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. The petitioner was found to have not been afforded a sufficient opportunity to respond adequately to the show cause notice, as there were contradictory communications and a short timeframe between notice receipt and the hearing date. The court directed the petitioner to submit a reply within a week of receiving the certified copy, avail a hearing opportunity within a week thereafter, and instructed the respondent authority to pass a fresh order following the proper hearing process.

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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.

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