High Court grants writ petition partially due to lack of opportunity for natural justice, sets aside orders for reconsideration.

The High Court allowed the writ petition in part, solely on the ground of lack of opportunity and speaking order. The court found that the respondent's actions violated principles of natural justice by not affording the petitioners a chance to present their case for interim relief. The impugned communications and orders were set aside, and the matter was remitted back to the respondent for reconsideration with a directive to decide in accordance with the law promptly. The petitioners were instructed to appear before the respondent with a written statement, if any, on a specified date for further proceedings.

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Issues:
Assailing the correctness of impugned communications and notices under the Income-tax Act, 1961, lack of opportunity and speaking order, compliance with principles of natural justice.

Analysis:
The petitioners challenged the communication and notices issued by the respondent under the Income-tax Act, 1961, seeking to quash the proceedings initiated against them. The petitioners' grievance was that their application seeking a stay of the demand notice was not considered by the respondent, who proceeded to issue the impugned communications and orders without affording them an opportunity or passing a speaking order. The petitioners contended that they could have substantiated their entitlement for interim relief if given a chance. The High Court observed that the respondent's actions were in violation of the circulars requiring the passing of speaking orders and affording reasonable opportunity to the petitioners. The court emphasized that quasi-judicial authorities must adhere to the principles of natural justice and pass speaking orders. Thus, the court allowed the writ petition in part solely on the ground of lack of opportunity and speaking order.

The High Court, after careful perusal of the impugned communications and directions, found that the respondent had erred in rejecting the petitioners' prayer and issuing unilateral directions to the bank without affording a reasonable opportunity to the petitioners. The court held that the impugned communications and orders could not be sustained due to the violation of principles of natural justice. Therefore, the court set aside the communication issued in favor of the petitioners and the directions to the bank. The matter was remitted back to the respondent for reconsideration with a direction to make a decision in accordance with the law and dispose of the issue expeditiously. The petitioners were directed to appear before the respondent along with a written statement, if any, on a specified date. The respondent was instructed to give further dates if necessary and proceed to pass orders in compliance with the directions of the court.

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