Puthukai Vayaningad Vairajathan Easwarante Kshethra Committee, Bangalam, Puthukai, Nileswar, Kasaragod V. The Income Tax Officer, Ward 1 & TPS, Aayakara Bhavan, Vidyanagar, Kasaragod and The Principal Commissioner of Income Tax, Aayakara Bhawan, Mananchira, Kozhikode and The Commissioner of Income Tax (Appeals), Aayakara Bhawan, Mananchira, Kozhikode and Income Tax Appellate Tribunal, Cochin Bench, 1st Floor, (Block C-1 & C-II), Kendriya Bhavan, Opp. CSEZ, Kakkanad, Cochin

WP(C)/15844/2022

AI Insights

The case involves the Puthukai Vayaningad Vairajathan Easwarante Kshethra Committee, represented by its former treasurer, Sri. C.V. Krishnan, challenging the assessment and penalty orders issued by the Income Tax Department. The assessment order dated 31.03.2022 and penalty orders under Sections 271(1)(c) and 271(1)(b) of the Income Tax Act, 1961, were contested due to alleged violations of natural justice, as the petitioner was not afforded an adequate and effective opportunity to be heard, particularly because the treasurer was in judicial custody during critical periods. The Income Tax Appellate Tribunal had previously noted these issues and remanded the case for re-adjudication, which was not properly followed, leading to the High Court's decision to set aside the orders and remand the matter back for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 682040 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-12-2023
• Assessment Year: misc
• Other Referred Cases: T.C.N Menon vs Income Tax Officer, Commissioner of Sales Tax vs H.M. Esufali H.M. Abdulaali, Dhakeswari Cotton Mills Ltd. vs Commissioner of Income Tax, Briji Bhushan Lal Parduman Kumar vs Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: P G PGJ; KEERTHIVAS GIRI; CHRISTOPHER ABRAHAM
• Assessee Lawyers: V P NARAYANAN; ALAN DEV
• Keywords: Assessment Order; Effective representation; Judicial Custody; Natural Justice; Opportunity of Hearing; Penalty order; Remand back
• Section: 144; 143(3); 142(1); 271(1)(c); 271(1)(b); 254

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 5TH DAY OF DECEMBER 2023 / 14TH AGRAHAYANA, 1945 WP(C) NO. 37467 OF 2022 PETITIONER: PUTHUKAI VAYANINGAD VAIRAJATHAN EASWARANTE KSHETHRA COMMITTEE, BANGALAM, PUTHUKAI, NILEWAR, KASARAGOD 671 314, REPRESENTED BY ITS FORMER TREASURER SRI.C.V.KRISHNAN., AGED 73 YEARS. BY ADVS. SRI. V. P. NARAYANAN SRI. ALAN PRIYADARSHI DEV RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD 1 & TPS, AAYAKARA BHAVAN, VIDYANAGAR, KASARAGOD KERALA, PIN – 671123. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAWAN, MANANCHIRA, KOZHIKODE, PIN – 673001. 3 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAWAN, MAMANCHIRA, KOZHIKODE, PIN – 673001. BY ADVS. SRI. P. G. JAYASHANKAR PGJ SMT. KEERTHIVAS GIRI SRI. CHRISTOPHER ABRAHAM – SC – INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.12.2023, ALONG WITH WP(C).15844/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 37467 & 15844 OF 2022 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY,THE 5TH DAY OF DECEMBER 2023 / 14TH AGRAHAYANA, 1945 WP(C) NO. 15844 OF 2022 PETITIONER: PUTHUKAI VAYANINGAD VAIRAJATHAN EASWARANTE KSHETHRA COMMITTEE, BANGALAM, PUTHUKAI P. O., NILESWAR, KASARAGOD-671314, REPRESENTED BY ITS FORMER TREASURER, SRI. C. V. KRISHNAN. BY ADVS. SRI. T. M. SREEDHARAN (SR.) SRI. V. P. NARAYANAN SRI. ALAN PRIYADARSHI DEV RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD -1 & TPS, AAYAKAR BHAVAN, VIDYANAGAR, KASARAGOD-671 123. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE-673 001. 3 THE COMMISSIONER OF INCOME TAX (APPEALS), AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE-673 001. 4 INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, 1ST FLOOR, (BLOCK C-1 & C-II), KENDRIYA BHAVAN, OPP .CSEZ, KAKKANAD, COCHIN-682 037, REP BY ITS ASSISTANT REGISTRAR. BY ADVS. SRI. P. G. JAYASHANKAR PGJ SMT. KEERTHIVAS GIRI SRI. CHRISTOPHER ABRAHAM – SC - INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.12.2023, ALONG WITH WP(C).37467/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 37467 & 15844 OF 2022 3 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) Nos.37467 & 15844 of 2022 ------------------------- Dated this the 5th day of December, 2023 JUDGMENT 1. Heard Ms. Divya Raveendran, learned Counsel for the petitioner and Mr. Christopher Abraham, learned Senior Standing Counsel for the the Income Tax Department. 2. These writ petitions has been filed impugning Exhibit P-3 assessment order dated 31.03.2022 and the penalty orders under Sections 271 (1) (c) and 271 (1) (b) of the Income Tax Act, 1961 dated 22.09.2022 and 20.09.2022 respectively. These orders have been passed after the matter was remanded back by the Income Tax Appellate Tribunal, Cochin Bench, Cochin vide Exhibit P-2 Order dated 07.10.2020. The Tribunal in paragraph 5 of the said Order dated 07.10.2022 noticed the fact that the Treasurer of the petitioner Sri. C. V. Krishnan was in judicial custody and therefore, no effective representation could be made which required assistance of Chattered Accountant. It was also noticed that the Books of Accounts were available only with Sri. C. V. Krishnan who was in judicial custody. Noticing the violation of the principles of WP(C) NO. 37467 & 15844 OF 2022 4 natural justice, the case was restored to the file of the Assessing Officer for re-adjudication after granting the assessee an adequate and effective opportunity of hearing. On remand also, the notice was served when Sri. C. V. Krishnan was in judicial custody and was in Jail. He sought for time for filing the reply to the notice under Section 142 (1) of the Income Tax Act. But since the last date for finalising the assessment proceedings was expiring on 31.03.2021, without granting extension of time, the assessment order came to be passed under Section 144 read with Section 254 of the Income Tax Act, 1961 and the tax was assessed at Rs. 3,20,665/- with direction to initiate the penalty proceedings under Section 271B, 271 (1) (b) and 271 (1) (c) of the Act. 3. The factors and grounds which were taken note of by the Income Tax Appellate Tribunal in its Order dated 07.10.2020 were present when the present impugned assessment order and penalty orders came to be passed. I am of the considered view that the petitioner was not afforded with adequate and effective opportunity of being heard as directed by the Tribunal and there has been a violation of the principles of natural justice in finalising the assessment and penalty orders impugned in these writ petitions. WP(C) NO. 37467 & 15844 OF 2022 5 4. Considering the aforesaid facts, these writ petitions are allowed and the impugned assessment and penalty orders are set aside and the matter is remanded back to the Assessing Authority to pass fresh order after considering the reply to be filed by the assessee and documents produced. The petitioner is granted three weeks time from today to file reply to the notices under Section 142 (1) and produce all the evidence and records for examination before the Assessing Authority. The petitioner should be afforded an opportunity of hearing by the Assessing Authority before finalising the assessment order. It is made clear that no further opportunity shall be granted to the petitioner for filing the reply to the notice under Section 142 (1) or producing the evidence and documents. It is also made clear that only one opportunity of being heard shall be granted by the Assessing Officer to the petitioner before finalising the assessment order. With the aforesaid directions, these writ petitions are hereby allowed. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 37467 & 15844 OF 2022 6 APPENDIX OF WP(C) 37467/2022 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF ASSESSMENT ORDER DATED 16.01.2008 EXHIBIT P2 TRUE COPY OF THE ORDER DATED 7.10.2020 IN ITA NO 459/C/2019 EXHIBIT P3 TRUE COPY OF THE ASSESMENT ORDER DATED 31.03.2022 FOR AY 2006-07 EXHIBIT P4 TRUE COPY OF THE INTERIM ORDER IN WPC NO 15844 OF 2022 DATED 13.5.2022 EXHIBIT P5 TRUE COPY OF THE PENALTY ORDER PASSED BY THE FIRST RESPONDENT DATED 22.9.2022 UNDER SECTION 271(1)© EXHIBIT P6 TRUE COPY OF THE PENALTY ORDER PASSED BY THE FIRST RESPONDENT DATED 20.9.2022 UNDER SECTION 271(1)(B) WP(C) NO. 37467 & 15844 OF 2022 7 APPENDIX OF WP(C) 15844/2022 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 16.01.2008 U/S 144 PASSED BY THE 1ST RESPONDENT EXHIBIT P2 TRUE COPY OF THE ORDER DATED 7.10.2020 PASSED BY THE 4TH RESPONDENT IN ITA NO.459/COCH/2019 EXHIBIT P3 TRUE COPY OF THE ASSESSMENT ORDER DATED 31.03.2022 FOR THE ASSESSMENT YEAR 2006-07 U/S. 144 R.W.S. 254 BY THE 1ST RESPONDENT EXHIBIT P4 TRUE COPY OF THE JUDGMENT IN T.C.N MENON VS INCOME TAX OFFICER, REPORTED IN (1974) 96 ITR 0148 EXHIBIT P5 TRUE COPY OF THE JUDGMENT IN COMMISSIONER OF SALES TAX. VS. H.M.ESUFALI H.M.ABDUALALI REPORTED IN (1973) AIR 2266 EXHIBIT P6 TRUE COPY OF THE JUDGMENT IN DHAKESWARI COTTON MILLS LTD. VS. COMMISSIONER OF INCOME TAX REPORTED IN (1954) 26 ITR 0775 EXHIBIT P7 TRUE COPY OF THE JUDGMENT IN BRIJI BHUSHAN LAL PARDUMAN KUMAR.V.S. COMMISSIONER OF INCOME TAX, REPORTED IN (1978) 115 ITR 0524 "