Case Note & Summary
The petitioners, M/s. Navodaya Education Trust and its trustees, filed writ petitions under Article 226 of the Constitution of India challenging an order dated 21-12-2017 passed by the Director General of Income Tax (Inv.), Bengaluru, withdrawing the approval granted to the Trust under Section 10(23C)(vi) of the Income Tax Act, 1961. The Trust is an educational institution running schools and colleges, and had been granted exemption under the said provision. The impugned order was passed without any show cause notice or opportunity of hearing to the Trust, and without considering the objections raised by the Trust. The petitioners contended that the order was arbitrary, violative of principles of natural justice, and liable to be quashed. The respondents argued that the order was passed based on material on record and that no prior hearing was required. The High Court, after hearing the parties, held that the impugned order was passed in gross violation of principles of natural justice as no opportunity of hearing was given to the Trust before withdrawing the exemption. The court observed that the order was cryptic and non-speaking, and did not consider the objections of the Trust. Accordingly, the court quashed the impugned order and remanded the matter to the respondent for fresh consideration after providing a reasonable opportunity of hearing to the petitioners. The writ petitions were allowed with no order as to costs.
Headnote
A) Administrative Law - Principles of Natural Justice - Opportunity of Hearing - Withdrawal of Exemption - The impugned order withdrawing approval under Section 10(23C)(vi) of the Income Tax Act, 1961 was passed without affording any opportunity of hearing to the petitioner Trust and without considering its objections, thus violating principles of natural justice. (Paras 1-10) B) Income Tax Law - Exemption under Section 10(23C)(vi) - Withdrawal of Approval - The Director General of Income Tax (Inv.) passed the order without issuing any show cause notice or giving personal hearing, and the order was non-speaking and cryptic, hence liable to be set aside. (Paras 11-20) C) Constitutional Law - Article 226 - Writ Jurisdiction - High Court can quash an order passed in violation of natural justice and remand the matter for fresh consideration after providing opportunity of hearing. (Paras 21-30)
Issue of Consideration
Whether the impugned order dated 21-12-2017 withdrawing the approval under Section 10(23C)(vi) of the Income Tax Act, 1961, without providing an opportunity of hearing to the petitioner Trust and without considering its objections, is sustainable in law.
Final Decision
The writ petitions are allowed. The impugned order dated 21-12-2017 is quashed. The matter is remanded to the respondent for fresh consideration after providing a reasonable opportunity of hearing to the petitioners. No order as to costs.
Law Points
- Principles of natural justice
- opportunity of hearing
- withdrawal of exemption under Section 10(23C)(vi) of Income Tax Act
- 1961
- requirement of speaking order
- consideration of objections
