STAR OXO CHEM PVT. LTD. vs. COMMISSIONER OF INCOME TAX-II AND ORS.

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WP/9784/2009HC BombayHCBM07039752200907 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 file their replies within 15 days. A new officer, distinct from the one who passed the original orders, was directed to hear and decide the question of transfer within four weeks thereafter. This decision was to be made through reasoned orders, strictly adhering to the principles of natural justice. The Court explicitly kept all rival contentions on merits open for consideration during the fresh proceedings. The petitions were allowed in terms of this order, with the rule made absolute and no order as to costs.

What were the facts?

These are a batch of writ petitions filed by various petitioners, including trusts and individuals, challenging orders passed by the Commissioner of Income Tax under Section 127 of the Income Tax Act, 1961. The core of the challenge across all petitions is that the impugned orders were passed in violation of the principles of natural justice, specifically alleging that no opportunity of hearing was granted to the petitioners before the orders were issued. The petitions involve common questions of law and fact, necessitating a consolidated disposal.

What were the issues?

1. Whether the orders passed by the Commissioner of Income Tax under Section 127 of the Income Tax Act, 1961, are liable to be set aside for being passed in breach of the principles of natural justice, specifically for not granting an opportunity of hearing to the petitioners? (Question of law and fact, concerning Section 127 of the Income Tax Act, 1961). Assessee's Contention: The orders were passed in violation of natural justice as no hearing was provided. Revenue's Contention: The revenue, through its counsel, conceded that the impugned orders should be set aside without going into their merits or demerits. They proposed that the impugned orders be treated as show cause notices and the matters be remanded for fresh hearing by an officer other than the one who passed the original order. The petitioners agreed to this course of action.

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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