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Natural justice upheld in Section 142(2A) order, no hearing granted. Court rules in favor of Petitioner (2A) The Court held that principles of natural justice apply to Section 142(2A) orders, emphasizing the importance of providing an opportunity for the assessee ...
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Natural justice upheld in Section 142(2A) order, no hearing granted. Court rules in favor of Petitioner (2A)
The Court held that principles of natural justice apply to Section 142(2A) orders, emphasizing the importance of providing an opportunity for the assessee to be heard. As no hearing was granted to the Petitioner before the order was issued, the Court ruled in favor of the Petitioner, allowing the Writ Petition and making the Rule absolute in their favor without costs.
Issues: Challenge to order under Section 142(2A) of the Income Tax Act, 1961 without opportunity of hearing.
Analysis: 1. The Petitioner, a Partnership Firm engaged in manufacturing, filed its return for the assessment year 2002-03, which was accepted. Subsequently, Respondent No.1 issued a notice under Section 142(2A) directing the accounts to be audited by a Special Auditor, without providing an opportunity of hearing to the Petitioner.
2. The Petitioner's main grievance was the lack of opportunity of hearing before the order under Section 142(2A) was passed. The Respondents argued that there is no legal requirement to provide a hearing under this section, as it is based on the subjective satisfaction of the Assessing Officer and the Commissioner of Income Tax.
3. Section 142(2A) was amended with a proviso effective from 1 June 2007, stating that the Assessing Officer must give the assessee a reasonable opportunity of being heard before directing an audit. However, the Supreme Court in the case of Rajesh Kumar clarified that the requirement of hearing was implicit even before the amendment.
4. The Supreme Court held in the case of Rajesh Kumar that the principles of natural justice apply to Section 142(2A) orders, as they have civil consequences for the assessee. The Court emphasized the importance of providing an opportunity for the assessee to be heard before passing such orders.
5. In the present case, as no hearing was provided to the Petitioner before the order under Section 142(2A) was issued, the Court held that the Petitioner is entitled to succeed. Consequently, the Writ Petition was allowed, and the Rule was made absolute in favor of the Petitioner without costs.
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