The Karnataka High Court has ruled in favor of Toyota Industries Engine India Private Limited, setting aside an income tax assessment order that was challenged on grounds of procedural unfairness and violation of natural justice principles.
The petitioner, represented by T Suryanarayana, argued that the impugned order was passed without considering their request for an adjournment. Toyota Industries had requested an adjournment on March 14, 2024, as they were unable to attend the scheduled hearing, seeking a rescheduling to a date after April 15, 2024.
Despite this request, the First Appellate Authority disposed of the appeal on March 18, 2024, without granting the adjournment.
The order of the First Appellate Authority noted, “no adjournment petition has been filed,” and proceeded to finalise the proceedings based on the available material, concluding that the appellant had nothing further to furnish.
The bench observed that, “the First Appellate Authority has disposed of the appeal and while doing so, while dealing with the response of the assessee, has observed “no adjournment petition has been filed. Therefore, there is no other option but to finalise the proceedings based on material available on record.” There is further observation, which reads as follows:
“Hence, it is apparent that the Appellant has nothing to furnish on the specific query made
u/s 250(4) and I proceed to dispose of the Appeal”.”
The Single Bench of S Sunil Dutt Yadav observed that the refusal to consider the adjournment request constituted a violation of natural justice principles, thereby causing prejudice to the petitioner. Justice S Sunil Dutt Yadav highlighted that the adjournment request was evidenced by undisputed communication and should have been acknowledged.
The High Court of Karnataka, therefore, set aside the impugned order and directed the Commissioner of Income Tax to rehear the appeal, providing Toyota Industries with a fair opportunity to present their case. The court also stated that all contentions remain open for future deliberations.
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