2025 (4) TMI 353 - HC - Income Tax

Review application succeeds as reassessment order violated natural justice when revenue misrepresented attendance at hearing

Calcutta HC allowed a review application where petitioner challenged reassessment proceedings. The court found apparent errors on record as the original ... Review application - Petitioner contended that it was not intimated about the initiation of reassessment proceedings or given an opportunity to present its case - Errors apparent on the face of the record, primarily on the grounds that the order incorrectly recorded that the Revenue was represented during the hearing, whereas no such representation was made - HELD THAT:- Belated communication effectively deprived the petitioner of its right to submit a response, thereby constituting a violation to the principle of audi alteram partem. Additionally, the order states that 'learned advocates appearing for the parties were heard,' which is factually incorrect, as the Advocate-on-Record for the petitioner was not afforded an opportunity to advance arguments. These material discrepancies constitute manifest errors on the face of the record, justifying the invocation of this Court’s review jurisdiction. Rejection of the writ petition on the premise that an alternative statutory remedy was available - Existence of an appellate or alternate remedy does not operate as an absolute bar to the exercise of writ jurisdiction, particularly where there has been a breach of principles of natural justice. Hon’ble Supreme Court, as well as various High Courts, have consistently held that where an order is passed in derogation of fundamental procedural safeguards, the writ court is vested with the authority to intervene under Article 226 of the Constitution of India. It is pertinent to note that the petitioner had sought an adjournment on legitimate grounds, as its counsel was engaged in another matter before a different bench of this Hon’ble Court. The refusal to grant such adjournment resulted in manifest prejudice against the petitioner, effectively depriving it of a reasonable opportunity to defend its case. This Court is of the considered view that in cases where substantive rights of a party are impacted due to serious procedural irregularities, the imperative of affording a fair opportunity to be heard must be scrupulously observed. Review petition is maintainable. It is evident that the impugned order suffers from apparent errors, which, if left uncorrected, would result in grave injustice. The refusal to grant the petitioner a fair opportunity to present its case constitutes a procedural irregularity warranting review. The entire concept of writ jurisdiction is founded on equity and fairness, and therefore, it is the duty of the Court to ensure that no miscarriage of justice occurs due to a procedural lapse. Accordingly, this Court finds merit in the review application. Consequently, the order is recalled and the writ petition being is restored for fresh adjudication. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include: Whether the principles of natural justice were violated due to the lack of notice and opportunity to be heard in the reassessment proceedings initiated against the petitioner. Whether the existence of an alternative statutory remedy precludes the exercise of writ jurisdiction under Article 226 of the Constitution of India. Whether the refusal to grant an adjournment constituted a procedural irregularity justifying a review of the initial dismissal order. Whether the errors apparent on the face of the record warrant the invocation of the court's review jurisdiction.2. ISSUE-WISE DETAILED ANALYSISViolation of Natural Justice: Relevant legal framework and precedents: The principle of audi alteram partem, a fundamental aspect of natural justice, mandates that no party should suffer adverse consequences without being given an opportunity to be heard. The court referenced precedents such as Kishori Prasad v. Union of India, emphasizing the necessity of fair hearing and effective representation. Court's interpretation and reasoning: The court determined that the petitioner was not duly informed about the reassessment proceedings, receiving notice only on February 27, 2024. This delay prevented the petitioner from presenting objections, constituting a breach of natural justice. Key evidence and findings: The court noted discrepancies in the record, particularly the incorrect assertion that both parties' advocates were heard, when in fact, the petitioner's counsel was not given a chance to argue. Application of law to facts: The court applied the principles of natural justice to find that the lack of notice and hearing deprived the petitioner of a fair opportunity to defend its case. Treatment of competing arguments: The court acknowledged the petitioner's argument that the absence of a fair hearing justified a review, especially given the factual inaccuracies in the initial order. Conclusions: The court concluded that the violation of natural justice principles warranted a review of the initial dismissal order.Existence of Alternative Remedy: Relevant legal framework and precedents: The court referred to established legal principles that the existence of an alternative remedy does not bar writ jurisdiction, particularly in cases involving procedural irregularities. Court's interpretation and reasoning: The court emphasized that the availability of an appellate remedy does not preclude the exercise of writ jurisdiction when fundamental procedural safeguards are breached. Key evidence and findings: The court found that the initial dismissal of the writ petition on the grounds of an alternative remedy overlooked the procedural violations alleged by the petitioner. Application of law to facts: The court applied the principles from precedents like Indian Oil Corporation Ltd. v. Sarvesh Kumar, affirming that writ jurisdiction is appropriate in cases of natural justice violations. Treatment of competing arguments: The court considered the petitioner's reliance on judicial precedents supporting the invocation of writ jurisdiction despite alternative remedies. Conclusions: The court held that the presence of an alternative remedy did not bar the writ petition, given the procedural irregularities.Refusal to Grant Adjournment: Relevant legal framework and precedents: The court referenced the principle that procedural fairness necessitates granting adjournments on legitimate grounds to prevent prejudice. Court's interpretation and reasoning: The court found that the refusal to grant an adjournment, despite the petitioner's counsel being engaged elsewhere, resulted in undue prejudice. Key evidence and findings: The court noted the petitioner's genuine request for adjournment due to conflicting engagements, which was unreasonably denied. Application of law to facts: The court applied the principles of procedural fairness to determine that the refusal to adjourn constituted a procedural irregularity. Treatment of competing arguments: The court considered the petitioner's argument that the denial of adjournment deprived it of a fair opportunity to present its case. Conclusions: The court concluded that the refusal to grant adjournment justified a review of the initial order.Errors Apparent on the Face of the Record: Relevant legal framework and precedents: The court cited Board of Control for Cricket in India v. Netaji Cricket Club, emphasizing that errors apparent on the face of the record justify review. Court's interpretation and reasoning: The court identified factual inaccuracies in the initial order, such as the incorrect recording of parties' representation, as errors warranting review. Key evidence and findings: The court highlighted the incorrect statement in the order that both parties' advocates were heard, which was factually inaccurate. Application of law to facts: The court applied the principles from precedents to find that the factual errors justified invoking review jurisdiction. Treatment of competing arguments: The court considered the petitioner's argument that the factual inaccuracies constituted errors apparent on the face of the record. Conclusions: The court held that the errors justified a review, as they would result in grave injustice if left uncorrected.3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The court emphasized: 'It is a cardinal tenet of the principle of natural justice that no party should suffer adverse consequences without being afforded an opportunity of being heard.' Core principles established: The court reaffirmed the principles that natural justice violations, procedural irregularities, and errors apparent on the face of the record justify invoking writ and review jurisdiction. Final determinations on each issue: The court allowed the review application, recalling the order dated April 9, 2024, and restoring the writ petition for fresh adjudication, granting the petitioner a fair opportunity to present its case.