Income Tax Dept Blatantly Violating Natural Justice Principles, Taxpayers cannot Suffer and Put to Harassment: Allahabad HC Imposes Cost of Rs. 50,000 [Read Order]

The Allahabad High Court has expressly criticized the income tax department for violating the principles of natural justice blindly and harassing taxpayers. While considering a petition challenging an order under section 148A(d) of the Income Tax Act, 1961, a bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji directed the department to immediately remove the shortcomings on the income tax portal.

The petitioner, Nabco Products Private Limited pleaded before the Court that the impugned order has been passed by the respondents arbitrarily and in gross violation of the principles of natural justice.

After hearing arguments from both sides, the Court observed that “We are frequently coming across cases where Income Tax Authorities are giving complete go by to the principles of natural justice. The excuse orally being set up usually by the departmental counsels is that there is some problem in the computerisation system which is solely controlled by the respondent no.1 i.e. the Central Board of Direct Taxes, New Delhi, and they can not, at their own, correct the system.”

Quashing the order, the bench imposed a cost of Rs. 50,000 on the department and held that “Be as it may, the system has been introduced and is being implemented by the respondents and, therefore, it is their primary duty to immediately remove short comings, if any, in the system. For own wrongs of the respondents, the assessee can not be allowed to suffer and put to harassment. Prevailing state of affairs clearly reflects that in the absence of any effective system of accountability of the erring officers, the harassment of the assessees and breach of principles of natural justice by the Officers is resulting in uncontrolled situation. The practice of frequently violating principles of natural justice, non consideration of replies of assessees under one pretext or the other or rejecting it with one or two lines orders without recording reasons for rejection, is gradually increasing which needs to be taken care of immediately by the respondents at the highest level, otherwise prevailing situation of arbitrary approach and breach of principles of natural justice may not only adversely affect the assessees who pay revenue to the Government, but also may develop a perception amongst people/assessees that it is difficult to get justice from the authorities in statutory proceedings.”

Advocates Mr. Abhinav Mehrotra and Mr. Satya Vrata Mehrotra appeared for the petitioners.

To Read the full text of the Order CLICK HERE

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