Joseph Kutty V. Commissioner of Income Tax (International Taxation) and Assistant Commissioner of Income Tax and Income Tax Officer, Ward No. 1 and TPS

WP(C)/11793/2021

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The case involves Joseph Kutty, a Non-resident Indian, who filed a writ petition against the Income Tax Department officials concerning the assessment of his income for the year 2017-18. The petitioner had declared an income of Rs.5,61,000 and paid the corresponding tax. However, he was later issued notices to explain the source of cash deposits during the demonetization period, which he failed to respond to adequately. Consequently, an assessment order was passed, which the petitioner contested through a revision under Section 264 of the I.T. Act, 1961. The Revisional Authority passed an order without a hearing, leading to the current writ petition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 796074 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 22-02-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: P K MENON; P G JAYASHANKAR; JOSE JOSEPH; KEERTHIVAS GIRI
• Assessee Lawyers: K I MATHER; R JAIKRISHNA
• Keywords: Assessment Year; Cash deposit; Demonetization; Income Tax; Non-Resident Indian; Notice; Opportunity of Hearing; Revisional Authority
• Section: 142(1); 143(2); 264

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 22ND DAY OF FEBRUARY 2024 / 3RD PHALGUNA, 1945 WP(C) NO. 11793 OF 2021 PETITIONER/S: JOSEPH KUTTY, AGED 45 YEARS THENGUVILA VEEDU, KARIYARA, PUNALUR P.O., KOLLAM- 691332. BY ADVS. K.I.MAYANKUTTY MATHER R.JAIKRISHNA RESPONDENT/S: 1 COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), OFFICE OF THE COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), ROOM NO. 741,BMTC BUILDING, 7TH FLOOR, 80FT ROAD, KORAMANGALA P.O., BANGALORE-560095. 2 ASSISTANT COMMISSIONER OF INCOME TAX, OFFICE OF ASSISTANT COMMISSIONER OF INCOME TAX, DCIT CIRCLE INTERNATIONAL TAXATION, AAYKAR BHAWAN, 1ST FLOOR, KAWDIAR P.O., THIRUVANANTHAPURAM-695003. 3 INCOME TAX OFFICER, WARD NO. 1 AND TPS, OFFICE OF INCOME TAX OFFICER, INCOME TAX OFFICE, RAILWAY STATION ROAD, KOLLAM P.O., KOLLAM-691001. BY ADVS. P.K.RAVINDRANATHA MENON (SR.) P.G.JAYASHANKAR JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA KEERTHIVAS GIRI THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC No 11793 of 2021 2 JUDGMENT Dated this the 22nd day of February, 2024 The petitioner who is a Non-resident Indian, an assessee under the provisions of the Income Tax Act and Rules made thereunder. For the assessment year 2017- 18, the petitioner had filed return of his income on 27.03.2018 declaring total income of Rs.5,61,000/- and on the said income remitted the tax of Rs.46,256/-. 2. The petitioner was issued a notice under Section 143(2) of the Income Tax Act,1961 (hereinafter referred to as ‘IT Act,1961’). Thereafter, another notice under Section 142(1) was issued to the petitioner on 21.11.2019 requiring the petitioner to explain the source of cash deposits during the demonetization period. The petitioner did not file any reply to the said notice. A letter dated 02.12.2019 was addressed to the petitioner asking the petitioner to file his objection/explanation for the proposed addition of Rs.10,00,000/- being cash deposit during the demonetization period. The petitioner choose not to respond to the said letter also. WPC No 11793 of 2021 3 3. 24.12.2019 was the last date for the response as per Ext.P6, the said letter was also duly delivered to the email address of the petitioner. Despite these opportunities, the petitioner did not file any reply, and thereafter, the order was passed on 25.12.2019. 4. Learned counsel for the petitioner submits that the last notice was served on the petitioner on 24.12.2019 giving the petitioner only a few hours to file reply and on the very next day ie.,25.12.2019, which was a ‘Christmas day’ the assessment order came to be passed. 5. The petitioner filed revision against the said assessment order under Section 264 of the I.T Act, 1961. The Revisional Authority without affording an opportunity of hearing has passed the impugned order in Ext.P11. 6. Sri.P .G Jayashankar, learned Senior Standing Counsel for the Income Tax Department, has submitted that the petitioner was afforded more than sufficient opportunity to explain the source of cash deposit of WPC No 11793 of 2021 4 Rs.10,00,000/- during the demonetization period. The petitioner never came forward with any explanation despite 3 notices having been served on the petitioner. In respect of the last notice, the petitioner filed reply on 26.12.2019. However, before the reply could be reached, the impugned assessment order came to be passed. Therefore, the petitioner cannot make any grievance in respect of not having been afforded the opportunity as alleged or otherwise. The petitioner was afforded enough opportunities, but failed to avail the opportunity granted and therefore, the assessment order does not suffer from any illegality as contended by the learned counsel for the petitioner. 7. In respect of the submission by the learned counsel for the petitioner that no opportunity of hearing was afforded to the petitioner by the Revisional Authority, the learned counsel for the respondents submits that the scheme of Section 264 of the I.T Act of 1961 does not contemplate providing opportunity of hearing to the assessee. WPC No 11793 of 2021 5 8. I have considered the submissions. This Court does not agree with the contention of the learned counsel for the petitioner that the petitioner was not given an opportunity of hearing to explain the source of cash deposit of Rs.10,00,000/- during the demonetization period. The facts mentioned in the counter affidavit would disclose that the petitioner has failed to avail an opportunity of hearing, despite having been served with notices. Therefore, the petitioner probably cannot contend that he was not afforded an opportunity of hearing. 9. So far as the question of giving an opportunity of hearing by the Revisional Authority is concerned, though Section 264 of the I.T Act does not specifically provides giving an opportunity of hearing, but the opportunity of hearing has to be read in the provision, inasmuch as the revisional order has civil consequences and without affording an opportunity of hearing, the order would not be sustainable. Since, there has been violation of the principles of natural justice by the WPC No 11793 of 2021 6 Revisional Authority in passing the impugned order without affording an opportunity of hearing, Ext.P11 order is set aside and the matter is remanded back to the 1st respondent. The 1st respondent is directed to issue a notice of hearing to the petitioner, and after hearing the petitioner pass a fresh order, in accordance with the law. It is made clear that, only one notice shall be issued to the petitioner and if the petitioner fails to avail the opportunity of hearing in pursuance to the said notice, no further opportunity shall be afforded to the petitioner. With the aforesaid directions, the present writ petition stands allowed in part. Sd/- DINESH KUMAR SINGH JUDGE AP WPC No 11793 of 2021 7 APPENDIX OF WP(C) 11793/2021 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE RETURN OF INCOME OF THE PETITIONER ALONG WITH STATEMENT OF ACCOUNT FOR AY 2017-2018 DATED 27/03/2018. Exhibit P2 TRUE COPY OF THE NOTICE ISSUED BY THE 3RD RESPONDENT UNDER SECTION 143(2) OF THE INCOME TAX ACT DATED 24/09/2018. Exhibit P3 TRUE COPY OF THE LETTER GIVEN BY THE PETITIONER TO THE 3RD RESPONDENT DATED 01/09/2018. Exhibit P4 TRUE COPY OF THE TRANSFER MEMO ISSUED BY THE 3RD RESPONDENT DATED 27/05/2019. Exhibit P5 TRUE COPY OF THE TRANSFER MEMO ISSUED BY THE INCOME TAX OFFICER, WARD 5, KOLLAM RANGE DATED 29/07/2019. Exhibit P6 TRUE COPY OF THE NOTICE ISUED BY THE 2ND RESPONDENT TO THE PETITIONER DATED 21/12/2019. Exhibit P6(A) TRUE COPY OF THE POSTAL COVER IN WHICH THE PETITIONER RECEIVED EXT.P6 NOTICE (THROUGH HIS WIFE) DATED 24/12/2019. Exhibit P7 TRUE COPY OF THE REPLY GIVEN BY THE PETITIONER TO THE 2ND RESPONDENT DATED 26/12/2019. Exhibit P8 TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE 2ND RESPONDENT DATED 25/12/2019. Exhibit P9 TRUE COPY OF THE REVISION PETITION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 26/12/2020. Exhibit P10 TRUE COPY OF THE COUNTER FOIL CHALLAN EVIDENCING THE PAYMENT OF RS.2,19,176/- DATED 03/02/2020. Exhibit P11 TRUE COPY OF THE ORDER OF THE 1ST RESPONDENT DATED 15/03/2021. RESPONDENT EXHIBITS Exhibit R1(a) A TRUE COPY OF THE NOTICE DATED 21.11.2019 ISSUED TO THE PETITIONER Exhibit R1(b) A TRUE COPY OF THE SCREENSHOT OF THE INCOME TAX PORTAL, SHOWING THE DELIVERY OF EXT R1(A) Exhibit R1(c) A TRUE COPY OF THE SCREENSHOT OF THE INCOME TAX PORTAL, SHOWING THE DELIVERY OF EXT P6 "