2011 (11) TMI 274 - HC - Income Tax

Division Bench remands case for fair hearing, nullifies ex-parte order.

The Division Bench remanded the matter back to the Settlement Commission for a fresh decision in accordance with the law, emphasizing the importance of ... Whether the Settlement Commission was justified in passing ex-parte order in favour of assessee without giving proper opportunity of hearing to both the sides – Held that:- In view of decision in case of CIT v. Anil Hastkala (P) Ltd [2009 (8) TMI 767 - Rajasthan High Court] - wherein it was held that if impugned order of Settlement commission u/s 245-D(4) is held to be legally unsustainable, in such an eventuality, matters are to be remitted back to settlement commission to examine afresh. Thus, the order is set aside & matter is remanded back to the Settlement Commission for decision afresh in accordance with law – Decided in favor of Revenue Issues:1. Justification of Settlement Commission passing ex-parte order without proper hearing.2. Remand of the matter back to Settlement Commission for fresh decision in accordance with the law.Analysis:1. The primary issue in this case revolves around whether the Settlement Commission, as per the provisions of the Income Tax Act, was justified in issuing an ex-parte order in favor of the assessee without providing adequate opportunity for both parties to present their case. The judgment refers to previous decisions where a coordinate bench remanded similar matters back to the Settlement Commission for fresh consideration in line with Section 245 D of the Act. The judgment in the case of Anil Hastkala (P) Ltd. highlighted the need for proper compliance with legal procedures and the importance of affording both parties a fair hearing before reaching a decision.2. The Division Bench further elaborated on the issue by emphasizing that the Settlement Commission failed to provide an opportunity for hearing to either party, leading to a violation of Section 245D(4) of the Act. The judgment emphasized that the Settlement Commission's actions were in flagrant violation of legal provisions, rendering the orders null and void. The Bench stressed the quasi-judicial nature of the Settlement Commission's obligations and highlighted the significance of adhering to procedural safeguards. The judgment underscored that the Settlement Commission's powers must be exercised in accordance with the law, without compromising the statutory requirements related to tax assessment and payment.3. The judges referenced previous legal decisions to support the argument that the Settlement Commission must act within the framework of the Income Tax Act and ensure compliance with mandatory provisions. The judgment highlighted the objective of the Settlement Commission in facilitating fair and prompt resolution of tax matters while upholding the integrity of the legal process. The judges emphasized the importance of striking a balance between expeditious resolution and strict adherence to legal requirements, noting that any violation of statutory provisions cannot be condoned. Ultimately, the judgment concluded that the cases under consideration needed to be reheard by the Settlement Commission to ensure compliance with Section 245D(4) of the Act.In conclusion, the judgment underscores the critical importance of procedural fairness and legal compliance in the functioning of the Settlement Commission under the Income Tax Act. The decision highlights the need for thorough adherence to statutory provisions and the significance of affording both parties a fair opportunity to present their case before reaching a conclusion.