Case Law Details
Durga Trading Company & Anr. Vs Deputy Director of Income Tax & Ors. (Calcutta High Court)
Introduction: In the case of Durga Trading Company & Anr. v. Deputy Director of Income Tax & Ors., the Calcutta High Court examined the validity of an income tax assessment order, focusing on the violation of natural justice. This article provides an in-depth analysis of the case and the court’s ruling.
Case Background: The core issue revolved around whether the Central Processing Centre (CPC) could propose adjustments in the Intimation under Section 143(1)(a) of the Income Tax Act, 1961, and subsequently pass an order under Section 154 without granting the petitioner an opportunity for a hearing, as stipulated in Section 154(3).
The case is relevant in scenarios where individuals are not given a reasonable opportunity for a hearing. Such instances of natural justice violation often form strong grounds for challenging orders.
Challenges and Facts: The petitioner challenged an adjustment proposed in the Intimation under Section 143(1)(a). When objections were raised against this adjustment, an intimation containing the adjustment was sent without addressing the objections. Subsequently, when the petitioner sought rectification under Section 154, the CPC not only upheld the adjustment but also increased the amount, resulting in a substantial demand.
Court’s Analysis and Ruling:
1. Violation of Natural Justice: The primary challenge focused on the violation of natural justice. The court scrutinized whether the authorities followed proper procedures and granted the petitioner an opportunity for a hearing.
2. Unjust Order: The court found the order issued by the Assessing Officer to be a “total non-speaking order” devoid of any reasoning. The absence of any explanation raised concerns about whether the Assessing Officer had applied their mind or provided an opportunity for a hearing.
Court’s Decision: The Calcutta High Court set aside the impugned order, asserting that it lacked reasoning and was passed without affording the petitioner an opportunity for a hearing. The court directed the Assessing Officer to reconsider the matter and pass a fresh speaking order, adhering to principles of natural justice. The direction aimed to ensure that the petitioner’s case was heard and proper reasoning was provided for any decisions taken.
Conclusion: The Calcutta High Court’s decision serves as a reminder of the importance of adhering to natural justice principles, particularly in matters involving income tax assessment. The case underscores the court’s commitment to fairness and transparency in administrative procedures. Natural justice violations can significantly impact the validity of assessment orders, highlighting the significance of providing individuals with a fair opportunity to present their case and objections.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Heard learned advocates appearing for the parties.
By this writ petition, petitioner has challenged the impugned order dated 9th July, 2023, passed by the Assessing Officer concerned, under Section 154 of the Income Tax Act, 1961 on the ground that the same has been passed in total non application of mind as well as in gross violation of principle of natural justice by not affording any opportunity of hearing to the petitioner before passing the aforesaid impugned order.
I have perused the aforesaid impugned order and find that in fact the impugned order is a total non speaking order since it does not contain any reason at all.
Mr. Dutt, learned advocate could not demonstrate from the aforesaid impugned order any reason, if at all, recorded by the Assessing Officer and that any opportunity of personal hearing to the petitioner was given.
Considering the facts and circumstances of this case and submission of the parties the aforesaid impugned order dated 9th July, 2023 is set aside and the matter is remanded back to the assessing officer concerned to pass a fresh speaking order in accordance with law and after giving an opportunity of hearing to the petitioner or its authorized representatives within a period of six weeks from the date of communication of this order.
With this observation and direction this writ petition being WPA 19414 of 2023 stands disposed of.
Author Bio
