null V. Income Tax Department

WP/25225/2021

AI Insights

The case involves a Writ Petition filed by a petitioner challenging an assessment order for the Assessment Year 2018-19, which was claimed to be illegal, arbitrary, and violative of the principles of natural justice. The petitioner argued that the final assessment order was a verbatim replica of the draft assessment order, indicating a lack of application of mind by the Assessing Officer. The petitioner also contended that no opportunity for a personal hearing was provided, despite requests for such an opportunity in case the written submissions were found inadequate. The respondent countered that the petitioner did not explicitly request a personal hearing and that sufficient opportunities were provided to submit documents. The court found that the assessment order was indeed a replica of the draft order and that the petitioner's request for a personal hearing was not adequately addressed, leading to a violation of natural justice.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 821347 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 24-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: M KIRANMAYEE
• Assessee Lawyers: S DWARAKNATH REDDY
• Keywords: Assessment year 2018-19; Draft Assessment Order; Income Tax; Natural Justice; Personal hearing; Show cause notice; Writ of Certiorari
• Section: 142(1); 143(2); 115BBE

Judgement Text

"THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HON’BLE SMT. JUSTICE V. SUJATHA Writ Petition No.25225 of 2021 ORDER:- (per the Hon’ble Sri Justice C. Praveen Kumar) The present Writ Petition came to be filed, seeking issuance of Writ of Certiorari calling the records pertaining to the orders in DIN:ITBA/AST/S/143(3)/2021-22/ 1035851931(1) dated 24.09.2021 on the file of respondent no.1, relating to Assessment Year 2018-19 and quash the same, as illegal, arbitrary and violative of principles of natural justice. 2. The averments in the affidavit filed, in support of the Writ Petition would show that for the Assessment Year 2018- 19, the petitioner filed its Return of Income (R.O.I.) on 24.09.2018, declaring its total income at Rs.64,20,580/-. The R.O.I. was taken for complete scrutiny by issuing of notice under Section 143(2) of the Income Tax Act (I.T. Act), 1961. In response to the notice issued, the petitioner has submitted his response on 29.09.2019 and 01.02.2020 seeking adjournment as the Authorized Representative of the petitioner was preoccupied with tax audits. (a) Later on, a notice under Section 142(1) of the I.T. Act, dated 27.11.2020 came to be issued calling for certain CPK, J & VS, J W.P.No.25225 of 2021 2 details to be submitted on or before 22.12.2020. The petitioner vide response dated 03.12.2020 sought time till 31.01.2021 to submit documents. Later on, a letter dated 12.01.2021 came to be issued by respondent no.1 requesting the petitioner to file details as called for vide earlier notice under Section 142(1) of the I.T. Act. Another notice came to be issued under Section 142(1) of the I.T. Act, to which, the petitioner responded on 24.01.2021 uploading the details as called for by respondent no.1. (b) Thereafter, there was correspondence between the petitioner and the respondent no.1 with regard to the documents in issue and ultimately Show Cause Notice-cum- Draft Assessment Order dated 23.04.2021 came to be issued stating as to why assessment should not be completed as per the Draft Assessment Order. The petitioner was directed to submit his response through Register e-filing account by 26.04.2021. (c) Subsequently, the petitioner submitted his explanation for the issues raised in the show cause notice. It was further stated by the petitioner that in case the submissions of the petitioner were found to be inadequate, requested the authority to give an opportunity to explain the issues to the satisfaction of the Assessing Officer as the proposed addition, as per show cause notice, is 20 times (approx) more than their returned income with the risk of CPK, J & VS, J W.P.No.25225 of 2021 3 being taxed under Section 115BBE. This explanation was submitted on 06.05.2021. Later, an order came to be passed on 24.09.2021. Challenging the same, the present Writ Petition came to be filed. 3. Sri S. Dwaraknath Reddy, learned Senior Counsel appearing for the petitioner would submit that no opportunity of personal hearing was given to the petitioner as stated in the show cause notice to the petitioner. Apart from that he would submit that the assessment order is exactly a replica of the Show Cause Notice-cum-Draft Assessment Order issued to the petitioner, which would clearly show that there was no application of mind by the Assessing Officer while passing the order. In other words, his argument would be that explanation offered by the petitioner was never taken into consideration and the draft assessment order was made the final order in verbatim. He further submits that though the last paragraph of the explanation categorically speaks about an opportunity to explain, if required, but the same was not accorded to the petitioner. 4. Opposing the same, Smt. M. Kiranmayee, learned Standing Counsel for Income Tax would submit that the petitioner never asked for any personal hearing, and as such, providing an opportunity of personal hearing would not arise. She further submits that sufficient opportunity was given to CPK, J & VS, J W.P.No.25225 of 2021 4 the petitioner, but no documents were filed earlier and only on 09.05.2021 documents came to be filed. In so far as the order impugned is concerned, she would submit that the same is not verbatim of the Draft Assessment Order and that the order impugned came to be passed after application of mind. 5. The point that arises for consideration is, whether the order impugned in the writ petition warrants interference? 6. It is an undisputed fact that the Show Cause Notice- cum-Draft Assessment Order was issued on 23.04.2021. In the said draft notice, it was mentioned as under:- “a. accept the proposed modification; or b. file your written reply objecting to the proposed modification; or c. if required, you may request for personal hearing so as to make oral submissions or present your case after filing of written reply. On approval of the request, personal hearing shall be conducted exclusively through video conference.” 7. In response to the same, the petitioner herein submitted his explanation on 06.05.2021, and the last paragraph of the said explanation reads as under:- “8. We have submitted evidences and explanations for the issues raised in the show cause notice. In case our submissions found to be still inadequate, we request you to please give us an opportunity to explain the issues to the satisfaction of the assessing officer as the proposed addition as per show cause notice is 20 times (approx) more than our returned income with the risk of being taxed u/s.115BBE.” CPK, J & VS, J W.P.No.25225 of 2021 5 After submitting the explanation, the impugned order came to be passed on 24.09.2021. These facts are not in dispute. 8. As observed earlier, the Assessment Order is a Mutatis Mutandis as exactly a replica of the Draft Assessment Order. 9. In so far as the first issue namely as to whether the petitioner has sought for personal hearing, as stated in the show cause notice, the explanation dated 06.05.2021 would clearly indicate that if the authorities find that the submissions made in the written explanation are inadequate, the petitioner requested the authorities to give an opportunity to explain the issues to the satisfaction of the Assessing Authority, as proposed addition, as per the show cause notice would be 20 times more than the returned income. The same would indicate that the petitioner did ask for an opportunity for explaining the issues to the satisfaction of the Assessing Officer, in case his submissions made in the written representatives are inadequate. Therefore, the argument of the learned counsel for the petitioner that no opportunity of personal hearing was given, cannot be found fault with. 10. In so far as the second issue is concerned, a comparison of the Draft Assessment Order-cum-Show Cause notice and the impugned order are identical, which is the final Assessment Order, is a exact replica of the Draft CPK, J & VS, J W.P.No.25225 of 2021 6 Assessment Order. There is not even a variation in the word or sentence in the two Assessment Orders. That being so, it can be said, without any hesitation, that the explanation offered by the petitioner herein was never considered by the Assessing Officer and without application of mind to the explanation given, copied the Draft Assessment Order in verbatim. This is sufficient to show that the Assessment Order came to be passed without considering the explanation of the petitioner. On this score alone, the order impugned is liable to be set aside. 11. The learned Standing Counsel for the respondents also raised an objection with regard to the maintainability of Writ Petition when there is an alternate statutory remedy available to the petitioner. She also relied upon a judgment of this Court in W.P.No.23935 of 2021 dated 21.10.2021 in support of her plea, wherein it was held as under:- “5. Ordinarily, this Court in exercise of writ jurisdiction would not interfere with an order of assessment in the face of the existence of alternative statutory remedy except in the following cases:- a) Breach of fundamental rights; b) Breach of natural justice; c) Order being wholly without jurisdiction; d) Vires of statute is under challenge.” There cannot be any dispute with regard to the proposition laid down in the said judgment. But, here is a case where there is a gross violation of principles of natural justice. CPK, J & VS, J W.P.No.25225 of 2021 7 Firstly, no opportunity of personal hearing was given though the explanation refers to seeking an opportunity of hearing in case the Assessing Authority is not satisfied with the contents of the explanations and secondly the explanation given by the petitioner was never considered by the Assessing Authority as discussed earlier/supra. 12. Accordingly, the Writ Petition is allowed setting aside the order impugned herein and consequently the matter is remanded back to the Assessing Authority [R.1], who shall deal with the explanation of the petitioner and pass appropriate orders after giving an opportunity of personal hearing to the petitioner in accordance with law, as early as possible. Having regard to the above finding, it may not be necessary for us to go into the other issues involved. There shall be no order as to costs. Miscellaneous petitions pending, if any, shall stand closed. _______________________________ JUSTICE C.PRAVEEN KUMAR _______________________ JUSTICE V. SUJATHA Date: 24.03.2022 MS CPK, J & VS, J W.P.No.25225 of 2021 8 THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HON’BLE SMT. JUSTICE V. SUJATHA Writ Petition No.25225 of 2021 (per the Hon’ble Sri Justice C. Praveen Kumar) Date: 24.03.2022 MS "