SAFFERULLA ELLYASU KUNJU, V. INCOME TAX OFFICER,

WP(C)/24140/2021

AI Insights

The case involves Safferulla Ellyasu Kunju, the petitioner, who contested an assessment order issued by the Income Tax Officer for the assessment year 2016-17. The petitioner argued that the time provided to respond to a show-cause notice was insufficient and that his exhaustive reply was not considered, violating the principles of natural justice. The court found that while the time given was indeed limited, the petitioner's response was adequately addressed. However, the court agreed with the petitioner that the assessing officer's dismissal of the reply indicated a non-application of mind, leading to the setting aside of the assessment order.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 760426 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 05-11-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: ANIL NAIR; TELMA RAJU; SANGEETH JACOB; CHRISTINA PAUL; EDATHARA KRISHNAN; ARAVIND SREEKUMAR
• Keywords: Assessment; Income Tax; Natural Justice; Non application of mind
• Section: 142(1); 263

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 5TH DAY OF NOVEMBER 2021 / 14TH KARTHIKA, 1943 WP(C) NO. 24140 OF 2021 PETITIONER: SAFFERULLA ELLYASU KUNJU, KARUVATTUMADOM HOUSE, PULIYOORAVANCH NORTH, KOLLAM, KERALA-690 539. BY ADV.ANIL D. NAIR ADV.TELMA RAJU ADV.SANGEETH JOSEPH JACOB ADV.CHRISTINA ANNA PAUL ADV.EDATHARA VINEETA KRISHNAN ADV.ARAVIND SREEKUMAR RESPONDENTS: 1 INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI-110 003. 2 PRINCIPAL COMMISSIONER OF INCOME TAX, NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI-110 003. ADV.CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.24140/21 -:2:- BECHU KURIAN THOMAS, J. -------------------------------------- W.P.(C) No.24140 of 2021 -------------------------------------- Dated this the 5th day of November, 2021 JUDGMENT Petitioner is an assessee under the Income Tax Act, 1961 (for short 'the Act'). For the assessment year 2016-17, petitioner had filed his returns on 17.10.2016, and the assessment was completed by order dated 24.12.2018. However, the assessment order was set aside by the Commissioner of Income Tax in exercise of the powers under section 263 of the Act. Subsequently, petitioner was served with a notice under section 142(1) of the Act on 14.09.2021 to which a reply was given on 23.09.2021. Thereafter a show-cause notice was issued on 27.09.2021 directing the petitioner to furnish explanation if any by 23.59 hours on 28.09.2021. Though this Court has been repeatedly noticing the short periods granted by the Income Tax department to assessees to submit their replies, in the instant case, petitioner by an exhaustive reply dated 28.09.2021, answered the show-cause notice. Having regard to the period of limitation staring against the proceedings, the assessing officer by W.P.(C) No.24140/21 -:3:- Ext.P7 order dated 29.09.2021 issued an assessment order. In short, within a period of three days, show-cause, reply and the assessment order were all issued and completed. 2. Petitioner complains against the assessment order on two grounds; (i) sufficient period of time was not granted to give a proper reply for the show-cause notice and (ii) even though petitioner had filed a reply, the same was not considered, thereby violating the principles of natural justice. 3. I have heard Adv.Anil D Nair, learned counsel for the petitioner as well as Adv.Christopher Abraham, learned Standing Counsel for the respondents. 4. Petitioner had replied to the show-cause notice issued on 27.09.2021, and that too, in an exhaustive manner, I am of the view that the contention raised by the petitioner regarding absence of sufficient time with respect to the show-cause notice has no basis on the facts of the case, since, even within the limited period, petitioner had furnished his reply. 5. However, I find merit in the contention raised by the petitioner regarding non-consideration of the explanation submitted. As mentioned earlier, an exhaustive reply was submitted by the W.P.(C) No.24140/21 -:4:- petitioner within the limited time available to him. The reply submitted by the petitioner is produced as Ext.P5 which runs into several pages. Unfortunately, while considering the reply, the assessing officer has discarded the explanation offered by the petitioner in one sentence as follows:- 'On perusal of the same it was (sic) observed that assessee is not able to produce any documentary evidence which may prove his claim beyond doubt to the satisfaction of the assessing officer”. 6. There is a clear indication of non-application of mind in the above quoted observation. An opportunity for filing an explanation to the show cause through a notice has a purpose. The contentions raised by the assessee will have to be considered by the assessing officer and either accepted or rejected the same with reasons. Reasons being the soul of every decision, absence of reasons indicates clear non-application of mind thereby rendering the order susceptible for challenge on grounds of violation of natural justice. The necessity to consider the objections raised by the assessees is all the more significant at the stage of assessment, since it is one of the edifices on which the right or obligation of an assessee commences. W.P.(C) No.24140/21 -:5:- 7. On a consideration of the assessment order Ext.P7, I find that the same is vitiated on account of violation of the principles of natural justice due to clear non-application of mind. Accordingly the same is set aside. The assessing officer is directed to consider the explanation offered by the petitioner and pass fresh orders of assessment, within a period of three months from the date of receipt of a copy of this judgment, after issuing notice of hearing to the petitioner. 8. Since the assessment order is set aside, consequently Ext.P8 and Ext.P9 notices for penalty shall also stand set aside. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE vps W.P.(C) No.24140/21 -:6:- APPENDIX OF WP(C) 24140/2021 PETITIONER'S/S' EXHIBITS EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 24.12.2019 ALONG WITH THE COMPUTATION SHEET. EXHIBIT P2 TRUE COPY OF THE NOTICE DATED 14.09.2021. EXHIBIT P3 TRUE COPY OF THE REPLY DATED 23.09.2021 ALONG WITH ANNEXURES. EXHIBIT P4 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 27.09.2021. EXHIBIT P5 TRUE COPY OF THE LETTER DATED 28.09.2021 ALONG WITH ANNEURES. EXHIBIT P6 ACKNOWLEDGEMENT OF HAVING FILED LETTER DATED 28.09.2021. EXHIBIT P7 TRUE COPY OF THE ORDER DATED 29.09.2021. EXHIBIT P8 TRUE COPY OF NOTICE OF PENALTY UNDER SECTION 274 READ WITH SECTION 271(1) (C). EXHIBIT P9 TRUE COPY OF NOTICE FOR PENALTY UNDER SECTION 274 READ WITH SECTION 271D. EXHIBIT P10 TRUE COPY OF REPLY FILED TO NOTICE FOR PENALTY UNDER SECTION 274 READ WITH SECTION 271(1)(C) ON 21.10.2021. EXHIBIT P11 TRUE COPY OF REPLY FILED TO NOTICE FOR PENALTY UNDER SECTION 274 READ WITH SECTION 271(1)D ON 21.10.2021. "