Tax Order Overturned Due to Procedural Flaws: Court Upholds Natural Justice, Demands Transparency and Fair Process. The HC quashed the CBDT's order under Sec. 119(2)(b) of the Income Tax Act, 1961, due to procedural irregularities, including unsigned orders and ...
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Tax Order Overturned Due to Procedural Flaws: Court Upholds Natural Justice, Demands Transparency and Fair Process.
The HC quashed the CBDT's order under Sec. 119(2)(b) of the Income Tax Act, 1961, due to procedural irregularities, including unsigned orders and undisclosed reports, violating natural justice principles. The court mandated CBDT to disclose all reports to the petitioner, ensure the order is signed by the hearing Member, and permit further submissions, underscoring procedural fairness and preserving all rights and contentions.
Issues involved: The petition challenges an order passed under section 119(2)(b) of the Income Tax Act, 1961 by the Central Board of Direct Taxes regarding the condonation of delay in filing Form 10-ID to avail the beneficial tax rate under Section 115BAB.
Details of the judgment: 1. The petitioner, a joint venture between Tata Autocomp Systems Ltd. and GOTION CHINA, faced delays due to changes in the Foreign Direct Investment policy and the COVID-19 pandemic, but eventually received necessary approvals and commenced commercial production.
2. The petitioner filed its return of income for relevant assessment years and sought to be governed by Section 115BAB for the upcoming year, hence applied for condonation of delay under Section 119(2)(b) of the Act.
3. Despite a personal hearing, the impugned order was not signed by the Member who conducted the hearing, and it relied on a report from Field Authorities not provided to the petitioner, violating principles of natural justice.
4. The High Court quashed the order, directing the CBDT to provide all relevant reports to the petitioner, ensure the order is authored and signed by the Member who conducted the personal hearing, and allow further submissions before passing a reasoned order.
5. The court emphasized the importance of procedural fairness, granting the petitioner the opportunity to present their case fully before any final decision is made, with all rights and contentions preserved.
Judgment by: K. R. SHRIRAM & DR. NEELA GOKHALE, JJ.
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