SEVA SAHAKARI SAMITI MARYADIT SIRIYAGARH,SIRIYAGARH vs. INCOME TAX OFFICER, WARD JANJGIR CHAMPA, JANJGIR CHAMPA

The contention in law assailed by the Ld. Counsel for the assessee emanates from Ground of appeal No.6 which is extracted as follows: “6. Ground No. VI That the impugned assessment order has been passed after seeking the direction of the Ld. Addl. Commissioner of Income Tax, Range-2, Bilaspur, however, no prior opportunity of being heard is given to the appellant before issuing such directions which are prejudicial to the interest of the appellant which is highly illegal, against the express provisions of law, bad in law, vitiated and hence, it is hereby requested that the assessment order may please be quashed and annulled on this ground alone.”

The Ld. Counsel for the assessee assailing the aforesaid ground has brought to the notice of the Bench to Section 144A a/w. proviso which reads as follows:

Referring to the said provision, the Ld. Counsel for the assessee submitted that a Joint Commissioner on his own motion or on a reference being made by the Assessing Officer or on the application of an assessee, can provide directions as he thinks fit for the guidance of the Assessing Officer to complete the assessment and such directions shall be binding on the Assessing Officer. Further, “1st proviso” states that any directions which are prejudicial to the assessee shall be issued only when an opportunity of being heard provided to the assessee. In other words, no directions which are prejudicial to the assessee can be given by Joint Commissioner without providing an opportunity of being heard to the assessee and that hearing shall take place before the Joint Commissioner himself. Explanation further states that if direction is given only regarding an investigation connected with the assessment, such direction for investigation will not be considered prejudicial to the assessee.

The Ld. Counsel for the assessee further referred to the assessment order and demonstrated at Page 10, Para 16 of the said order wherein, the Addl. CIT, Range-2, Bilaspur had issued specific directions to the A.O where he writes “On perusal of the record, it was found that the assessee has deposited Rs.1,00,342/-, Rs.13,02,405/- and Rs.52,560/- during the period of demonetization, source of which was not explained. Hence it is established that the cash deposits amounting to Rs.14,55,307/- is nothing but undisclosed income and is liable to be added u/s.69A of the IT Act, 1961 in the hands of the assessee. In view of the above facts, assessment u/s 144 has to be completed on the basis of material available on record. Penal proceedings may be initiated accordingly. Any other bank account of any nature appearing in the name of the assessee also to be taken into account while completing the assessment. Any other income earned by the assessee including interest income etc. during the year under consideration may be taken into account. Business income of the assessee may be estimated by applying net profit rate of 5% on the turnover of the business of the assessee as disclosed.”

The Ld. Counsel for the assessee, therefore, submitted that the directions were prejudicial to the assessee since it enhanced the tax liability of the assessee, therefore, it was mandatory for the Addl. CIT, Range-2, Bilaspur to follow mandate of “1st proviso” to Section 144A of the Act wherein the statute itself states compliance of ‘principles of natural

Per contra, the Ld. Sr. DR relied on the orders of the sub-ordinate authorities.

In the present case, we find that no such opportunity of hearing has been provided to the assessee by the Joint Commissioner, hence, there is violation of the “1st proviso” to Section 144A of the Act. The Hon’ble Supreme Court has consistently emphasized the importance of adequate natural justice in the judicial and quasi-judicial proceedings. This principle ensures fairness, reasonableness and due process preventing arbitrary action and upholding fundamentality of the legal process. In the case of Maneka Gandhi Vs. Union of India (UOI) and Ors. AIR 1978 SC 597, the Hon’ble Apex Court expanded the scope of natural justice holding that any action violating fairness, reasonableness and due process is arbitrary and unconstitutional. In the case of State of Orissa Vs. Dr. (Miss) Binapani Dei, 1967 AIR 1269, the Hon’ble Apex Court has established that even

The right to be heard is the cornerstone of natural justice and in this regard in the case before the Hon’ble Uttarakhand High Court in 2022 regarding a practising advocate, Dushyant Mainali (CLR No.22/2022) wherein the Hon’ble High Court had observed that the said advocate Mainali was accused of professional misconduct for allegedly misleading the litigant and causing the delay in filing revisional petition. The Hon’ble High Court directed the Bar Counsel of Uttarakhand to initiate disciplinary proceedings against the lawyer. Mainali challenged these remarks before the Hon’ble Supreme Court, contending that he was neither a party to the case before the High Court nor was involved in any capacity. The remarks, therefore, not only tarnished his professional reputation but were also made in clear violation of the principles of natural justice. The Hon’ble Apex Court in Civil Appeal No.15191/2022, arising out of a Special Leave Petition filed by Dushyant Mainali examined the Hon’ble High Court’s order and found the approach to be legally untenable. Hon’ble Justice Gavai (as he was at that time) speaking for the bench, noted that

The Hon’ble Supreme Court in the case of CIT Vs. Amitabh Bachhan (2016) 384 ITR 200 (SC) while upholding the mandatory requirement for adhering to the principles of natural justice, in any proceedings by a quasi-judicial authority also referred to the decision in the case of the C.I.T., West Bengal, II, Calcutta Vs. M/s. Electro House, (1972) 82 ITR 824 (SC), wherein it was held and observed that a breach of principles of natural justice effects the legality of the order. Any contravention of the principles of natural justice vitiates the order passed by the authority. Accordingly, the Hon’ble Apex Court has ruled that it is mandatory to provide an opportunity to the assessee to be heard on all issues especially where conclusions are drawn adverse to the assessee.

That decisive factors in all the aforesaid judicial pronouncements is that principles of natural justice has to be duly complied with and no action prejudicial to any person can be taken by any authority without providing him a fair and reasonable opportunity of being heard. In the

Since assessment itself is quashed, subsequent proceedings are non- est as per law. Rest any other grounds are academic only.

As per above terms, the appeal of the assessee is allowed.

गाड� फ़ाइल / Guard File. आदेशानुसार / BY ORDER, SAMIRAN Digitally signed by SAMIRAN BERA // True Copy // BERA Date: 2026.11.04 Senior Private Secretary 16:04:03 +05'30' आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.