2019 (12) TMI 81 - HC - Income Tax

Court overturns payment order under Income Tax Act due to procedural unfairness. Petitioner granted new hearing opportunity.

The court set aside the order demanding payment under Section 133A(2A) of the Income Tax Act, 1961, due to the violation of principles of natural justice. ... Opportunity of personal hearing - confusion in the date and time - violation of principles of natural justice - Ex-parte order passed u/s 201(1) & 201(1A) - As contended that the said notice was received by the petitioner on 23.03.2019 at 3 p.m. and reference to the same is found in e-mail addressed by the petitioner to the Department on 23.03.2019 - as submitted that the appearance on 22.03.2019 as stipulated under Annexure-A was not possible - HELD THAT:- In light of the hearing itself being fixed on 22.03.2019 and petitioner himself receiving the notice on 23.03.2019 and also taking note of the said e-mail which was sent to the petitioner on 23.03.2019, the facts would make out a case that no sufficient opportunity for the petitioner to show cause as regards to the notice at Annexure-A, was afforded. Learned counsel appearing for the petitioner also submits that in light of the contradictory communication, there was confusion also as regards the date fixed, it is submitted that the said submission is made without prejudice to the other contentions raised. The facts as narrated above make out of a case of affording fresh opportunity to the petitioner and there after passing an order under Section 201(1) & 201(1A). In light of violation of principles of natural justice, the order at Annexure-‘D’ is set aside with a direction to pass fresh order after affording an opportunity of hearing to the petitioner. Petitioner to submit necessary reply to the show cause notice at Annexure-A within a period of one week from the date of receipt of certified copy and avail of opportunity from the authority within a week thereafter. Issues:Assessment of demand under Section 133A(2A) of Income Tax Act, 1961; Adequacy of opportunity provided to the assessee for responding to show cause notice; Violation of principles of natural justice in passing the order.Analysis:The judgment pertains to the challenge of a demand raised against the petitioner, an assessee, for an amount under Section 133A(2A) of the Income Tax Act, 1961, for the financial year 2011-12. The petitioner contested the demand on the grounds of inadequate opportunity provided to respond to the show cause notice issued on 15.03.2019. The petitioner received the notice on 23.03.2019, a day after the scheduled appearance date of 22.03.2019, which was communicated through email. The court noted that the purpose of the show cause notice is to grant a reasonable opportunity to the assessee to present their case. Given the timeline of events and the contradictory communications, the court found that the petitioner was not afforded a sufficient opportunity to respond adequately. Consequently, the order demanding payment was set aside due to the violation of principles of natural justice.The respondent authority had argued that an intimation regarding the hearing date was sent via email on 23.03.2019, extending the time until 25.03.2019, despite the order being passed on 26.03.2019. The court, however, emphasized that the critical aspect is to provide a meaningful opportunity for the assessee to reply to the notice. The confusion arising from the contradictory communications and the short timeframe between notice receipt and the hearing date led the court to conclude that a fresh opportunity should be given to the petitioner. The court directed the petitioner to submit a reply to the show cause notice within a week of receiving the certified copy and to avail an opportunity for a hearing within a week thereafter. The respondent authority was instructed to pass a fresh order following the proper hearing process. The petition was disposed of, with the contentions of the parties being kept open for future consideration.