RADHAKRISHNAN K., V. ASSESSMENT UNIT, INCOME TAX DEPARTMENT,

WP(C)/1660/2023

AI Insights

The case involves Radhakrishnan K., a trader in rubber, who filed a writ petition against the Income Tax Department's National Faceless Assessment Centre (NFAC) challenging the assessment order, computation sheet, and penalty notice issued for the assessment year 2021-2022. The petitioner argued that he was unable to submit necessary documents due to the closure of the respondent's portal, despite being granted an extension to do so. The respondent contended that the petitioner failed to prove the genuineness of his purchases and did not utilize the video conferencing facility in time, thus waiving his right to a hearing. The court found that the respondent's actions were unreasonable and violated the principles of natural justice, leading to the setting aside of the impugned orders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748963 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 23-05-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: ANIL NAIR
• Keywords: Assessment Order; Faceless assessment; Income Tax; Natural Justice; Penalty notice
• Section: 142(1); 143(2)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS TUESDAY, THE 23RD DAY OF MAY 2023 / 2ND JYAISHTA, 1945 WP(C) NO. 1660 OF 2023 PETITIONER: RADHAKRISHNAN K., PROPRIETOR, R.K. TRADERS, KOTTAPPURAM, SREE KRISHNA PURAM, PALAKKAD DISTRICT, PIN - 679513 BY ADV ANIL D. NAIR RESPONDENT: ASSESSMENT UNIT, INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE (NFAC), NEW DELHI, PIN – 110001 SRI. JOSE JOSEPH (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.05.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 1660 OF 2023 2 Dated this the 23rd day of May, 2023 JUDGMENT The writ petition is filed to set aside Exts.P9 assessment order, P9 (a) computation sheet and P9 (b) notice for penalty issued by the respondent. 2. The relevant facts leading to the above orders, in brief, are: the petitioner is a trader in Rubber. The petitioner filed his return of income for the assessment year 2021-2022, which was subject to scrutiny. The petitioner was served with Ext.P1 notice under Section 143(2) of the Income Tax Act,1961 (in short ‘Act’). The petitioner submitted Ext.P2 reply stating that he was ready to furnish all the supporting materials. The petitioner was thereafter served with Ext.P3 notice, to which the petitioner again submitted Ext.P4 reply. Then, the petitioner was served with Ext.P5 show cause notice WP(C) NO. 1660 OF 2023 3 dated 15.12.2022, calling upon him to show cause why assessment shall not be finalised taking into account the variation. The petitioner was directed to submit his response through registered e-filing account of the respondent on or before 18:25 hours of 20.12.2022. Immediately, the petitioner submitted Ext.P6 request on 20.12.2022 stating that his accountant was sick and he needed time till 26.12.2022. The respondent by Ext.P7 reply dated 20.12.2022, granted enlargement of time by permitting the petitioner to submit his response on or before 24.12.2022. But, the respondent’s portal was closed, which precluded the petitioner from submitting his response and supporting materials. To the utter surprise of the petitioner, the respondent proceeded with the assessment and has passed Exts.P9 to P9(b). Exts.P9 to P9(b) are arbitrary, unjustifiable and unsustainable in law. Hence, the writ petition. 3. The respondent has through its Standing Counsel WP(C) NO. 1660 OF 2023 4 filed a statement, inter alia, contending that since the petitioner did not discharge his fundamental responsibility of proving that the purchases were genuine, the show cause notice dated 15.12.2022 was issued asking him to file his objections on or before 20.12.2022. As the petitioner attempted for the video conference facility only on 23.12.2022, and the time period was over. It cannot be said that there is violation of principles of natural justice. The petitioner had waived his right of having a hearing by video conference. The system of Faceless Assessment can work in a robust manner, only if the assessee co-operates and discharges his responsibilities within the time period fixed by the respondent. The petitioner has an alternative statutory remedy by filing an appeal. The writ petition is devoid of any merits and is liable to be dismissed. 4. The petitioner has filed a reply affidavit reiterating his contentions in the writ petition and WP(C) NO. 1660 OF 2023 5 denying the assertions in the counter affidavit. The petitioner has contended that, as there are several numbers of purchase bills, it was impossible to upload the documents in the portal, within the prescribed time period. It was in the above circumstances, the petitioner sought for enlargement of time, which was allowed till 24.12.2022. However, the portal was closed. Thus, the petitioner was prevented from submitting his reply and uploading the documents to substantiate his defence. The stand of the respondent is unreasonable and unjustifiable. Therefore, the writ petition may be allowed. 5. Heard; Sri.Anil D. Nair, the learned counsel appearing for the petitioner and Sri.Jose Joseph, the learned Standing Counsel appearing for the respondent. 6. It may be true that the petitioner was initially served with a notice under Section 143(2) of the Act on 26.6.2022. In response to the said notice, the petitioner had submitted Ext.P2 reply. Again, Ext.P3 notice was WP(C) NO. 1660 OF 2023 6 served on the petitioner on 6.10.2022, which was again replied to by Ext.P4. Finally, the respondent issued Ext.P5 show cause notice dated 15.12.2022, directing the petitioner to submit his reply on or before 20.12.2022. Immediately, the petitioner submitted Ext.P6 reply seeking enlargement of time upto 26.12.2022, on the ground that his accountant was sick. In response to Ext.P6 request, the respondent granted time to the petitioner till 24.12.2022 to submit his reply. 7. Having granted the petitioner time till 24.12.2022, it is unreasonable and too hyper-technical on the part of the respondent to now contend that, since the petitioner had not availed the opportunity to upload the documents at the first instance, he cannot be permitted to have a hearing through the video conferencing facility and to upload the documents. If that be the case, then there is no meaning in the respondent granting the petitioner the enlargement of time and the petitioner filing his WP(C) NO. 1660 OF 2023 7 response. The action of an instrumentality has to be not only fair but also reasonable. Faceless Assessment may be an efficient, novel and transparent scheme developed by the respondent, but cannot be a tool to defeat the indefeasible and substantial right of a party, that too, to establish his defence. 8. In the above conspectus, I hold that the action of the respondent in foreclosing the right of the petitioner in submitting his reply, with the supporting documents and having a video conference hearing is unjustifiable and against the principles of reasonableness. Notwithstanding the contention of the alternative remedy raised by the respondent, as there is clear infraction of the principles of natural justice, I am inclined to allow the writ petition by setting aside Exts.P9 to P9(b) orders and permit the petitioner to submit his reply with the supporting documents to Ext.P5 and earlier show cause notice. Resultantly, I allow the writ petition as follows:- WP(C) NO. 1660 OF 2023 8 (i) Exts.P9 to P9(b) orders are set aside. (ii) The respondent is directed to open its portal and permit the petitioner to submit his reply along with supporting documents and afford him an opportunity of being heard through the video conferencing facility. (iii) All coercive proceedings shall be kept in abeyance, pursuant to the impugned orders, until the finalisation of the above proceedings. Sd/- rmm23/5/2023 C.S.DIAS, JUDGE WP(C) NO. 1660 OF 2023 9 APPENDIX OF WP(C) 1660/2023 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE NOTICE UNDER SECTION 143(2), DATED 28.06.2022 ISSUED BY THE RESPONDENT. Exhibit P2 TRUE COPY OF THE ACKNOWLEDGMENT DATED 13.07.2022 OF THE REPLY FILED BY THE PETITIONER Exhibit P3 TRUE COPY OF THE NOTICE DATED 06.10.2022 UNDER SECTION 142(1) ALONG WITH ANNEXURE ISSUED BY THE RESPONDENT. Exhibit P4 TRUE COPY OF THE RESPONSE TO EXT.P3 AND THE ACKNOWLEDGMENT Exhibit P5 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 15.12.2022 ISSUED BY THE RESPONDENT Exhibit P6 TRUE COPY OF THE REQUEST FOR ADJOURNMENT ALONG WITH THE ACKNOWLEDGMENT. Exhibit P7 TRUE COPY OF THE SCREENSHOT SEEKING PERMISSION FOR VIDEO CONFERENCING AND THE REMARK Exhibit P8 TRUE COPY OF THE SCREENSHOT OF THE ATTEMPT TO FILE REPLY TO SHOW CAUSE NOTICE Exhibit P9 TRUE COPY OF THE ASSESSMENT ORDER DATED 26.12.2022 PASSED BY THE RESPONDENT Exhibit P9(a) TRUE COPY OF THE COMPUTATION SHEET PREPARED BY THE RESPONDENT ALONG WITH THE NOTICE OF DEMAND. Exhibit P9(b) TRUE COPY OF THE NOTICE OF PENALTY DATED 26.12.2022 ISSUED BY THE RESPONDENT "