M/S SUDHIR KUMAR AND COMPANY vs. PRINCIPAL COMMISSIONER OF INCME TAX AND ANOTHER

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WTAX/990/2022HC AllahabadUPHC01096566202224 July 20222 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the notice dated March 26, 2022, issued by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961, for Assessment Year 2017-18, which granted only a single day for the petitioner to submit a reply, constituted a breach of the principles of natural justice. The Tribunal found that a reasonable opportunity of hearing was not afforded to the petitioner. Consequently, the impugned order dated March 31, 2022, passed by the Principal Commissioner under Section 263, was quashed. The matter was remitted back to the Principal Commissioner to pass a fresh order in accordance with the law, after providing the petitioner with a reasonable opportunity of hearing. No other issues were expressly left undecided.

What were the facts?

The petitioner, M/s Sudhir Kumar And Company, filed a writ petition challenging an order dated March 31, 2022, and a notice dated March 26, 2022, issued by the Principal Commissioner of Income Tax (Respondent No. 1) for Assessment Year 2017-18. The petitioner sought to quash these actions and prevent further proceedings under Section 263 of the Income Tax Act, 1961, without a proper opportunity to be heard. The notice under Section 263 was issued on March 26, 2022, requiring a reply by March 28, 2022, which the petitioner argued was insufficient time. The Revenue contended that the short notice was necessitated by the impending expiry of the limitation period on March 31, 2022.

What were the issues?

1. Whether the notice dated March 26, 2022, issued by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961, for Assessment Year 2017-18, which granted only one day for the petitioner to submit a reply, was in breach of the principles of natural justice and afforded a reasonable opportunity of hearing. Assessee's Contentions: The petitioner argued that the one-day notice was practically a denial of natural justice and that they were not afforded a reasonable opportunity to be heard on merits before the impugned order was passed. They sought to quash the notice and the subsequent order. Revenue's Contentions: The respondent submitted that the Principal Commissioner was compelled to issue the notice and pass the order because the limitation for passing an order under Section 263 for Assessment Year 2017-18 was expiring on March 31, 2022.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

Court No. - 3 Case :- WRIT TAX No. - 990 of 2022 Petitioner :- M/S Sudhir Kumar And Company Respondent :- Principal Commissioner Of Incme Tax And Another Counsel for Petitioner :- Saurabh Sharma,Mahima Jaiswal,Sr. Advocate Counsel for Respondent :- Gaurav Mahajan Hon'ble Surya Prakash Kesarwani,J. Hon'ble Chandra Kumar Rai,J. Heard Sri Shambhu Chopra, learned Senior Advocate assisted by Ms. Mahima Jaiswal, learned counsel for the petitioner and Sri Gaurav Mahajan, learned Senior Standing Counsel for the respondents. This writ petition has been filed praying for the following reliefs: "(i) certiorari quashing the order passed by Respondent no.1 dated 31st March, 2022 for A.Y. 2017-18 (Annexure No.3) to the petition; (ii) certiorari quashing the notice dated March 26th, 2022 issued by Respondent No.1 for A.Y.2017-18 (Annexure No.2) to the petition; (iii) mandamus commanding the Respondent no.1 not to proceed u/s 263 in pursuance to the Notice issued u/s 263 of the Act for A.Y.2017-18 and not to pass any fresh order u/s 263 without first giving an opportunity to the petitioner to be fully heard on merits and after perusing all the evidence and material submitted by the petitioner for the assessment year in question;" With the consent of learned counsels for the parties, this writ petition is being finally disposed off without calling of counter affidavit. From the records, we find that the notice dated 26th March, 2022 was issued by the respondent no.1 i.e. Principal Commissioner of Income Tax-1, Agra, under Section 263 of the Income Tax Act, 1961 fixing the date for 28th March, 2022 requiring the petitioner to submit reply. Thus, merely a day's time was granted to the petitioner to submit reply. This is practically denial of natural justice. Sri Gaurav Mahajan, learned Senior Standing Counsel for the respondents states that the respondent no.1 was compelled to issue a notice and pass the order since the limitation was going to expire on 31st March, 2022 for Assessment Year 2017-18. In view of the facts as aforenoted, we find that the impugned order dated 31st March, 2022 has been passed by respondent no.1 i.e. Principal Commissioner of Income Tax-1, Agra, in breach of principles of natural justice and reasonable opportunity of hearing was not afforded to the petitioner, therefore, the impugned order dated 31st March, 2022 for A.Y.2017-18 passed by the respondent no.1, under Section 263 of the

Income Tax Act, 1961 is hereby quashed. The matter is remitted back to the respondent no.1 to pass afresh order in accordance with law after affording reasonable opportunity of hearing to the petitioner. The writ petition is allowed to the extent as indicated above. Order Date :- 25.7.2022 Rameez Digitally signed by RAMEEZ AHMED Date: 2022.07.26 15:51:19 IST Reason: Location: High Court of Judicature at Allahabad

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