Tribunal quashes tax orders for lack of notice, emphasizing assesses' right to be heard

The Tribunal allowed the appeals filed by the assesses in three cases challenging orders passed by the Principal Commissioner under section 263 of the Income Tax Act. The Tribunal found that the orders lacked jurisdiction as notices were not served to the assesses before passing the orders, depriving them of the opportunity to be heard. Relying on precedents, the Tribunal quashed the orders in all three cases, emphasizing the necessity of providing assesses with a fair chance to present their case before such orders are issued.

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Issues:
- Jurisdiction under section 263 of the Income Tax Act - Notice not served to assessee before passing order

Analysis:
1. The judgment pertains to three appeals filed by different assesses against the order passed by the Principal Commissioner of Income Tax under section 263 of the Income Tax Act. The appeals involve a common issue, and hence, they were heard together.

2. In the first appeal, the assessee challenged the order passed by the Principal Commissioner of Income Tax for Assessment Year 2010-11, stating that no notice was served on the assessee before passing the order under section 263. The assessee contended that the order lacked jurisdiction as the basic condition of providing an opportunity of being heard was not fulfilled.

3. The authorized representative highlighted that the notice issued under section 263 was returned unserved, indicating that the assessee deliberately avoided receiving it. The representative argued that the order was passed without serving any notice to the assessee, depriving them of the opportunity to be heard, which is essential under section 263.

4. The departmental representative contested the argument, stating that the assessee had appeared before the Commissioner during the proceedings under section 263, implying that the notice issue was not valid. Reference was made to section 292BB of the Act, which restricts the assessee from challenging the notice if they have participated in the assessment or reassessment proceedings.

5. After considering the contentions of both parties and reviewing the order passed by the Principal Commissioner, the Tribunal observed that no notice was served on the assessee under section 263. The Tribunal noted that the order was based on available records without providing the assessee with an opportunity to present their case. The Tribunal emphasized that the satisfaction of the Commissioner required giving the assessee a chance to contest the facts and circumstances mentioned in the notice under section 263, which was not fulfilled in this case.

6. Citing precedents from the Delhi High Court and the Rajasthan High Court, the Tribunal concluded that the order passed by the Principal Commissioner under section 263 was not sustainable in law due to the absence of serving a notice and providing an opportunity to the assessee. Consequently, the Tribunal quashed the order and allowed the appeal of the assessee.

7. The Tribunal allowed the appeal filed by the assessee for Assessment Year 2010-11 in the first case (ITA No. 2388/Del/2017) based on the jurisdictional issue and lack of notice served to the assessee.

8. In the subsequent appeals (ITA No. 2389/Del/2017 and ITA No. 2390/Del/2017), similar facts were observed where the Principal Commissioner passed orders under section 263 without serving any notice to the assesses. Following the decision in the first appeal, the Tribunal quashed the orders in these cases as well, allowing the grounds raised by the assesses.

9. Consequently, the appeals filed by the assesses in all three cases were allowed by the Tribunal, emphasizing the importance of providing a fair opportunity of being heard before passing orders under section 263 of the Income Tax Act.

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