ANAVILASAM SERVICE CO-OPERATIVE BANK LIMITED V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP(C)/11960/2021

AI Insights

The case involves Anavilasam Service Co-operative Bank Limited, which is a primary agricultural credit society, contesting an assessment order by the Assistant Commissioner of Income Tax. The bank had filed its return for the assessment year 2018-19 claiming a deduction under section 80P of the Income Tax Act, 1961. Despite responding to several notices under section 142(1) of the Act, the bank's replies were not considered in the final assessment order, leading to a claim of violation of natural justice. The court's intervention was sought to address this oversight, emphasizing the necessity of considering all submissions and documents provided by the assessee in the assessment process.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 686917 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-10-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: ANIL NAIR; R; TELMA RAJU; SANGEETH JACOB; CHRISTINA PAUL
• Keywords: Assessment Order; Deduction claim; Natural Justice; Violation of Principles
• Section: 142(1); 143(2); 80P; 246A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 1ST DAY OF OCTOBER 2021 / 9TH ASWINA, 1943 WP(C) NO. 11960 OF 2021 PETITIONER: ANAVILASAM SERVICE CO-OPERATIVE BANK LIMITED NO.1182, ANAVILASAM SCB BUILDING, ANAVILASAM P.O., MURICKADY, KUMILY, KERALA-685 535, REPRESENTED BY ITS SECRETARY, INDIRA. BY ADVS. ANIL D. NAIR R.SREEJITH TELMA RAJU SANGEETH JOSEPH JACOB CHRISTINA ANNA PAUL RESPONDENT: THE ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL E-ASSESSMENT CENTRE, DELHI-110 003. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 11960 OF 2021 2 BECHU KURIAN THOMAS, J. ---------------------------------------- W.P.(C)No. 11960 of 2021 ---------------------------------------- Dated this the 1st day of October, 2021 JUDGMENT Petitioner is a primary agricultural credit society. As an assessee, petitioner had filed its return for the assessment year 2018-19 and claimed deduction under section 80P of the Income Tax Act, 1961 (for short ‘the Act’). Though petitioner was served with notices under section 142(1) of the Act and appropriate replies were filed to such notices, it is now complained that the reply filed by the petitioner was not even referred to, while passing the order of assessment. Petitioner further contends that though an appeal is available under section 246A of the Act, failure to consider the reply submitted by the petitioner amounts to violation of the principles of natural justice. It is also contended that had the reply of the petitioner been considered, the nature of the assessment order could have been different. 2. A statement has been filed on behalf of the WP(C) NO. 11960 OF 2021 3 respondent stating that the assessment proceedings were initiated by issue of Ext.P1 notice under section 143(2) of the Act, which was followed by a notice under section 142(1), which is produced as Ext.P3, in which several queries were raised and clarifications sought for, to which the assessee offered clarifications by Ext.P4. Another notice under section 142(1) of the Act was issued to the petitioner, which was responded to by Ext.P6 letter which was yet again followed by Ext.P7 notice under section 142(1) seeking further explanation on the deduction claimed under section 80P(2)(d) of the Act. Respondent has also mentioned in the statement that the assessee had responded to the aforesaid notice by Ext.P8 letter and attempted to justify the claim of deduction by producing a copy of the certificate from the Registrar of Co-operative Societies. According to the respondent, it is thereafter that the draft assessment order was issued where the disallowance of the claim under section 80P(2)(d) of the Act was proposed as per Ext.P9 to which Ext.P10 objection was filed by the assessee. It was after all these procedures WP(C) NO. 11960 OF 2021 4 that the assessing officer finalised the assessment order by issuing Ext.P11 wherein the claim under section 80P(2)(d) of the Act was disallowed. 3. I have heard the arguments of Adv.Anil D. Nair, the learned counsel for the petitioner as well as Adv. Christopher Abraham, the learned Standing Counsel for the respondent. 4. As rightly argued by the learned Standing Counsel for the respondent, this Court will not interfere normally under Article 226 of the Constitution of India on orders of assessment issued by the assessing authorities. It is equally settled that when there is a violation of the principles of natural justice, this Court can step in, even against assessment orders, to avoid the unnecessary travails of an assessee, in pursuing the statutory remedies. 5. In the instant case, Ext.P9 show cause notice was issued on 22.03.2021 directing the petitioner to show cause as to why the assessment should not be completed as per the draft assessment order. The response of the petitioner was also sought for in the said show-cause notice. Petitioner’s WP(C) NO. 11960 OF 2021 5 response to Ext.P9 is produced as Ext.P10, wherein it has raised an objection of some substance, however brief it may be. Certain documents were also produced along with Ext.P10. However, while issuing the order of assessment, it is seen that there is no reference at all to the response submitted by the petitioner nor is there any consideration of the document produced along with Ext.P10. Whether the contentions raised by the petitioner in Ext.P10 or whether the document produced along with Ext.P10 may have a bearing upon the case is not a matter which this Court can go into at this stage. An order of assessment is the foundation on which the rights of the assessee depend upon. It is necessary that the assessing authority considers the objections filed by the petitioner especially when a show- cause notice in the form of Ext.P9 had been issued, eliciting the response of the petitioner. Failure to consider the said response offered by the petitioner in the facts of the case is a negation of the rights of natural justice. In the said view of the matter, I find that the order of assessment suffers from WP(C) NO. 11960 OF 2021 6 the infirmity of violation of the principles of natural justice and is liable to be set aside. Accordingly, I set aside Ext.P11 assessment order dated 19-04-2021 issued by the respondent and direct the respondent to consider and pass fresh orders for the assessment year 2018-19, relating to the petitioner, after affording an opportunity of hearing to the petitioner, as expeditiously as possible, and untrammelled by any of the observations of this Court in this judgment. The decision as aforesaid shall be taken within an outer time limit of 60 days from today. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE AJ/01.10.2021 WP(C) NO. 11960 OF 2021 7 APPENDIX OF WP(C) 11960/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF NOTICE DATED 22.09.2019. Exhibit P2 TRUE COPY OF THE REPLY TO THE NOTICE DATED 07.10.2019. Exhibit P3 TRUE COPY OF NOTICE DATED 01.12.2020. Exhibit P4 TRUE COPY OF THE REPLY TO THE NOTICE DATED 15.12.2020. Exhibit P5 TRUE COPY OF NOTICE DATED 16.02.2021. Exhibit P6 TRUE COPY OF THE REPLY TO THE NOTICE DATED 01.03.2021. Exhibit P7 TRUE COPY OF NOTICE DATED 08.03.2021. Exhibit P8 TRUE COPY OF THE REPLY TO THE NOTICE DATED 13.03.2021 ALONG WITH THE CERTIFICATES. Exhibit P9 TRUE COPY OF NOTICE DATED 22.03.2021. Exhibit P10 TRUE COPY OF THE REPLY TO THE NOTICE 26.03.2021. Exhibit P11 TRUE COPY OF THE ORDER DATED 19.04.2021. Exhibit P12 TRUE COPY OF THE JUDGMENT OF THE HON'BLE SUPREME COURT DATED 12.01.2021. "