ARANHOLI KANDIYIL ASHRAF ALI, V. UNION OF INDIA,

WP(C)/28605/2022

AI Insights

The case involves Aranholi Kandiyil Ashraf Ali, a partner in 'M/s. Sona Fashion Jewellery', who was implicated in a search and seizure operation concerning unexplained investments amounting to Rs. 21,00,000 for the assessment year 2013-14. The Income Tax Department reopened the assessment under Section 147 of the Income Tax Act and issued notices under Sections 148 and 142(1). The petitioner contested the final assessment order, arguing that he was not given adequate time to respond to the Show Cause Notice as per the Standard Operating Procedure for Faceless Assessments. The court found merit in the petitioner's argument regarding the violation of natural justice and remanded the case for re-assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 687025 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-12-2023
• Assessment Year: misc
• Other Referred Cases: W.P.(C) No. 31553 of 2022 in Aneesh v. Union of India and others
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: RAJAKANNAN; M GOPIKRISHNAN NAMBIAR; K MATHAI; JOSON MANAVALAN; KURYAN THOMAS; PAULOSE ABRAHAM
• Keywords: Faceless assessment; Income concealment; Natural Justice; Search and seizure; Unexplained investment
• Section: 147; 148; 142(1); 271(1)(c); 144B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 21ST DAY OF DECEMBER 2023 / 30TH AGRAHAYANA, 1945 WP(C) NO. 28605 OF 2022 PETITIONER: ARANHOLI KANDIYIL ASHRAF ALI, ARANHOLI KANDIYIL, KADAVATHUR, THALASSERY, KANNUR- 670676. BY ADVS. SRI. RAJA KANNAN SRI. M. GOPIKRISHNAN NAMBIAR SRI. K. JOHN MATHAI SRI. JOSON MANAVALAN SRI. KURYAN THOMAS SRI. PAULOSE C. ABRAHAM RESPONDENTS: 1 UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI -110004. 2 ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI- 110003. 3 INCOME TAX OFFICER, WARD 2, AAYAKAR BHAVAN, KONNOTHUMCHAL, CHOVVA P. O., KANNUR -670006. BY ADV. SRI. CHRISTOPHER ABRAHAM - SC - INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 28605 OF 2022 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.28605 of 2022 ------------------------- Dated this the 21st day of December, 2023 JUDGMENT 1. The petitioner/assessee did not filed return of his income for the assessment year 2013-14. A search and seizure operation was conducted against “Parco Group of Concerns” mainly engaged in the business of retail jewellery under the brand name “M/s. Swarnanjali Gold”. The Jewellery shop is run by the aforesaid group in the name and style of “M/s. Sona Fashion Jewellery”. The petitioner is partner of “M/s. Sona Fashion Jewellery”. During the course of search and seizure operation, it was found that petitioner as partner had invested Rs. 21,00,000/- during the financial year 2012-13 relevant to the assessment year 2013-14 in “M/s. Sona Fashion Jewellery”. But the petitioner did not furnish the return of his income for the said assessment year 2013-14. Investment to the tune of Rs. 21,00,000/- was remained unexplained. The petitioner/assessee had concealed his particular of income to the extent of Rs. 21,00,000/- for the assessment year 2013-14, it was opined that the income of the assessee chargeable to tax had escaped assessment to the tune of Rs. WP(C) NO. 28605 OF 2022 3 21,00,000/- and the case of the petitioner was, therefore, reopened under Section 147 of the Income Tax Act and, consequently a notice under Section 148 of the Income Tax Act was issued on 18.03.2020. Subsequently, notice under Section 142 (1) of the Income Tax Act along with questionnaire was issued on 29.09.2020 and 01.03.2021 respectively. Later on, a letter was issued on 22.03.2021 and it was duly served upon the assessee in respect of required details as asked for in the earlier notices issued under Section 142 (1) of the Income Tax Act. The petitioner did not reply to the said notices and only in response to the notice issued under Section 148 of the Income Tax Act and later on, the petitioner/assessee had furnished his return of income for the assessment year 2013-14 on 20.02.2021 declaring the income of Rs. Nil. 2. The learned Counsel for the petitioner submits that Show Cause Notice and draft assessment order were issued on 12.09.2021 in Exhibits P-10 and P-10(a). The petitioner was granted time only up to 14.09.2021. This notice was uploaded in the web portal. The petitioner could not take notice of Exhibits P-10 and P-10(a), and the final assessment order came to be passed on 16.09.2021. The learned counsel for the petitioner also has brought to the notice of this Court WP(C) NO. 28605 OF 2022 4 the Standard Operating Procedure (SOP) for assessment unit under Faceless Assessment provisions under Section 144B of the Income Tax Act. Clause N.13.1 would disclose that at least seven days time should be granted for filing the reply to the Show Cause Notice. This Court has also taken the view regarding minimum seven days time to be granted for filing reply to the Show Cause Notice in the Judgment dated 04.12.2023 [W.P.(C) No. 31553 of 2022 in Aneesh v. Union of India and others] . 3. Considering the aforesaid fact that the petitioner was not afforded a reasonable opportunity of seven days to file reply to the Show Cause Notice issued under Section 148 of the Income Tax Act issued on 12.09.2021, I find some substance in the submission of the learned Counsel for the petitioner regarding violation of the principles of natural justice. On this ground alone this writ petition is allowed. The impugned assessment order and further proceedings are set aside and the matter is remanded back to the National Faceless Assessment Centre, Delhi to provide an opportunity for filing reply by the petitioner to the Show Cause Notice dated 12.09.2021 in Exhibit P-10. The National Faceless Assessment Centre is directed to provide the link for filing the reply to the Show Cause Notice dated 12.09.2021 in WP(C) NO. 28605 OF 2022 5 Exhibit P-10 by the petitioner. After the link is activated, the petitioner should file the reply within seven days thereafter. It is made clear that no further opportunity shall be granted to the petitioner and thereafter, the National Faceless Assessment Centre, Delhi shall proceed to finalise the assessment order under Section 147 read with Section 144 of the Income Tax Act. With the aforesaid directions and observations, the present writ petition stands finally disposed of. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 28605 OF 2022 6 APPENDIX OF WP(C) 28605/2022 PETITIONER'S EXHIBITS EXHIBIT P1 THE TRUE COPY OF THE NOTIFICATION NO. 61/2019/F.NO. 370149/154/2019-TPL {S.O. 3264(E)} DATED 12.09.2019 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, UNDER THE 1ST RESPONDENT EXHIBIT P2 THE TRUE COPY OF THE NOTIFICATION NO. 60/2020/F.NO. 370149/154/2019-TPL{S.O. 2745(E)} DATED 13.08.2020 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, UNDER THE 1ST RESPONDENT EXHIBIT P3 THE TRUE COPY OF THE NOTIFICATION NO. 61/2020/F.NO. 370149/154/2019-TPL {S.O. 2746(E)} DATED 13.08.2020 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, UNDER THE 1ST RESPONDENT EXHIBIT P4 THE TRUE COPY OF THE NOTICE DATED 18.03.2020 ISSUED BY THE 3RD RESPONDENT, ALONG WITH THE TYPED VERSION EXHIBIT P5 THE TRUE COPY OF THE NOTICE DATED 01.03.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 142(1) OF THE ACT FOR THE A.Y 2013-14 EXHIBIT P6 THE TRUE COPY OF THE REPLY (WITHOUT ANNEXURES) DATED 09.04.2021 SUBMITTED BY THE PETITIONER EXHIBIT P6(A) THE TRUE COPY OF THE E-ACKNOWLEDGMENT (DATED NIL) GENERATED IN THE IT PORTAL IN RESPECT OF THE FILING OF EXT. P6 REPLY AND VARIOUS ATTACHMENTS EXHIBIT P7 THE TRUE COPY OF THE NOTICE (WITHOUT ANNEXURES) DATED 30.06.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 143(2) READ WITH SECTION 147 OF THE ACT WP(C) NO. 28605 OF 2022 7 EXHIBIT P8 THE TRUE COPY OF THE NOTICE DATED 14.07.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 142(1) OF THE ACT, FOR THE A.Y 2013-14 EXHIBIT P9 THE TRUE COPY OF THE REPLY (WITHOUT ANNEXURES) DATED 15.07.2021 SUBMITTED BY THE PETITIONER EXHIBIT P9(A) THE TRUE COPY OF THE E-ACKNOWLEDGMENT (DATED NIL) GENERATED IN THE IT PORTAL IN RESPECT OF THE FILING OF EXT. P9 REPLY AND VARIOUS ATTACHMENTS EXHIBIT P10 THE TRUE COPY OF THE NOTICE (WITHOUT ANNEXURES) DATED 12.09.2021 ISSUED BY THE 2ND RESPONDENT FOR THE A.Y 2013-14 EXHIBIT P10(A) THE TRUE COPY OF THE DRAFT ASSESSMENT ORDER DATED 12.09.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 147 OF THE ACT, FOR THE A.Y. 2013-14 EXHIBIT P11 THE TRUE COPY OF THE ASSESSMENT ORDER DATED 16.09.2021 ISSUED BY THE 2ND RESPONDENT FOR A.Y 2013-14 EXHIBIT P12 THE TRUE COPY OF THE NOTICE OF PENALTY DATED 16.09.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT EXHIBIT P13 THE TRUE COPY OF AN ARTICLE DATED 22.08.2021, DOWNLOADED FROM WWW.CACLUBINDIA.COM, PROVIDING INFORMATION RELATING TO THE GLITCHES IN THE NEW IT PORTAL EXHIBIT P14 THE TRUE COPY OF THE CIRCULAR NO. 19/2019 DATED 14.08.2019 ISSUED BY THE CBDT, NEW DELHI EXHIBIT P14(A) THE TRUE COPY OF THE PRESS RELEASE DATED 14.08.2019 ISSUED BY THE CBDT, NEW DELHI "