Delhi High Court rejects penalty by Income-Tax department

Delhi High Court rejects penalty by Income-Tax department

It remanded the matter back to the authorities for a fresh judgment

The Delhi High Court has ruled that a penalty order passed by the Income-Tax department under the Income Tax Act, 1961, without considering the objections filed by the assessee, violated the principles of natural justice.

The bench comprising Justice Manmohan and Justice Dinesh Kumar Sharma quashed the penalty order and remanded the matter back to the income tax authority for fresh adjudication.

The petitioner had approached the court contending that before levying the penalty, the respondents had not taken into account his replies filed in December 2021 and also uploaded on the website early this year. He further stated that despite repeated requests, he was not granted a personal hearing in the matter by the authorities.

The division bench observed, "Upon perusal of the paper book as well as a screenshot of the Income Tax Portal pertaining to the petitioner, in particular, this court finds that the petitioner had filed his replies to the notices issued to him by the respondents. Despite the filing of the said replies, the same was not considered while passing the impugned order. In fact, the impugned order states that despite giving several opportunities the petitioner had not filed any response."

Quashing the penalty order and directing the department to consider the issue afresh, the bench relied on an earlier order wherein the court had laid down that an assessee had the right to a personal hearing if such a request was made.

It ruled, "The impugned order is set aside on the ground that it is violative of the principle of natural justice and the matter is remanded back to the respondent for fresh adjudication. The respondent shall grant a hearing to the petitioner before passing an order. The respondent is directed to decide the matter in accordance with law within twelve weeks."