SHRI ANUJJ MALHOTRA vs. PRINCIPAL COMMISSIONER OF INCOME TAX AND ANOTHER

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WTAX/992/2022HC AllahabadUPHC01096525202224 July 20222 pages
AI SummaryRemanded

What did the High Court hold?

The Tribunal held that the notice dated March 28, 2022, issued by the Principal Commissioner of Income Tax under Section 263, which required the petitioner to submit a reply by March 30, 2022, granted an unreasonably short period of one day. This action was found to be a breach of the principles of natural justice and denied the petitioner a reasonable opportunity of hearing. Consequently, the impugned order dated March 31, 2022, passed by the Principal Commissioner of Income Tax for AY 2017-18 under Section 263 of the Income Tax Act, 1961, was quashed. The matter was remitted back to the Principal Commissioner of Income Tax to pass a fresh order in accordance with the law after affording a reasonable opportunity of hearing to the petitioner. The writ petition was allowed to this extent.

What were the facts?

The petitioner, Shri Anujj Malhotra, filed a writ petition challenging an order passed under Section 263 of the Income Tax Act, 1961, by the Principal Commissioner of Income Tax (Respondent No. 1) for Assessment Year 2017-2018. The petitioner also challenged the notice issued under Section 263. The notice dated March 28, 2022, required the petitioner to submit a reply by March 30, 2022, granting only one day's time. The revenue contended that the notice and subsequent order were necessitated by the impending expiry of the limitation period on March 31, 2022.

What were the issues?

1. Whether the order passed under Section 263 of the Income Tax Act, 1961, by the Principal Commissioner of Income Tax for AY 2017-2018 is liable to be quashed on the grounds of breach of natural justice and denial of a reasonable opportunity of hearing to the petitioner? Assessee's Contention: The petitioner argued that the notice issued under Section 263 provided an unreasonably short period of one day for submitting a reply, thus violating the principles of natural justice and denying a reasonable opportunity to be heard. The petitioner sought to quash the notice and the consequent order. Revenue's Contention: The respondent revenue argued that the notice and order were issued under compulsion due to the limitation period expiring on March 31, 2022, for the Assessment Year 2017-18.

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. - 992 of 2022 Petitioner :- Shri Anujj Malhotra Respondent :- Principal Commissioner Of Income 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 u/s 263 passed by Respondent no.1 dated 31st March, 2022 for A.Y.2017-2018 (Annexure No.3) to the petition (ii) certiorari quashing the notice dated March 28th, 2022 issued by Respondent No.1 for A.Y.2017-2018 (Annexure No.2) to the petition; (iii) madamus 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. 2017-2018 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 materials 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 28th 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 30th 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 15:51:21 IST Reason: Location: High Court of Judicature at Allahabad

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