MFAR Realtors Private Limited V. Union of India, Ministry of Finance, Income Tax Department, National E-Assessment Centre and Assistant Commissioner of Income Tax, National E-Assessment Centre

WP(C)/18252/2021

AI Insights

The case involves MFAR Realtors Private Limited, which challenged the assessment order and penalty notice issued by the Income Tax Department for the assessment year 2018-19. The petitioner argued that they did not receive the showcause notice due to the lockdown in Kerala, which restricted their office operations. The court examined the timing and delivery of the showcause notice and found that the petitioner was not given a fair opportunity to respond, thus violating the principles of natural justice. Consequently, the court set aside the assessment and penalty notices and ordered a reissuance of the showcause notice with an extended response period for the petitioner.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 803530 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-10-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: BENNY THOMAS; AKHIL KUMAR G NAIR
• Keywords: Assessment Order; Lockdown; Natural Justice; Penalty notice; Showcause notice
• Section: 143(2); 274; 270A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS MONDAY, THE 11TH DAY OF OCTOBER 2021 / 19TH ASWINA, 1943 WP(C) NO. 18252 OF 2021 PETITIONER: MFAR REALTORS PRIVATE LIMITED, VII/705D, NH BYE PASS KUNDANOOR, KOCHI-682 304, REPRESENTED BY ITS DIRECTOR, MR. M.M. ABDUL BAHEER. BY ADVS. P.BENNY THOMAS AKHIL SURESH HARI KUMAR G NAIR RESPONDENTS: 1 UNION OF INDIA, MINISTRY OF FINANCE, INCOME TAX DEPARTMENT, NATIONAL E- ASSESSMENT CENTRE DELHI-110 001, REP. BY ADDL. COMMISSIONER. 2 ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX DEPARTMENT, NATIONAL E- ASSESSMENT CENTRE, DELHI-110 001 BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 18252 OF 2021 2 BECHU KURIAN THOMAS, J ................................................ W.P.(C) NO. 18252 OF 2021 …........................................ Dated this the 11 th day of october, 2021 JUDGMENT Petitioner challenges the order of assessment for the assessment year 2018-19 dated 24/5/2021 produced as Ext.P8 as well as the notice for penalty under section 274 read with Section 270A of the Income Tax Act 1961 (for short ‘the Act’) is produced as Ext.P6. 2. The main grievance of the petitioner stems from the alleged failure to receive a showcause notice purported to have been issued to it on 13/5/2021, seeking an explanation from the petitioner as to why, the draft assessment order shall not be confirmed. According to the petitioner he has never received such a WP(C) NO. 18252 OF 2021 3 showcause notice dated 13/5/2021. Reliance is also placed by the learned counsel for the petitioner on the lock down imposed upon the State of Kerala from 8/5/2021 till 16/6/2021. It is further claimed that the office of the petitioner was not functioning during the said period on account of the lock-down as result of which, petitioner did not receive any showcause notice on the draft assessment order. 3. I have heard the learned counsel for the petitioner Adv.Akhil Suresh as well as the learned Standing Counsel Adv.Christopher Abraham. 4. On a perusal of Ext.P8 order of assessment, it is noticed that the assessee was called upon to file, its submission by showcause notice dated 13/5/2021. The time provided for filing the said explanation was stipulated as 17/5/2021. It is not disputed and is in fact available in the public domain, that the State WP(C) NO. 18252 OF 2021 4 was under complete lock-down from 8/5/2021 till 16/6/2021. Insistence by the 2nd respondent to file the submissions to the showcause notice by 17/5/2021 therefore deprive the petitioner of a reasonable opportunity to contest the case on merits by filing the required explanation. It is also evident that the time provided for filing such explanation was only four days. Assuming for a moment that the showcause notice was received by the petitioner, even then, there is a violation of the principles of natural justice for not providing sufficient opportunity to submit the explanation to the showcause notice. 5. Since the assessment order has been passed without actually serving the showcause notice dated 13/5/2021, upon the petitioner, and even if it was served, the time granted to the petitioner was not sufficient especially in the light of the restrictions on account of the covid-19 pandemic regulations in the state, I am WP(C) NO. 18252 OF 2021 5 of the opinion that Ext.P8 is liable to be set aside. Accordingly I set aside Ext.P8 order of assessment and consequently Ext.P6 notice of penalty issued under Section 274. However, I direct the 2nd respondent to serve the showcause notice purported to have been issued on 13/5/2021, once again on the petitioner on or before 25/10/2021 and the petitioner shall file its objections/ explanations within a period of 2 weeks from the date of receipt of such a showcause notice. Thereafter the assessing officer shall pass fresh orders on or before 5/12/2021 in accordance with law. This writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE AJM WP(C) NO. 18252 OF 2021 6 APPENDIX OF WP(C) 18252/2021 PETITIONER’S EXHIBITS: Exhibit P1 A TRUE COPY OF THE FINANCIAL STATEMENT FOR THE YEAR ENDING 31.03.2018. Exhibit P2 A TRUE COPY OF THE STATEMENT OF PROFIT AND LOSS ACCOUNT OF PETITIONER FOR PERIOD ENDING 31.03.2018. Exhibit P3 A TRUE COPY OF THE NOTICE U/S. 143 (2) DATED 22.09.2019 ISSUED BY R2. Exhibit P4 A TRUE COPY OF THE REPLY DATED 20.02.2020 SUBMITTED BY PETITIONER. Exhibit P5 A TRUE COPY OF THE REPLY DATED 27.01.2021 SUBMITTED BY PETITIONER. Exhibit P6 A TRUE COPY OF THE PENALTY NOTICE DATED 24.05.2021 ISSUED BY R2. Exhibit P7 A TRUE COPY OF THE GRIEVANCE DETAILS DATED 22.06.2021. Exhibit P8 A TRUE COPY OF THE ASSESSMENT ORDER DATED 24.05.2021 ISSUED BY R2. RESPONDENT’S EXHIBITS: NIL AJM //TRUE COPY// PA TO JUDGE "