Mandatory hearing before rejection of Section 270AA application must be afforded before adverse tax consequence is sustained

Rejection of an assessee's application under Section 270AA was unsustainable because the proviso to Section 270AA(4) requires an effective opportunity of hearing before refusal. As compliance with that mandatory hearing requirement could not be shown, the rejection could not stand. The order was therefore set aside, and the assessing officer was directed to reconsider the application afresh after affording the petitioner a proper hearing.

---

---

Issues: Whether rejection of the assessee's application under Section 270AA of the Income-tax Act, 1961 was sustainable when the mandatory opportunity of hearing under the proviso to Section 270AA(4) had not been afforded.

Analysis: The challenge was founded on breach of the proviso to Section 270AA(4), which requires an effective opportunity of hearing before rejection of the application. The respondents could not demonstrate compliance with that mandatory requirement. In the circumstances, the impugned rejection could not be sustained and fresh consideration was required after hearing the petitioner.

Conclusion: The rejection order was set aside and the assessing officer was directed to pass a fresh order after affording effective opportunity of hearing to the petitioner.

---