ERANHOLI KANDIYIL EBRAHIM, V. UNION OF INDIA,

WA/2157/2023

AI Insights

The case involves Eranholi Kandiyil Ebrahim, the appellant, who challenged the assessment order and penalty notices issued by the Income Tax Department for the assessment year 2013-14. The appellant contended that he did not receive the show cause notice and draft assessment order before the final assessment order was passed. The single judge dismissed the writ petition, leading to this intra-court appeal. The division bench found that the department failed to properly serve the show cause notice and draft assessment order, thus allowing the appeal and setting aside the previous orders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 724818 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 18-12-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: RAJA M GOPIKRISHNAN NAMBIAR; K JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C ABRAHAM
• Keywords: Assessment Order; Draft Assessment Order; Ex parte order; Penalty notices; Show cause notice; IT portal glitches
• Section: 148; 142(1); 271(1)(c); 274; 271F

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE & THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN MONDAY, THE 18TH DAY OF DECEMBER 2023 / 27TH AGRAHAYANA, 1945 WA NO. 2157 OF 2023 [AGAINST THE JUDGMENT dtd.10.11.2023 in WP(C) 13588/2022 OF HIGH COURT OF KERALA] APPELLANT: ERANHOLI KANDIYIL EBRAHIM, AGED 61 YEARS ERANHOLI KANDIYIL HOUSE, KADAVATHUR P.O., KANNUR - 670 676. BY ADVS. RAJA KANNAN M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS 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 1 AND TPS, AAYAKAR BHAVAN, KONNOTHUMCHAL, CHOVVA P. O., KANNUR - 670 006. BY STANDING COUNSEL SRI.CHRISTOPHER ABRAHAM. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 18.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.NO.2157 OF 2023 :-2-: JUDGMENT SHOBA ANNAMMA EAPEN,J: This intra court appeal is filed challenging the judgment dated 10.11.2023 of the learned single judge in W.P.(C) No.13588/2022. 2. The writ petition was filed by the appellant herein challenging Ext.P10 assessment order, Exts.P11 and P11(a) penalty notices dated 28.9.2021 in respect of the assessment year 2013-14. Ext.P4 notice dated 18.3.2020 was issued by the third respondent- the Income Tax Officer, Ward No.2, Kannur under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') to the appellant- a partner of M/s.Sona Fashion Jewellery engaged in the business of retail sale of gold jewellery. The appellant filed reply to the said notice as per Ext.P5 and pursuant to the above reply, the second respondent issued Ext.P6 notice under Section 142(1) of the Act. The said notice was also responded by the appellant as per Ext.P7. The third respondent issued Ext.P9 letter W.A.NO.2157 OF 2023 :-3-: rejecting the objection raised by the appellant. Thereafter, Ext.P10 assessment order was issued by the second respondent in the nature of ex parte order. Pursuant to Ext.P10 assessment order, Exts.P11 and P11(a) penalty notices were also issued by the second respondent under Section 274 read with 271(1)(c) and 271F of the Act. Challenging Exts.P10,P11 and P11(a), the appellant had filed the above writ petition. 3. The main contention raised by the learned counsel for the appellant is that before passing Ext.P10 assessment order, the appellant was not served with show cause notice dated 23.9.2021 and draft assessment order dated 24.9.2021. The learned single Judge, after detailed consideration of the issue, dismissed the writ petition holding that sufficient opportunity was granted to the appellant and further found that it would be hard to believe that the appellant did not receive show cause notice dated 23.9.2021 and draft assessment order dated 24.9.2021 W.A.NO.2157 OF 2023 :-4-: and dismissed the writ petition permitting the appellant to file appeal against Ext.P10 assessment order dated 28.09.2021. Aggrieved by the Judgment of the learned single judge, the appellant has filed this writ appeal. 4. Heard the learned counsel for the appellant and the learned Standing Counsel for the respondents. 5. The only issue raised by the appellant in this appeal is that he was not served with show cause notice dated 23.9.2021 and draft assessment order dated 24.9.2021 [Ext.P11(b)] before passing Ext.P10 assessment order. It is the specific case of the appellant that there was glitches in the IT portal since 21.8.2021 and the said fact was not opposed by the department in their counter affidavit. On a perusal of Ext.P10 assessment order, it is mentioned that show cause notice was issued on 23.9.2021 for compliance on 27.09.2021. The order does not reflect W.A.NO.2157 OF 2023 :-5-: anything regarding the service of draft assessment order dated 24.9.2021. Ext.P10 order reveals that show cause notice was duly delivered to the assessee and since there was no response from the assessee, the assessment was finalised. On receipt of Ext.P4 notice under Section 148 of the Act, the appellant diligently filed reply to the notice. On the basis of the reply filed by the appellant-assessee, the department proceeded further with notice under Section 142(1) of the Act. The appellant also had a specific case that the I.T. Portal was not available since 21.8.2021. It is also contended that in many cases across India, draft assessment orders were not issued on time before the issuance of the assessment order, which was solely attributable to the glitches in the IT portal. In the counter affidavit filed by the Department, nothing has been stated regarding the allegation of glitches in the I.T.portal. The petitioner had diligently replied to all the notices issued by the Department other than the show cause W.A.NO.2157 OF 2023 :-6-: notice dated 23.9.2021 and the draft assessment order dated 24.9.2021 alleged to have been delivered to the appellant. 6. If the appellant had received the show cause notice and draft assessment order, he would have filed replies to the same. There is no reason to believe otherwise. Ext.P10 assessment order was passed on 28.9.2021, within five days from the date of show cause notice. Reasonable time ought to have been given by the assessing authority before completing the assessment. In Ext.P10 assessment order, there is no mention about the service of draft assessment order and hence it has to be presumed that no such order was served on the petitioner before finalising Ext.P10 assessment order. 7. On a consideration of the entire facts and circumstances of the case, we are of the opinion that there were laches on the part of the department in properly serving the show cause notice as well as the W.A.NO.2157 OF 2023 :-7-: draft assessment order to the appellant and also affording a reasonable time to file reply to the show cause notice and draft assessment order. Interest of justice will be best met, if the appellant is given one more opportunity to file reply to the show cause notice dated 23.9.2021 as well as the draft assessment order dated 24.9.2021. Accordingly, the writ appeal is allowed with the following directions:- 1.Exts.P10,P11 and P11(a) are set aside. 2.The appellant is directed to file reply to the show cause notice dated 23.9.2021 and the draft assessment order dated 24.9.2021 within a period of one month from the date of receipt of certified copy of this judgment. 3.On receipt of the reply filed by the petitioner, the assessing authority shall afford an opportunity of being heard to the appellant before W.A.NO.2157 OF 2023 :-8-: finalisation of the proceedings. 4.The appellant shall forward/serve a certified copy of this judgment as well as a copy of the writ appeal to the second respondent-assessing authority for compliance. Sd/- A.MUHAMED MUSTAQUE JUDGE sd/- SHOBA ANNAMMA EAPEN JUDGE MBS/ "