Income Tax Refund Rejected without Providing Opportunity to Hear: Karnataka HC allows Petition [Read Order]

The Karnataka High Court held that the Income Tax refund was rejected without providing an opportunity to hear. The Court held that the authority must take note of the time available under Section 163(6) of the Income Tax Act,1961.

Healthcare Global Enterprises Limited, the assessee challenged the validity of the impugned Assessment Order computation sheet, demand notice and has also sought for a grant of refund that is lawfully due to it. 

The petitioner has also challenged the notice, submitting that the show cause notice had directed the furnishing of a reply by 26.04.2024, which was inadequate time and despite the reply being made within the short period made available, prejudice has been caused as the reply was made hurriedly and subsequently. 

It was submitted that another reply came to be filed on 28.04.2024. The same was also hurriedly filed as a very short time was made available. It was further submitted that in the absence of a hearing, the order is passed within two days after reply at assessment order would reflect the hurried manner in which the order was passed. 

It was also submitted that the petitioner also was deprived of personal hearing to make out the clarification in pursuance to its reply in the absence of such hearing to make out clarification, the petitioner has been prejudiced.

Counsel Sri E.I.Sanmati, appearing for the respondents submitted that the reply had been made out in writing, and if that were to be so, the contention that there has been a violation of principles of natural justice cannot be accepted. The written response has been made within the time sought by the Revenue and the first such reply was made on 26.04.2024 and upon subsequent opportunity, another reply was made on 28.04.2024.  However, furnishing of replies within a short time can be construed to be replies filed to meet the timeline and in case of such replies filed

within a short time, the contention of prejudice due to lack of sufficient time to make out a reply and lack of opportunity of personal hearing to make out clarifications, as raised by the assessee.

It was submitted that the petitioner may be permitted to have the opportunity of a personal hearing to explain his reply and in the event of further clarification sought for, the petitioner may be reserved liberty to make out his additional reply or furnish the documents.

It was also observed that the contention of the petitioner requires acceptance as the process of consideration of replies cannot be hurried in the light of the last date for completion of assessment, which in the present case, was 30.04.2024. 

A single bench of Justice S Sunil Dutt Yadav made clear that the authority must take note of the time available under Section 163(6) of the Income Tax law, to avoid passing of an order at the fag end, which has caused prejudice to the assessee.

To Read the full text of the Order CLICK HERE

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