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Dr. Ambedakar Enterprisese vs Union of India 

[2023] 153 taxmann.com 323 (Allahabad)

Background:

1. Basic Idea of Section Involved

 Section 75(4): An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

2. PRINCIPLE OF LAW in regard to PERSONAL HEARING 

Even though the above Section 75(4) says -“when a request is received in writing” the principle of law is that assessee is not required to request  for opportunity of personal hearing and it is mandatory for the authority to afford such opportunity before passing an adverse order. Even if the petitioner may have signified ‘No’ in the column meant to mark the assessees choice to avail personal hearing, it would bear no legal consequence.

Principle of natural justice bind the authorities to always ensure to provide such opportunity of hearing. 

3. Timeline : 

10 June 2022 – Issuance of Show Cause Notice

24 June 2022 – Date fixed for Personal Hearing 

09 July 2022 – Due Date to Reply to Show Cause Notice 

30 Nov 2022 – Order passed.

Argument of Petitioner: 

1. The Impugned order is wholly ex parte. 

2. Though the petitioner could not appear on the date fixed for personal hearing, no other date for hearing was fixed and no order or notice was served on the petitioner.

3. The order impugned was not passed on the date fixed but about five months thereafter on 30-11-2022

 Argument of Respondent:

1. Petitioner failed to file any reply and to make any application to submit any reply even after the due date fixed in the notice dated 10-6-2022 had expired. 

2. Petitioner chose not to file any appeal against the impugned order dated 30-11-2022 and has also approached the Court with delay.

 Judgement:

1. There is no doubt that rules of natural justice have been breached.

2. It may be true that the petitioner may have been at fault in not filing reply on the date fixed and having not filed any application thereafter. Yet, the adjudicating authority chose not to pass any order and did not fix any other date for hearing in the matter for a long period of five months.

3. There wase no reason to pass that ex parte order, without any further notice or before fixing another date. 

4. However, at the same time, there is fault on the part of the petitioner in neither filing appeal within limitation nor approaching this Court within reasonable time. Therefore, equities have to be balanced.

5. In case the petitioner deposits a sum of Rs. 75,000/- before the adjudicating authority within three weeks from today, the impugned order shall stand set aside. Further, petitioner may file its reply to the contents of the notice and the order within a period of two weeks thereafter.

6. If such compliance is made by the petitioner, the adjudicating authority may fix a fresh date and proceed in accordance with law.