Bhagyanagar India Ltd. Vs PCIT (Telangana High Court)
The Telangana High Court set aside orders passed under Sections 127 and 263 of the Income Tax Act after finding that the proceedings were conducted in undue haste and without affording the assessee a fair and reasonable opportunity of hearing. The Court noted that although objections had been filed against the proposed transfer of jurisdiction under Section 127, no further hearing was granted and the transfer order was not properly served upon the assessee. It also observed irregularities in the Section 263 proceedings, including the issuance of two show cause notices prescribing different hearing dates, which indicated a hurried approach by the authorities. Significantly, the Court took into account that the proceedings occurred during the peak COVID-19 period, when business operations and movement were severely restricted. Holding that the actions violated principles of natural justice, the Court quashed both orders while granting liberty to the department to initiate fresh proceedings in accordance with law.
Core Issue. Whether orders passed under sections 127 and 263 during the peak COVID-19 period could be sustained when the assessee was not afforded a fair and reasonable opportunity of hearing, resulting in violation of principles of natural justice.
