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Income Tax Authority Did Not Consider The Reply Filed By Assessee; Delhi High Court Sets Aside Penalty Imposed And Directs Fresh Consideration

Parina Katyal
22 March 2022 12:04 PM GMT
Income Tax Authority Did Not Consider The Reply Filed By Assessee; Delhi High Court Sets Aside Penalty Imposed And Directs Fresh Consideration
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The Delhi High Court has ruled that a penalty order passed by the income tax authority under Section 271(1)(c) of the Income Tax Act, 1961 without granting a hearing to the assessee is violative of the principles of natural justice. The Bench, consisting of Justices Manmohan and Dinesh Kumar Sharma, quashed the penalty order and remanded the matter back to the income tax authority...

The Delhi High Court has ruled that a penalty order passed by the income tax authority under Section 271(1)(c) of the Income Tax Act, 1961 without granting a hearing to the assessee is violative of the principles of natural justice.

The Bench, consisting of Justices Manmohan and Dinesh Kumar Sharma, quashed the penalty order and remanded the matter back to the income tax authority for fresh adjudication.

The Petitioner/Assessee Mayur Batra filed a writ petition before the Delhi High Court challenging the penalty levied on him under Section 271(1)(c) of the Income Tax Act, 1961.

The Assessee contended before the High Court that the income tax authority had not considered the replies filed by the Assessee nor was a personal hearing granted to the Assessee before passing the penalty order under Section 271(1)(c) of the Act.

Section 271(1)(c) of the Income Tax Act, 1961 empowers the income tax authority to impose penalty on any person if it is satisfied that the person has concealed the particulars of his income or furnished inaccurate particulars of such income.

The High Court held that the income tax authority had not considered the replies filed by the Petitioner/Assessee to the notice issued to him under the Act while passing the penalty order under Section 271(1)(c) of the Act. The High Court noted that the Delhi High Court in the case of Bharat Aluminium Company Ltd versus Union of India (2022) had laid down that an assessee has a vested right to personal hearing and the same has to be given if such a request is made by him.

The High Court ruled that the penalty order issued under Section 271(1)(c) violated the principles of natural justice since the Assessee was not given the right to a hearing. The High Court remanded the matter back to the income tax authority for fresh adjudication and directed the tax authority to grant a hearing to the Petitioner/Assessee before passing an order.

Case Title: Mayur Batra Versus ACIT And Anr.

Citation: 2022 LiveLaw (Del) 225

Counsel For The Petitioner/Assessee: Mr. Ruchesh Sinha, Advocate

Counsel For The Respondent: Mr. Sanjay Kumar, Advocate With Ms. Easha Kadian, Advocate.

Click Here To Read/Download Order



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