Case Law Details
Divine Chemtec Limited Vs Income Tax Department (Andhra Pradesh High Court)
In the case of Divine Chemtec Limited vs Income Tax Department, as heard in the Andhra Pradesh High Court, The court examines the penalty order issued by the National Faceless Assessment Centre, Delhi, and evaluates whether it violates the principle of natural justice.
Analysis: The petitioner, Divine Chemtec Limited, challenges the penalty order proposed by the Income Tax Department under Section 271(1)(c) of the Income Tax Act. The petitioner argues that the penalty order is unwarranted as there was neither concealment of income nor furnishing of inaccurate particulars. They contend that the revised return, filed in response to the proceedings under Section 153A of the IT Act, was accepted by the department, rendering the previous return filed under Section 139 insignificant. The petitioner asserts that the penalty proceedings were initiated based on the earlier return, which is not maintainable. The respondent, Income Tax Department, opposes the writ petition, arguing that an effective alternative remedy of appeal is available to the petitioner and that the penalty was rightfully imposed due to the petitioner’s earlier misleading return.
The court examines the contentions of both parties and reviews the record, including the reply notices submitted by the petitioner. It is observed that the crucial pleas raised by the petitioner in their reply notice dated 31.05.2021 were not adequately addressed or considered in the impugned penalty orders. The court concludes that the non-consideration of these pleas amounts to a partial violation of principles of natural justice. Furthermore, the petitioner’s request for a personal hearing was not accorded due attention. Although the availability of an alternative remedy through an appeal is generally considered a bar to filing a writ petition, the court recognizes that in cases involving violations of natural justice, the constitutional courts can entertain writ petitions despite the existence of an alternative remedy.
Conclusion: In conclusion, the Andhra Pradesh High Court sets aside the impugned penalty orders passed by the Income Tax Department and remits the case back to the department. The court directs the department to reconsider the petitioner’s reply notices, particularly the crucial contentions raised, and provide the petitioner with an opportunity for a personal hearing. The court emphasizes that the petitioner must deposit 25% of the penalty amount within six weeks of receiving the court’s order. Failure to comply will result in the cancellation of this order. It is worth noting that while an alternative remedy exists through the appeals process, the court’s decision to entertain the writ petition is justified due to the partial violation of principles of natural justice.
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