The Allahabad High Court in Nabco Products Private Limited versus Union of India and Ors. criticised the attitude of the income tax officers and observed that Income Tax Authorities are frequently violating the principles of natural justice. It noted that the harassment caused to the assessees and the breach of principles of natural justice by the Income Tax Officers has become uncontrolled due to the absence of an effective system of accountability of the erring officers.
It further 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 cannot, on their own, correct the system.”
It further directed 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 shortcomings, if any, in the system. For own wrongs of the respondents, the assessee cannot 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 an 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.”