Natural justice in revision proceedings: truncated hearing time under section 263 led to setting aside and remand for fresh adjudication.

A revisional order under section 263 was found unsustainable because the assessee was given only one day to respond to the show-cause notice, which the ITAT majority held was not a reasonable opportunity of hearing and breached the principles of natural justice under section 263(1). The defect did not invalidate the revision proceedings entirely; the proper course was to set aside the impugned order and remand the matter to the Principal Commissioner for fresh adjudication after granting adequate opportunity of hearing. The dissenting view differed on the merits and also favoured remand in light of deficiencies in the assessment and revisional process.

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Issues: Whether the revisionary order passed under section 263 of the Income-tax Act, 1961 was vitiated for want of adequate opportunity of hearing and, if so, whether the matter was liable to be set aside and remanded to the Principal Commissioner for fresh adjudication.

Analysis: The show-cause notice under section 263 afforded only one day to respond before the revisional order was passed. The majority held that such truncated time did not amount to a reasonable opportunity of hearing and amounted to violation of the principles of natural justice embodied in section 263(1). The majority further held that such infirmity is curable and does not extinguish the revisional proceedings; the proper course is to vacate the impugned order and restore the matter for fresh decision after granting adequate opportunity. The dissenting view differed on the merits and preferred remand after noting deficiencies in the assessment and revisional process.

Conclusion: The revision order was held to be unsustainable for breach of natural justice and was set aside, with the matter remanded to the Principal Commissioner for passing a fresh revisional order after giving sufficient opportunity of hearing to the assessee.

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