Appeal partially allowed due to violation of natural justice principles during lockdown.

The Tribunal partly allowed the appeal, finding that the Principal Commissioner of Income Tax's order under Section 263 was invalid due to a violation of natural justice principles during the Covid-19 lockdown. The Tribunal emphasized the necessity of affording the assessee a reasonable opportunity to be heard before making such decisions and directed a fresh order to be passed considering the assessee's submissions.

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Issues:
Validity of Revision Order Passed by PCIT under Section 263 of the Act

Analysis:
The appeal was filed against the order of the Principal Commissioner of Income Tax (Appeals) for the Assessment Year 2015-16. The grounds raised by the assessee included challenges to the validity of the order passed by the PCIT under Section 263 of the Act. The PCIT found that the assessee had incurred expenses in cash in violation of section 40A(3) and made donations that required disallowance, which were not examined by the Assessing Officer. The PCIT issued a show cause notice on 20.03.2020, and subsequently passed an order on 30.03.2020 setting aside the assessment order and directing a redo of the assessment. The assessee contended that the PCIT violated principles of natural justice by not providing a reasonable opportunity to be heard, especially during the nationwide lockdown due to the Covid-19 pandemic.

The PCIT granted only one opportunity for the assessee to explain, which was during the lockdown period. The Tribunal found that the PCIT's actions were in violation of natural justice principles, as the assessee was unable to respond to the show cause notice due to the lockdown. The Tribunal set aside the PCIT's order and directed a fresh order to be passed after affording a reasonable opportunity of hearing to the assessee. The appeal was partly allowed for statistical purposes.

In conclusion, the Tribunal found that the PCIT's order under Section 263 of the Act was invalid due to the violation of natural justice principles, particularly during the Covid-19 lockdown period. The Tribunal emphasized the importance of providing a reasonable opportunity for the assessee to be heard before passing such orders, and directed a fresh order to be passed after considering the assessee's submissions.

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