1998 (7) TMI 27 - HC - Income Tax

Summary

Issues involved:
Delay in obtaining refund for the assessment year 1982-83, rejection of refund application by the Central Board of Direct Taxes, applicability of the Amnesty Scheme, exercise of discretion by the Board, requirement of passing a speaking order, principles of natural justice in quasi-judicial actions by the Board.

Detailed Analysis:
The petitioners filed petitions seeking a writ to direct the Central Board of Direct Taxes to condone the delay in obtaining a refund for the assessment year 1982-83 and grant the same with interest. The petitioners argued that they were entitled to a refund under the Amnesty Scheme but the Board rejected their applications without providing reasons. The petitioners contended that the Board's action was judicial or quasi-judicial in nature and should have involved an opportunity for a hearing and compliance with the principles of natural justice.

The petitioners' counsel argued that the Board erred in rejecting the refund applications and failing to grant relief under the Amnesty Scheme. He emphasized that even if the Amnesty Scheme did not apply, section 119(2)(b) obligated the Board to consider the circumstances and exercise its power to grant a refund. The counsel highlighted that the Board's power was a "power coupled with duty" and should have been exercised in favor of the petitioners due to circumstances beyond their control.

The court noted that the Board's orders lacked reasoning and failed to show that the Board considered the facts and circumstances of the case. Citing precedents, the court emphasized the need for the Board to pass a speaking order and apply its mind before making a decision on refund applications. The court concluded that the Board's orders were deficient and required to be quashed and set aside.

Regarding the requirement of affording an opportunity of hearing, the court referred to a Karnataka High Court decision emphasizing the need for the Board to provide a hearing to the affected parties in quasi-judicial functions. The court directed the Board to reconsider the petitioners' applications, ensuring compliance with the law and principles of natural justice. The court emphasized the importance of the Board passing a speaking order and deciding the applications in accordance with the Supreme Court's directives.

In the final judgment, the court quashed the Board's orders and instructed the Board to prioritize the reconsideration of the applications due to their age. The court made the rule in each petition absolute, with no order as to costs, emphasizing the need for expeditious resolution of the matters.