PARAMESWARA KRISHNA KAIMAL, V. UNION OF INDIA,

WP(C)/25379/2022

AI Insights

The case revolves around a writ petition filed by Parameswara Krishna Kaimal challenging the assessment order issued by the Income Tax Department for the assessment year 2018-19. The petitioner, an NRI, contested the applicability of Section 144C of the Income Tax Act, 1961, arguing that the assessment should not have been finalized under this section as it was not in effect for the relevant assessment year. Furthermore, the petitioner claimed that the assessment order was passed beyond the statutory limitation period. The Income Tax Department defended the application of Section 144C, highlighting its procedural nature and the inclusion of NRIs as 'eligible assessee' from April 1, 2020. The court dismissed the petition, affirming the validity of the assessment order and the application of Section 144C.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 743379 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-01-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM; KEERTHIVAS GI; P G JAYASHANKAR; JOSE JOSEPH; S S MANU
• Assessee Lawyers: S V RAJAN; SANIL JOSE; SWETHA DILEEP
• Keywords: Assessment Order; Eligible Assessee; Faceless assessment; Limitation; Non-Resident Indian
• Section: 143(3); 153; 144C; 144C(13); 144C(15)(b)(ii)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 5TH DAY OF JANUARY 2024 / 15TH POUSHA, 1945 WP(C) NO. 25379 OF 2022 PETITIONER: PARAMESWARA KRISHNA KAIMAL, AGED 82 YEARS, S/O. LATE K. PARAMESWARA KAIMAL, 1818, NORTH CITY PARK, USA, FROM A18,ELANKOM GARDENS, VELLAYAMABALAM, SASTHAMANGALAM P. O., THIRUVANANTHAPURAM, PIN – 695010. BY ADVS. SRI. S. V. RAJAN SRI. SANIL JOSE SMT. SWETHA P. DILEEP SMT. T. T. JAYANTHY SRI. A. N. PREMLAL SRI. S.HEMANTH SANTHOSH SMT. V. K. GAYATHRI DEVI SMT. SREENA B. S. RESPONDENTS: 1 UNION OF INDIA, REPRESENTED BY THE FINANCE SECRETARY, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI, PIN – 110001. 2 THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION CIRCLE, THIRUVANANTHAPURAM, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, INCOME TAX DEPARTMENT, AAYAKAR BHAVAN, KOWDIAR P. 0. ,THIRUVANANTHAPURAM, KERALA STATE, PIN – 695003. 3 THE SECRETARIAT, DISPUTE RESOLUTION PANEL-2 (INCOME TAX), 'A' WING, 4TH FLOOR, KENDRIYA SADAN, KORAMANGALA, BANGALORE, PIN – 560034. BY ADVS. SRI. CHRISTOPHER ABRAHAM – INCOME TAX DEPARTMENT SRI. KEERTHIVAS GI SRI. P. G. JAYASHANKAR – SENIOR SC SRI. JOSE JOSEPH – SC - INCOME TAX DEPARTMENT SRI. S. MANU – DEPUTY SOLICITOR GENERAL OF INDIA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 25379 OF 2022 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.25379 of 2022 ------------------------- Dated this the 5th day of January, 2024 JUDGMENT 1. Heard Ms. Swetha P. Dileep, learned Counsel for the petitioner and Mr. P. G. Jayashankar, learned Senior Counsel for the Income Tax Department. 2. The petitioner has approached this Court against the assessment order dated 22.07.2022 in respect of the assessment year 2018-19 despite alternative remedy of statutory appeal available to the petitioner. The petitioner has questioned Exhibit P-10 assessment order dated 22.07.2022 on the grounds that the assessment could not have been completed as per the provisions of Section 144 C of the Income Tax Act, 1961 (hereinafter referred to as the \"Act\" for short) as the petitioner is a Non-Resident Indian (hereinafter referred to as \"NRI\" for short) and NRI has been included in the definition of an \"eligible assessee\" under Sub-Section 15 (b) (ii) of Section 144 C w.e.f. 01.04.2020. In the present case, the assessment year is of the year 2018-19 and, therefore, the finalisation of the assessment of the petitioner for the said assessment year under the provisions of Section 144C is without jurisdiction. The WP(C) NO. 25379 OF 2022 3 next ground is that the final assessment order in Exhibit P-10 is dated 22.07.2022 and same is barred by limitation as per the provisions of Section 153 of the Act. It is submitted that as per the provisions of Section 143 and 144 of the Act, the assessment order required to be passed within a period of 18 months from the end of the assessment year. The 18 months period for the relevant assessment year i.e. 2018-19 would expire on 30.09.2020 and, therefore, the assessment order is beyond the limitation prescribed under the statute. It is void and nonest. 3. Mr. P. G. Jayashankar, learned Senior Standing Counsel for the Income Tax Department however, submits that Section 144 C is a procedural provision which has been brought in the statute w.e.f. 01.04.2020. An NRI has been included within the definition of \"eligible assessee\" under Sub-Section 15 (b) (ii) of Section 144 C to apply the machinery provision for finalising the assessment proceedings in respect of such an assessee. Section 144 C is a not substantive provision but, provides a machinery to complete the faceless assessment. It is not prejudicial to the interest of an NRI. In fact, it is a beneficial provision and detail procedure is provided for finalising the assessment in respect of an \"eligible assessee\" which would include the NRI as well. It is further submitted that the petitioner has never taken this objection before the assessing authority that the petitioner's assessment should not be WP(C) NO. 25379 OF 2022 4 finalised under Section 144 C of the Act and this objection has been taken for the first time before this Court which is otherwise liable to be rejected. 4. It is also submitted that the intention of the legislation is clear from the Explanatory Memorandum of the Finance Bill, 2020 for incorporating the NRI within the definition of \"eligible assessee\" under Section 144 C (15) (b) (ii) which states: \"This amendment will take effect from 1st April 2020. Thus, if the A.O. proposes to make any variation after this date, in the case of eligible assessee, which is prejudicial to the interest of the assessee, the above provision shall be applicable.\" 5. In respect of the 2nd submission of the learned Counsel for the petitioner that the assessment order is barred by limitation, the learned Counsel for the Revenue has submitted that time line has been extracted in the statement which would disclose that the petitioner has sold the property on 31.01.2018 and he filed return of his income for the assessment year 2018-19 on 04.03.2019. Notices under Section 143 (2) and 142 (1) were issued to him and the petitioner has availed personal hearing on 20.09.2021 and on 28.09.2021. The draft assessment order passed under Section 144 C was communicated to the petitioner to which he filed objection on 27.10.2021. The draft assessment order along with the objections were referred to the Dispute Resolution Board and the WP(C) NO. 25379 OF 2022 5 Dispute Resolution Board, passed the order on 29.06.2023 i.e. within period of nine months as prescribed under Section 144 C of the Act and, thereafter, on 22.07.2022 the final assessment order under Section 143 (3) read with Section 144C (13) was passed. It is further submitted that the Taxation and Other Laws Amendment Act (TOLA) had extended the limitation for finalising the assessment order in respect of the assessment year 2018-19 up to 30th September, 2021 vide the Notification, S. O. 2580(E) dated 25.06.2021 and in the present case, the draft assessment order was passed on 28.09.2021 and same was referred to the Dispute Resolution Board and within one month from the order of the Dispute Resolution Board, final assessment order has been passed in fact within less than a period of one month as is mandated under Section 4 of Section 144 C (iv). 6. I have considered the submissions. Section 144 C is not a substantive provision. It is machinery provision which has been incorporated for the benefit of the assessees including the eligible assessee. The NRI has been included in the definition of \"eligible assessee\" under Section 144C (15) (b) (ii) w.e.f. 01.04.2020 and, therefore, the assessment proceedings in respect of an NRI undertaken after the said date are to be governed under the provisions of Section 144 C. The objection of the petitioner that the petitioner ought not to have been WP(C) NO. 25379 OF 2022 6 proceeded under Section 144 C does not have merit. The assessment proceedings have been finalised under Section 144 C which is a machinery provision and in fact beneficial to the assessee. Therefore, I find no substance in the 1st objection raised by the petitioner. 7. So far as the question of limitation is concerned, the timeline has been given in the statement which would clearly state that the final order of assessment has been passed strictly in accordance with the provisions of Section 144 C and the general provision of Section 153 or 153 B would not be applicable in the present case . Therefore, the 2nd objection also does not have merit and substance. Further, the petitioner has never raised objection in respect of the petitioner not being covered within the provisions of Section 144C before the assessing authority, which is evident from the assessment order itself. Thus, I find no substance in the writ petition and the same is hereby dismissed. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 25379 OF 2022 7 APPENDIX OF WP(C) 25379/2022 PETITIONER’S EXHIBITS EXHIBIT P1 THE TRUE COPY OF THE INCOME TAX RETURN VERIFICATION FORM DATED 04/03/2019 FOR THE ASSESSMENT YEAR 2018 -2019 FILED BY THE PETITIONER BEFORE. THE RESPONDENT NO. 2 (DCIT CIRCLE, INTERNATIONAL TAXATION, THIRUVANANTHAPURAM) EXHIBIT P2 THE TRUE COPY OF THE NOTICE DATED 28/09/2019 UNDER SECTION 143 (2) OF THE INCOME TAX ACT, 1961, FROM THE OFFICE OF THE NATIO.NAL E- ASSESSMENT CENTRE (NEAC) FOR THE ASSESSMENT YEAR 2018-19 ISSUED TO THE PETITIONER EXHIBIT P3 THE TRUE COPY OF THE NOTICE DATED 22.01.2021 UNDER SECTION 142 (1) OF THE INCOME TAX ACT, 1961 ISSUED BY THE RESPONDENT NO. 2 TO THE PETITIONER FOR THE ASSESSMENT YEAR 20182019 WITH ITS ANNEXURE EXHIBIT P4 THE TRUE COPY OF THE REPLY LETTER DATED 06.02.2021 SENT BY THE PETITIONER TO THE RESPONDENT NO.2 EXHIBIT P5 THE TRU:E COPY OF THE LETTER DATED 23.06.2021 SENT BY THE PETITIONER TO THE RESPONDENT NO. 2 EXHIBIT P6 THE TRUE COPY OF THE SHOW CAUSE NOTICE DATED 20.09.2021 ISSUED BY THE RESPONDENT NO. 2 UNDER SECTION 129 OF THE INCOME TAX ACT, 1961 EXHIBIT P7 THE TRUE COPY OF THE REPLY LETTER DATED 26.09.2021 SENT BY THE PETITIONER TO THE RESPONDENT NO.2 EXHIBIT P8 THE TRUE COPY OF DRAFT ASSESSMENT ORDER UNDER SECTION 144 C OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2018-2019 ISSUED BY THE RESPONDENT NO. 2 TO THE PETITIONER UNDER DIN & ORDER NO. ITBA/ AST/F/144C/2021-2022/ 1035969652 (1) DATED 28.09.2021 WP(C) NO. 25379 OF 2022 8 EXHIBIT P9 THE TRUE COPY OF PETITIONER'S WRITTEN STATEMENT OF OBJECTION DATED 27.10.2021 (WITHOUT ANNEXURES) TO THE DRAFT ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2018-2019 DATED 28.09.2021 SENT TO THE RESPONDENT NO. 2 EXHIBIT P10 THE TRUE COPY OF THE THE ASSESSMENT ORDER ISSUED BY THE RESPONDENT NO. 2 TO THE PETITIONER UNDER DIN & ORDER NO. ITBA/AST/ S/143(3)/2022- 23/104408015 (1) DATED' 22.07.2022 FOR THE ASSESSMENT YEAR 2018-2019 AS PER THE FINAL ASSESSMENT MADE BY THE DISPUTE RESOLUTION PANEL- 2, BENGALURU, UNDER SECTION 144 C (5) OF THE INCOME TAX ACT, 1961 "