K.R.SREEKUMAR V. INCOME TAX OFFICER

WP(C)/11199/2013

AI Insights

The case involves a writ petition filed by Maya Sreekumar and her family against the Income Tax Officer and the Tax Recovery Officer, challenging an assessment order and demand notice related to income tax liabilities. The petitioner argued that the assessment was conducted without proper notice and opportunity to present their case, particularly concerning the cash flow statements and the opportunity to cross-examine creditors. The court examined whether the procedural requirements were met in the reassessment process following the petitioner's earlier challenges and found that the petitioner had been given sufficient opportunities, which were not availed. Consequently, the court dismissed the petition, upholding the assessment order.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 754366 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-12-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: D S SREEKUMARAN; T S MAYA
• Keywords: Assessment Order; Demand notice; Natural Justice; Reassessment; Writ of Certiorari
• Section: 131; 264

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 19TH DAY OF DECEMBER 2019 / 28TH AGRAHAYANA, 1941 WP(C).No.11199 OF 2013(Y) PETITIONERS: 1 K.R.SREEKUMAR AGED 52, S/O.RAMAKRISHNA PILLAI, KANNAMPALLIL VALIYATHU, S.V.MARKET P.O., KARUNAGAPPALLY, KOLLAM DISTRICT. [DECEASED] 2 MAYA SREEKUMAR AGED 46 YEARS W/O.LATE K.R.SREEKUMAR, R/AT KANNAMPILLIL VALIATHU, S.V.MARKET PO., KARUNAGAPALLY. 3 MEERA M.S AGED 28 YEARS D/O.SREEKUMAR, R/AT KANNAMPILLIL VALIATHU, S.V.MARKET PO., KARUNAGAPALLY. 4 GANGARAM AGED 20 YEARS S/O.SREEKUMAR, R/AT KANNAMPILLIL VALIATHU, S.V.MARKET PO., KARUNAGAPALLY. Impleaded as per order dated 8.10.2015 BY ADVS. SRI.D.S.SREEKUMARAN SMT.T.S.MAYA RESPONDENTS: 1 INCOME TAX OFFICER WARD IV, INCOME TAX OFFICE, ALAPPUZHA PIN - 688 001 2 THE TAX RECOVERY OFFICER ROOM NO.7 FIRST FLOOR PUBLIC LIBRARY BUILDING, SASTRI ROAD, KOTTAYAM 686 001. R1 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON, 3.12.2019, THE COURT ON 19.12.2019 DELIVERED THE FOLLOWING: W.P.(C).No.11199/13 2 JUDGMENT Dated this the 19th day of December 2019 1.This writ petition is filed seeking the following prayers:- “i) to issue a writ of certiorari and quash Exhibit P5(a) Assessment Order dated 28.12.2006 and Exhibit P5(b) Demand Notice attached with Exhibit P5(a) dated 28.12.2006 as illegal and arbitrary. ii) to issue a writ of certiorari and quash Exhibit P6 sale proclamation notice dated 30.3.2013 as it is highly illegal, arbitrary and against the principle of natural justice. iii) to issue a writ of mandamus or any other appropriate writ, order or direction to the respondents to reassess and make a fresh assessment as directed by the Commissioner of Income Tax, Kottayam in his Exhibit P3 order after hearing the petitioner giving him sufficient opportunity to explain his case.“ 2.Heard the learned counsel for the petitioner and the learned counsel appearing for the respondents. 3.It is submitted by the learned counsel for the petitioner that the original petitioner, who has since passed away was under treatment of schizoaffective disorder and Schizophrenia till his death on 14.12.2014. It stated that he was afflicted by delusions and hallucinations and that he had made certain statements during the course of enquiry with regard to W.P.(C).No.11199/13 3 assessment to Income Tax, which resulted in heavy tax liability being inflicted on him. It is stated that there was an aided school by name 'John F Kenedy School' established by the petitioner's father Ramakrishna Pillai in 1965 at Karunagapally. The petitioner and his siblings inherited the school and were managing the affairs of the school in rotation. It is stated that the shares of the petitioner's brothers were purchased by the petitioner by sale deeds dated 27.10.1998 and 22.02.1999. The apparent consideration of the sale of the shares was Rs.3 lakhs. An enquiry was conducted into the transaction and in a sworn statement given under Section 131 of the Income Tax Act on 12.2.2000, the petitioner admitted that he had purchased 2/3rd of shares for a total consideration of Rs.60 lakhs against the apparent consideration of Rs.3 lakhs and that he had raised personal loans from several persons for the said purpose. It is stated that the assessment was completed on 19.3.2004 on the basis of the sworn statement. A revision petition was filed by the petitioner under Section 264 of the Income Tax Act. The grounds raised were that the cash flow statement prepared by the assessing officer was not W.P.(C).No.11199/13 4 given to the petitioner and his contentions with regard to the same were not considered and that he was not given copies of the statements relied on and that the opportunity to cross- examine the creditors. On these grounds, the assessment was set aside by Exhibit P3. The assessing officer was directed to pass a fresh assessment order after giving copies of the cash flow statement and the statements recorded from the loan creditors of the assessee and allowing for cross- examination of the creditors, if so desired by the petitioner. The assessee was permitted to adduce fresh evidence, if any. The assessing authority was directed to examine the same before passing fresh assessment order. 4.It is stated that nothing was done thereafter. The petitioner had submitted Exhibit P4 letter dated 29.11.2011, stating that he had not received any copy of the assessment order and that opportunity had not been granted to adduce evidence. Thereafter, Exhibit P5 letter was received by the petitioner forwarding the copy of the assessment order and demand notice. The petitioner was further informed that the W.P.(C).No.11199/13 5 assessment order had been despatched on 29.12.2006. Exhibit P5 is the assessment order, which is challenged by the petitioner primarily on the ground that it had not been served on him. 5.A counter affidavit has been filed by the respondents stating that re-assessment proceedings were initiated pursuant to Exhibit P3 on 24.4.2006. Copies of cash flow statements, sworn statements recorded from assessee and from creditors were forwarded to the petitioner and by letter dated 24.4.2007, the petitioner was given an opportunity to cross- examine the loan creditors and to produce fresh evidence if any. It is stated that the petitioner failed to respond to the above letter. It is stated that on 19.12.2006 the petitioner had appeared before the assessing officer pursuant to a further notice and had sought adjournment of the assessment proceedings for two months. However, since the time limit for completion of assessment was expiring on 31.12.2006, the assessment was completed by Exhibit P5(a) and a copy of the order along with demand notice was sent to the petitioner by W.P.(C).No.11199/13 6 registered post. It is stated that Exhibit R1(a) receipt would show that the postal articles were duly received by the petitioner. 6. Faced with the said contentions, the learned counsel for the petitioner submits that the challenge to the impugned order on the ground that it was not received and that no notice preceeded it are withdrawn. The only surviving question is with regard to legality of Exhibit P5(a), which is an appealable order. The learned counsel for the petitioner would then submit that Exhibit P5(a) was not preceded by any pre-assessment notice. It is further submitted that the letter issued to the petitioner after Exhibit P3 proceedings did not contain a fresh cash flow statement, but only referred to the cash flow statement as contained in Exhibit P1 original order of assessment which had been set aside in Exhibit P5(a). It is stated that no fresh evidence is relied on by the assessing officer and the assessing officer did not consider the contentions of the petitioner as had been directed in Exhibit P3. W.P.(C).No.11199/13 7 7.I have considered the contentions advanced. The contention that the order of assessment has not been served on the petitioner cannot be believed in view of Exhibit R1(A) which contains the admitted signature of the petitioner affixed on 3.1.2007. In the above view of the matter, the writ petition which has been filed only on 19.4.2013 is obviously belated. The surviving issue which requires consideration is the legality of the assessment. It is seen from Exhibit P3 that the assessment carried out had been set aside by the revisional authority on three grounds. The first was that the Assessing Officer did not prepare and give the cash flow statement to the assessee before the assessment was completed. Secondly, it was found that the records do not show that copies of the statements recorded from the creditors were given to the assessee. Thirdly, it was found that no opportunity was given to the assessee to cross-examine the creditors who had contradicted the assessee regarding the payments. It is not in dispute that Exhibit P2 order of assessment contained a cash flow statement at paragraph 5 thereof. The contention of the assessee was that the said statements had not been put to him W.P.(C).No.11199/13 8 and his contentions were not considered before the assessment order was passed. It is seen from Exhibit P5(a) proceedings that copy of the cash flow statement prepared by the assessing officer, copy of the sworn statement recorded from the assessee and copies of the sworn statement recorded from the loan creditors were issued to the assessee and the assessee was required to be present on 8.5.2006 to offer comments on the cash flow statement and to produce evidence in support of his case and if he so requires, to produce and cross-examine the loan creditors. It is stated that on 13.12.2006, another letter was issued posting the case on 19.12.2006. It is submitted that the assessee appeared on 19.12.2006, but did not adduce any fresh evidence or make available the loan creditors for cross-examination. He only sought time. It is in the above circumstances that Exhibit P5(a) assessment order had been issued. 8.It is clear that the assessee had obtained Exhibit P3 order requiring a fresh assessment and opportunity to place his contentions on record or to adduce further evidence. However W.P.(C).No.11199/13 9 it is clear from the narration in Exhibit P5(a) that such opportunity was not availed by the assessee. The assessment had to be completed before 31.12.2006. It was in the above view of the matter that Exhibit P5(a) assessment order had been issued. Having considered the contentions advanced, I find no illegality or perversity vitiating the order of assessment justifying an interference in the same in exercise of the jurisdiction of judicial review, that too, in an obviously belated proceedings. The assessee who did not avail of the opportunity to substantiate his case in spite of issuance of notice and grant of opportunity cannot be heard to contend that the order is bad for want of consideration of his contention. No further notice was required to be issued in a matter of this nature where the opportunity is granted pursuant to Exhibit P3 order in revision. The writ petition, therefore, fails and the same is accordingly dismissed. Sd/- Anu Sivaraman, Judge sj W.P.(C).No.11199/13 10 APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPIES OF THE MEDICAL CERTIFICATES WITH RESPECT TO THE PETITIONER ISSUED BY DOCTOR LATE M.R.R.MENON EXHIBIT P1(A) TRUE COPY OF THE MEDICAL CERTIFICATE ISSUED BY DR.SUBHASH EXHIBIT P2 TRUE COPY OF THE ORDER DATED 19.3.2004 ISSUED BY THE 1ST RESPONDENT EXHIBIT P3 TRUE COPY OF THE REVISION ORDER C.NO.308(C)/56/264/CIT-KTM/2004-05 DATED 29.3.2006 EXHIBIT P4 TRUE COPY OF THE PETITIONERS LETTER DATED 29.11.2011 EXHIBIT P5 TRUE COPY OF THE COVERING LETTER DATED 29.11.2011 BY THE 2ND RESPONDENT. EXHIBIT P5(A) TRUE COPY OF THE ASSESSMENT ORDER DATED 28.12.2006 EXHIBIT P5(B) TRUE COPY OF THE DEMAND NOTICE ATTACHED WITH EXHIBIT P5 DATED 28.12.2006. EXHIBIT P6 RESPONDENTS EXHIBITS EXHIBIT R1(A) TRUE COPY OF THE NOTICE DATED 30.3.2013. TRUE COPY OF THE POSTAL ACKNOWLEDGMENT. True copy PS to Judge "