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High Court overturns tax order, citing lack of natural justice. Commissioner to review, grant hearing. The High Court set aside the order under section 264 of the Income Tax Act, 1961, due to a violation of natural justice for not considering the ...
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High Court overturns tax order, citing lack of natural justice. Commissioner to review, grant hearing.
The High Court set aside the order under section 264 of the Income Tax Act, 1961, due to a violation of natural justice for not considering the petitioner's objection before passing the order. The court directed the Commissioner to reconsider the case, issue a reasoned order, and grant a hearing to the petitioner within eight weeks. The court emphasized the significance of upholding natural justice principles and allowing the petitioner a fair chance to present their case. The court did not assess the merits of the case, leaving the Commissioner to decide on the objection at hand.
Issues: Challenging order under section 264 of the Income Tax Act, 1961 for not considering petitioner's objection before passing the order.
Analysis: The petitioner challenged the order dated 29.3.2021 passed by the Principal Commissioner of Income Tax, Kolkata-2 under section 264 of the Income Tax Act, 1961, alleging a violation of natural justice as the objection dated 26th March, 2021 was not considered before passing the order. The respondent Income Tax authority argued that despite receiving a show-cause notice and fixing a time limit for response, no reply was received from the petitioner until 26th March, 2021. The draft order was approved for uploading on 29th March, 2021, citing it as a time-barring matter. The court noted that the relevant assessment order to be revised was received by the petitioner on 4th February, 2020, and the limitation period was two years from that date, expiring on 3rd February, 2022. The court found that there was sufficient time available for the Commissioner to consider the petitioner's objection before passing the order on 29th March, 2021, and concluded that the objection should have been taken into account.
The High Court set aside the impugned order dated 29th March, 2021, on the grounds of violation of principles of natural justice for not considering the petitioner's objection before passing the order. The court directed the Commissioner to reconsider the petitioner's case, pass a reasoned order strictly in accordance with the law, and provide an opportunity for a hearing to the petitioner or its authorized representative within eight weeks from the date of the court's communication. Importantly, the court clarified that it did not delve into the merits of the case, leaving the respondent Commissioner free to decide on the objection by applying judicial discretion.
In conclusion, the writ petition challenging the order under section 264 of the Income Tax Act, 1961 was disposed of by the High Court, emphasizing the importance of adhering to principles of natural justice and providing an opportunity for the petitioner to present their case before passing any consequential orders.
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