ERANHOLI KANDIYIL EBRAHIM, V. UNION OF INDIA,

WP(C)/13588/2022

AI Insights

The case involves Eranholi Kandiyil Ebrahim, a partner in M/s. Sona Fashion Jewellery, who challenged the assessment order and penalty notices issued by the Income Tax Department for the assessment year 2013-14. The petitioner argued that the faceless assessment proceedings were flawed due to technical glitches, which prevented him from receiving crucial documents and responding adequately. The court examined whether the petitioner was denied a fair opportunity to contest the assessment and penalties imposed. The court found that the petitioner had received all necessary communications and had not responded to the draft assessment order or the notices, leading to the dismissal of the writ petition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 725183 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 10-11-2023
• Assessment Year: misc
• Other Referred Cases: E.Madhavi Pallikkaramma and Another v. K.V.Prabhakarn Nair and Others, Ellathkandi Khaleel Ahammad v. Union of India
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: GOPIKRISHNAN NAMBIAR; JOHN MATHAI; MANAVALAN THOMAS; C ABRAHAM; KANNAN
• Keywords: E-assessment Scheme; Faceless Assessment Scheme; Natural Justice; Technical glitches
• Section: 148; 142(1); 271(1)(c); 274; 271F; 143; 143(3A); 143(3B)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 10TH DAY OF NOVEMBER 2023 / 19TH KARTHIKA, 1945 WP(C) NO. 13588 OF 2022 PETITIONER/S: ERANHOLI KANDIYIL EBRAHIM, AGED 61 YEARS, ERANHOLI KANDIYIL HOUSE, KADAVATHUR P. O., KANNUR - 670 676 BY ADVS. M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN RESPONDENT/S: 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 1 AND TPS, AAYAKAR BHAVAN, KONNOTHUMCHAL, CHOVVA P. O., KANNUR - 670 006. OTHER PRESENT: SRI.CHRISTOPHER ABRAHAM-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 13588 OF 2022 2 J U D G M E N T Heard Sri.Raja Kannan, learned counsel for the petitioner, and Sri.Christopher Abraham, learned Standing Counsel for Income Tax Department. 2. The present writ petition has been filed impugning Ext.P10 assessment order, Exts.P11 and P11(a) penalty notices, all dated 28.9.2021, issued by the second respondent in respect of the assessment year 2013-14. The petitioner also prays that this Court may direct the second respondent to finalise the assessment proceedings for the assessment year 2013-14 afresh, after issuing notices and affording a reasonable opportunity of filing objections, in accordance with law. 3. The petitioner is a partner of M/s.Sona Fashion Jewellery, Kadavathur, Kannur, which is engaged in the business of retail sale of gold jewellery. It is submitted that before 2019, the assessment proceedings used to take place in physical format. However, under the Finance Act, 2019, the Faceless Assessment Scheme was brought in WP(C) NO. 13588 OF 2022 3 for the purpose of reduction of human interface and for better transparency in the assessment proceedings; and Section 143 of the Income Tax Act, 1961 (“the Act”, for short) was amended and Sections 143(3A) and 143(3B) were inserted empowering the Central Government to make Scheme and Notifications, for carrying out the assessments under the Act. 4. In pursuance to the powers vested under Sections 143(3A) and 143(3B) of the Act, the Scheme under the name and style “E-Assessment Scheme, 2019” was notified since September, 2019. Vide notification dated 12.9.2019, issued under Section 143(3B) of the Income Tax Act, the said Scheme was further supplemented. Now, the assessment and appeal proceedings are being carried out following the procedure prescribed under the Scheme, Faceless Assessment Scheme. 5. The Income Tax Officer, Ward No.2, Kannur, third respondent, issued notice dated 18.3.2020 under Section 148 of the Act, Ext.P4, in respect of the assessment year 2013-14, and the petitioner WP(C) NO. 13588 OF 2022 4 filed reply to the said notice issued under Section 148 on 12.11.2020 vide Ext.P5. After considering the reply filed by the petitioner to the notice under Section 148 dated 18.3.2020, the second respondent, issued notice under Section 142(1) of the Act, Ext.P6, requiring the petitioner to file its response electronically through the web-portal. The petitioner responded to the said notice by filing reply dated 27.2.2021, Ext.P7. The petitioner was required to submit certain documents and details which he submitted. The petitioner's objection to the show cause notice under Section 142 was rejected by the third respondent, and thereafter the assessment order, Ext.P10, was issued by the second respondent, which is in the nature of an ex parte order, wherein it was stated that show cause notice was issued on 23.9.2021 for which the time was granted up to 27.9.2021 for objections/response. But, since the writ petitioner did not file response to the said show cause notice, assessment proceedings have been completed under Section 143(3) read with Sections 147 and WP(C) NO. 13588 OF 2022 5 144B of the Act, vide Ext.P10 order dated 28.9.2021. Thereafter, notices have been issued under Section 274 read with Sections 271(1)(c) and 271F of the Act by imposing penalty on the petitioner, vide Exts.P11 and P11(a) dated 28.9.2021. 6. Learned counsel for the petitioner submits that the faceless system of assessment proceedings were not free from technical faults, that from 21.8.2021, the portal itself was not available, which is evident from Ext.P12, a news article dated 22.8.2021, reporting that the Finance Minister had summoned the MD & CEO, Infosys, to explain as to why even after 2.5 months since the launch of new e-filing portal, glitches in the portal were not resolved. The submission of the learned counsel for the petitioner is that the petitioner did not receive the draft assessment order, Ext.P11(b), and notice dated 23.9.2021 giving only three days' time to the petitioner to file response to the draft assessment order, because of technical glitches. It is further submitted that since the time was WP(C) NO. 13588 OF 2022 6 very less, it would not have been possible for the petitioner to file response to the draft assessment order, had it been received by the petitioner. Learned counsel for the petitioner, therefore, submits that the proceedings from the stage of receiving the draft assessment order had been conducted in violation of principles of natural justice and therefore, the same are liable to be set aside. 7. Learned counsel for the petitioner has placed reliance on the decisions of the Hon'ble Supreme Court in E.Madhavi Pallikkaramma and Another v. K.V.Prabhakarn Nair and Others [(2001) 9 SCC 726] and of this Court in Ellathkandi Khaleel Ahammad v. Union of India [MANU-KE-2042-2022 - WP(C) No.13513/2022 dtd 4.7.2022], in support of his contentions. 8. Shri.Christopher Abraham, learned Standing Counsel for the Revenue, submits that technical glitches noticed in the news article, Ext.P12, was in respect of e-filing and not in respect of the notices/drat orders/final assessment orders etc. WP(C) NO. 13588 OF 2022 7 He further submits that there is nothing on record that after 21/22.8.2021 any such glitches were not rectified. Draft assessment order, which is dated 24.9.2021, was one month after the said report in Ext.P12. When the petitioner had received all other notices and filed responses, it cannot be believed that the petitioner did not receive drat assessment order Ext.P11(b) and notice. Notices were issued through e-mail with real time alert on the mobile number given by the petitioner. The draft assessment order as well as all notices were available in the portal. The petitioner never raised grievance of insufficient time for filing response to the notice dated 23.9.2021, nor he objected to the draft assessment order dated 24.9.2021 and therefore, the assessment proceedings got completed vide Ext.P10 order. Sri.Christopher Abraham, further, submitted that the petitioner has efficacious remedy of appeal under Section 246A of the Act before the Commissioner of Appeals and this Court may not entertain this writ petition on the WP(C) NO. 13588 OF 2022 8 ground of availability of alternate remedy of appeal under the statute. 9. I have considered the submissions of both sides. It is not in dispute that all other notices issued to the petitioner during the faceless assessment proceedings were served on him and he filed responses to the said notices. It would be hard to believe that the petitioner did not receive the draft assessment order dated 24.9.2021 in Ext.P11(b) and notice dated 23.9.2021. I, therefore, find little substance in the submission of Sri.Raja Kannan, learned counsel for the petitioner, that the petitioner did not receive notice dated 23.9.2021 and draft assessment order dated 24.9.2021, Ext.P11(b), and therefore, he could not file reply. 10. The next submission of the learned counsel for the petitioner that even if the draft assessment order dated 24.9.2021, Ext.P11(b), and notice dated 23.9.2021, were served on the petitioner, there would not have been sufficient time to the petitioner for filing reply/objection to the WP(C) NO. 13588 OF 2022 9 draft assessment order, inasmuch as the petitioner was afforded only three days time to file objection to the draft assessment order, i.e. up to 27.9.2021, and therefore, there has been violation of principles of natural justice. This submission of the petitioner is also unsustainable, because violation of principles of natural justice would come only if the petitioner asked for extension of time to file reply/objection to the draft assessment order dated 24.9.2021, Ext.P11(b), or the notice dated 23.9.2021 and the authority denied such request for further time for filing reply/objection. In the present case, the petitioner did not choose to file reply to the notice dated 23.9.2021, nor objection to the draft assessment order. Therefore, the alleged violation of principles of natural justice does not exist. 11. Insofar as the judgment of the Hon'ble Supreme Court in the case of E.Madhavi Pallikkaramma (supra) is concerned, the Hon'ble Supreme Court in its order on the facts of the case, remanded the matter back to the assessing WP(C) NO. 13588 OF 2022 10 authority on the ground that the Tribunal had recorded the finding that the assessee was not granted sufficient opportunity of hearing. In the present case, this is not a fact. In the present case, the petitioner did not file reply to the notice dated 23.9.2021 or ask for further time or file objection to the draft assessment order. Therefore, the case relied on by the learned counsel for the petitioner is of no help to the facts of the present case. 12. In the case of Ellathkandi Khaleel Ahammad (supra), admittedly, draft assessment order was not served on the assessee before finalising the assessment and therefore, the case was remanded back to the assessing officer. In the present case, as stated above, it would be hard to believe that the petitioner did not receive draft assessment order and therefore, the decision in the case of Ellathkandi Khaleel Ahammad (supra) is of no use to the petitioner in the present case. 13. In view of the above, I do not find any substance in the submission of the learned counsel WP(C) NO. 13588 OF 2022 11 for the petitioner that notice dated 23.9.2021 and draft assessment order dated 24.9.2021 were not served on the petitioner. Accordingly, the present writ petition is hereby dismissed. 14. The petitioner may file appeal against the assessment order dated 28.9.2021 in Ext.P10, in accordance with law. If the petitioner files appeal within a period of three weeks from today, the same should be entertained and decided on merits without going into the question of limitation, in accordance with law. Pending interlocutory applications, if any, in the writ petition stand dismissed. Sd/- DINESH KUMAR SINGH JUDGE jg WP(C) NO. 13588 OF 2022 12 APPENDIX OF WP(C) 13588/2022 PETITIONER EXHIBITS Exhibit P1 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 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 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 TRUE COPY OF THE NOTICE DATED 18.03.2020 ISSUED BY THE INCOME TAX OFFICER, WARD 2, KANNUR (CURRENTLY THE 3RD RESPONDENT.) Exhibit P5 TRUE COPY OF THE REPLY DATED 12.11.2020 SUMITTED BY THE PETITIONER, IN RESPONSE TO EXT.P4 NOTICE. Exhibit P6 TRUE COPY OF THE NOTICE (WITHOUT ANNEXURES) DATED 04.02.2021 ISSUED BY THE 2ND RESPONDENT FOR THE A.Y. 2013-14. Exhibit P7 TRUE COPY OF THE LETTER DATED 27.02.2021 (WITHOUT ANNEXURES) FILED BY THE PETITIONER TO THE 2ND RESPONDENT, IN RESPONSE TO EXT.P6 NOTICE. Exhibit P8 TRUE COPY OF THE LETTER DATED 20.03.2021 (BOTH WITHOUT ANNEXURES) SUBMITTED BY THE PETITIONER WP(C) NO. 13588 OF 2022 13 BEFORE THE 2ND RESPONDENT. Exhibit P8(a) TRUE COPY OF THE LETTER DATED 16.04.2021 (BOTH WITHOUT ANNEXURES) SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. Exhibit P9 TRUE COPY OF THE LETTER DATED 24.08.2021 ISSUED BY THE 3RD RESPONDENT. Exhibit P10 TRUE COPY OF THE ORDER OF ASSESSMENT AND COMPUTATION SHEET BOTH DATED 28.09.2021 ISSUED BY THE 2ND RESPONDENT FOR THE A.Y. 2013-14. Exhibit P11 TRUE COPY OF THE NOTICE OF PENALTY DATED 28.09.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT. Exhibit P11(a) TRUE COPY OF THE NOTICE OF PENALTY DATED 28.09.2021 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 274 READ WITH SECTION 271 F OF THE ACT. Exhibit P11(b) TRUE COPY OF THE DRAFT ASSESSMENT ORDER DATED 24.09.2021 SSUED BY THE 2ND RESPONDENT. Exhibit P12 TRUE COPY OF AN ARTICLE DATED 22.08.2021, DOWNLOADED FROM WWW.CACLUBINDIA.COM, PROVIDING INFORAMTION RELATING TO THE GLITCHES IN THE NEW IT PORTAL. "