VIRENDRA V. SHAH vs. COMMISSIONER OF INCOME TAX-II AND ORS.

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WP/10071/2009HC BombayHCBM01041501200907 December 2009Bench: HON'BLE SHRI JUSTICE J.P. DEVADHAR,HON'BLE SHRI JUSTICE V.C. DAGA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court set aside the impugned orders passed by the Commissioner of Income Tax under Section 127 of the Income Tax Act, 1961. The Court directed that these orders would be treated as show cause notices, to which the petitioners must reply within 15 days. A fresh hearing would then be conducted by an officer other than the one who passed the original orders. This new officer was directed to decide the question of transfer within four weeks of receiving the replies, ensuring that the principles of natural justice are followed and reasoned orders are passed. All contentions on merits were expressly kept open for consideration during the fresh proceedings. The petitions were allowed in terms of this order.

What were the facts?

These are a batch of writ petitions filed by various petitioners, including trusts, individuals, and private limited companies, challenging orders passed by the Commissioner of Income Tax under Section 127 of the Income Tax Act, 1961. The common thread across all petitions is that the impugned orders were allegedly passed in breach of the principles of natural justice, as the petitioners claim they were not granted an adequate opportunity of being heard. The petitions were filed in 2009. The respondents are the Commissioner of Income Tax and other revenue authorities.

What were the issues?

1. Whether the orders passed by the Commissioner of Income Tax under Section 127 of the Income Tax Act, 1961, were in breach of the principles of natural justice due to the lack of an adequate opportunity of hearing for the petitioners? (Question of law and fact, concerning Section 127 of the Income Tax Act, 1961). Assessee's contention: The primary contention of the petitioners was that the impugned orders were passed in violation of natural justice principles because they were not afforded a proper hearing. Revenue's contention: The learned counsel for the respondents, without delving into the merits or demerits of the impugned orders, submitted that the orders be set aside and treated as show cause notices. They further proposed that the matters be remanded for a fresh hearing by an officer other than the one who passed the original order.

Which sections of the Income-tax Act were involved?

Section 127

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION W.P. NO. PETITIONER RESPONDENTS 10067/2009 Sau.Sushila

Danchand Ghodawat Charitable Trust Commissioner of Income Tax & Ors. 10068/2009 Rupal V. Shah Commissioner of Income Tax & Ors. 10069/2009 Ghodawat Family Charitable Trust Commissioner of Income Tax & Ors. 10070/2009 Atul Mahadeo Shinde Commissioner of Income Tax & Ors. 10071/2009 Virendra V. Shah Commissioner of Income Tax & Ors. 10072/2009 M/s. Satartech Infra Commissioner of Income Tax & Ors. 10073/2009 M/s. Star Petro Links Commissioner of Income Tax & Ors. 9784/2009 Star Oxo Chem Pvt. Ltd. Commissioner of Income Tax & Ors. 9785/2009 Pushpa Satish Ghodawat Commissioner of Income Tax & Ors. 9786/2009 Danchand Khemraj Ghodawat Commissioner of Income Tax & Ors. 9787/2009 Shreya Exports Commissioner of Income Tax & Ors. 9788/2009 Star Flexipack Commissioner of Income Tax & Ors. 9789/2009 Neeta Sanjay Ghodawat Commissioner of Income Tax & Ors. 9790/2009 Ghodwat Energy Pvt. Ltd. Commissioner of Income Tax & Ors. 9791/2009 Danchand Khemraj Ghodawat (HUF) Commissioner of Income Tax & Ors. 9792/2009 Sanjay Danchand Ghodawat (HUF) Commissioner of Income Tax & Ors. 9793/2009 Vinod D. Ghodawat Commissioner of Income Tax & Ors. 9794/2009 Sanjay D. Ghodawat Commissioner of Income Tax & Ors. 9795/2009 Ghodawat Foods International Pvt. Ltd. Commissioner of Income Tax & Ors. 9796/2009 Vinod Dhanchand Ghodawat (HUF) Commissioner of Income Tax & Ors. 9797/2009 Satish D. Ghodawat Commissioner of Income Tax & Ors. 9798/2009 Kwality Tobacco Products Commissioner of Income Tax & Ors. 9799/2009 Ujwala Vinod Ghodawat Commissioner of Income Tax & Ors. 9800/2009 Starline Textiles Commissioner of Income Tax & Ors. 9803/2009 Shrenik Industries Commissioner of Income Tax & Ors. Ms. Aasifa Khan for petitioner in all the petitions. Mr. Vimal Gupta for respondents in all the petitions. CORAM : V.C.DAGA AND J.P.DEVADHAR, JJ.

DATED : 7TH DECEMBER, 2009.

2 P.C. :-

1.

Rule, returnable forthwith. Respondents waive service. All these petitions involved common question based on identical fact. So, this order will dispose of all these petitions. 2. Having heard learned counsel for the petitioners and learned counsel appearing for the respondents, all these petitions are directed against the order passed by the Commissioner of Income Tax under section 127 of the Income Tax Act, 1961. 3. One of the challenges to the orders impugned in all these petitions is that the orders under challenge are passed in breach of principles of natural justice since no opportunity of hearing was granted to the petitioners. 4. At the outset, the learned counsel appearing for the respondents submits that without going into the merits and / or demerits of the impugned order, it be set aside and the impugned order itself be treated as show cause notice and that all those matters be remanded back for being heard afresh by any other officer other than the Officer, who has passed the impugned order. The petitioners have no objection to follow this route. 5. In this view of the matter, we set aside the impugned order and direct that it be treated as a show cause notice in all these petitions which the petitioners shall reply within 15 days from today. The officer, other than the author of the impugned order, shall hear and decide the question of transfer within a period of 4 weeks thereafter by reasoned orders following the principles of natural justice. All rival contentions on merits are kept open. 6. All the petitions are allowed in terms of this order. Rule is accordingly made absolute with no order as to costs. (J.P.DEVADHAR, J.) (V.C.DAGA, J.)

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