Court sets aside Penalty order under Income Tax Act citing violation of natural justice principles

The court set aside the Penalty order under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2015-16, citing violation of natural justice principles. The petitioner's submissions were acknowledged, contradicting the claim of non-receipt of replies. Relying on precedent, the court emphasized the right to a personal hearing for the assessee. The matter was remanded for fresh adjudication, directing the respondent to provide a hearing to the petitioner within twelve weeks for a new decision. The writ petition and applications were disposed of accordingly.

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Issues:
Challenge to Penalty Order under Section 271(1)(c) of Income Tax Act, 1961 for Assessment Year 2015-16.

Analysis:

The petitioner filed a writ petition challenging the Penalty order dated 7th February, 2022 under Section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2015-16. The petitioner's counsel argued that the replies filed by the petitioner were not considered before levying the penalty, despite being submitted on specific dates. Additionally, the petitioner was not granted a personal hearing despite repeated requests. The court took note of the petitioner's submissions and found that the replies were indeed filed by the petitioner, contradicting the statement in the impugned order that no replies were received. The court referred to the case of Bharat Aluminium Company Ltd. vs. Union of India & Ors., which established that an assessee has a right to a personal hearing upon request. Consequently, the court set aside the impugned order on the grounds of violating the principles of natural justice and remanded the matter back to the respondent for fresh adjudication. The respondent was directed to grant a hearing to the petitioner before passing a new order, with a deadline of twelve weeks for the decision to be made. The writ petition and applications were disposed of with these directions.

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