THE NEW TRUCK OPERATORS UNION DORAHA vs. PRINCIPAL COMMISSIONER OF INCOME TAX-2 LUDHIANA & ANOTHER

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CWP/4732/2016HC Punjab & HaryanaPHHC01095594201605 September 2016Bench: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE AVNEESH JHINGAN2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court directed the respondents to consider the petitioner's grievance dated 02.11.2015 by passing a reasoned order. The Court noted that the impugned orders dated 26.10.2015 and 02.11.2015 would be subject to the reasoned order to be passed by the respondents. The respondents were requested to pass this order by 31.10.2016. The Court did not decide on the merits of the adjustment itself but focused on ensuring a procedural fairness by requiring a reasoned decision on the petitioner's objections. The principle established is that tax authorities must provide an opportunity of being heard before making adjustments that affect a taxpayer's refund, and their subsequent orders must address any objections raised.

What were the facts?

The petitioner, The New Truck Operators Union, Ludhiana, filed a writ petition challenging a communication dated 26.10.2015 from the Principal Commissioner of Income Tax-2, Ludhiana, which stated that the refund due for Assessment Year 2011-12 had been adjusted against an outstanding demand. The respondents' counsel clarified that the initial communication contained an inadvertent error and the refund had not been adjusted on that date. Subsequently, the petitioner's advocate raised objections on 02.11.2015, arguing the adjustment was arbitrary and made without providing an opportunity to show cause. The respondents then issued another letter on 02.11.2015, informing the petitioner that the adjustment had been made, without addressing the petitioner's objections.

What were the issues?

1. Whether the adjustment of the refund due to the petitioner for Assessment Year 2011-12 against an outstanding demand was arbitrary and contrary to law, particularly on the ground that the petitioner was not afforded an opportunity of showing cause against the proposed adjustment? Assessee's Contention: The petitioner argued that the adjustment was arbitrary and contrary to law, primarily because they were not given an opportunity to show cause against the proposed adjustment. The petitioner relied on their letter dated 02.11.2015 detailing these grievances. Revenue's Contention: The respondents' counsel initially stated that the communication dated 26.10.2015 was erroneous regarding the adjustment. They later relied on a letter dated 02.11.2015 informing the petitioner that the adjustment had been made, without addressing the petitioner's objections raised in their letter of the same date.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Sr. No.219 CWP No.4732 of 2016 Date of decision: 05.09.2016 The New Truck Operators Union, Ludhiana ....Petitioner versus Principal Commissioner of Income Tax-2, Ludhiana and another ....Respondents CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON'BLE MR. JUSTICE DEEPAK SIBAL * * * * Present:- Mr. Rajesh Gupta, Advocate for the petitioner. Mr. Z.S. Klar, Advocate for the respondents. * * * * S.J. VAZIFDAR,

CHIEF JUSTICE (ORAL)

The petitioner is aggrieved by a communication dated 26.10.2015 from the respondent stating that the refund due to the petitioner for the Assessment Year 2011-12 had been adjusted against the demand outstanding. 2. Learned counsel appearing on behalf of the respondents states that in the said communication it was inadvertently wrongly stated that the refund due to the petitioner had been adjusted. He states that the refund due had not been adjusted on that day. Subsequently, the petitioner's Advocate by a letter dated 02.11.2015 raised grievances regarding the communication dated 26.10.2015. It was contended that the adjustment was arbitrary and contrary to law inter alia on account of the petitioner not having been given an opportunity of showing cause against the proposed adjustment. Learned counsel appearing on behalf of the respondents relied upon a letter dated Jyoti Sharma 2016.09.06 10:45 I attest to the accuracy and authenticity of this document Chandigarh

CWP No.4732 of 2016 -2- 02.11.2015 from the respondents informing the petitioner that the adjustment had been made. This letter does not consider the petitioner's objection in the letter dated 02.11.2015. It merely informed the petitioner that the adjustment had been made. 3. The ends of justice would be served by directing the respondents to consider the petitioner's grievance dated 02.11.2015 by passing a reasoned order. The impugned orders dated 26.10.2015 and 02.11.2015 shall be subject to the order to be passed by the respondents pursuant to our order passed in this writ petition. The respondents are requested to pass the order by 31.10.2016. 4. Disposed of. (S.J. VAZIFDAR) CHIEF JUSTICE (DEEPAK SIBAL) JUDGE September 05, 2016 Jyoti 1 (i) Whether speaking/reasoned Yes/No (ii) Whether reportable Yes/No Jyoti Sharma 2016.09.06 10:45 I attest to the accuracy and authenticity of this document Chandigarh

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