to a lack of due process. The court held that when there is a dispute regarding liability, the respondent should provide an opportunity for the petitioner to present evidence. As such, the court quashed the exhibit P-4 order and directed the second respondent to allow the petitioner to be heard and present evidence within three months.

The respondents stated that the petitioner, as the president of the defaulter assessee, had given periodical advances apart from grants, leading to a rejection of the claim for exemption and a demand for income tax and interest. The petitioner's objection was not accepted, and he was treated as an assessee in default. The court observed that the petitioner's contention was not adequately considered, emphasizing the importance of providing an opportunity for the petitioner to dispute the liability. The court directed the second respondent to reconsider the matter after affording the petitioner a chance to present evidence supporting his claim that no amount was due from him to the defaulter.

In conclusion, the court found that the petitioner was not given a fair opportunity to contest the amount claimed due from him. The lack of a proper hearing and consideration of the petitioner's evidence led to the quashing of the exhibit P-4 order. The court emphasized the importance of due process and directed the second respondent to allow the petitioner to be heard and present evidence within a specified timeframe, ensuring a fair resolution of the dispute regarding the alleged amount due from the petitioner to the defaulter.

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