INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - No opportunity of being heard given to assessee -

Pr. CIT invoked jurisdiction under section 263 and treated order passed by AO as erroneous and prejudicial to the interest of revenue. Assessee challenged this on the ground of no opportunity of being heard given to assessee. Held: Right to fair hearing is guaranteed right to an assessee and thus granting of effective opportunity is sine qua non in section 263 for setting aside a statutory order. Notice of hearing which was issued by office of Pr. CIT to the assessee was dated 18-3-2021 wherein the matter for final hearing was fixed on 24-3-2021 at 6.04 P.M. However, on 24-3-2021, assessee requested for seeking some more time for engaging and for submitting documents. However, Pr. CIT did not consider request of assessee and passed order on 31-3-2021 itself. As per facts of case, assessee was not afforded opportunity much less sufficient opportunity to give the reply to the show cause notice. Therefore it was clear that Pr. CIT in a hurriedly manner without affording opportunity of hearing to assessee, passed impugned order by violating principles of audi alteram partem. Accordingly, order passed under section 263 was set aside.

Distinguished:Deniel Merchants P. Ltd. & Anr. v. ITO & Anr in Special Leave Petition No. 23976/2017 dated 29-11-2017 : 2017 TaxPub(DT) 5217 (SC) and Jaidurga Minerals v. Pr. CIT and Jagnnath Prasad Bhargva v. Lal Nathimal AIR 1943 All 17.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

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