Shri Naveen Babu Nechikattil V. The National Faceless Assessment Centre and The Assessment Unit, National E-Assessment Center, Income Tax Department and The Income Tax Officer, Ward -2

WP(C)/11946/2023

AI Insights

The case involves Shri Naveen Babu Nechikattil, the petitioner, who challenged the assessment order issued by the Income Tax Department for the year 2018-19. The primary contention was that the order was issued without considering the petitioner's timely reply to the pre-assessment notice, thus violating the principles of natural justice. The court referenced a similar case (W.A. No.1693 of 2023) where it was held that fairness in tax matters requires the assessing authority to consider the assessee's reply before passing the assessment order. Despite the petitioner's delay in responding to earlier notices, the court found that the reply to the show cause notice was received before the order was signed, necessitating a re-evaluation of the assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 798191 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 06-08-2024
• Assessment Year: misc
• Other Referred Cases: Daujee Abhushan Bhandar Pvt. Ltd. v. Union of India, Commissioner of Income Tax v. Balachand Ajit Kumar, Subhkarn and Sons v. N.A. Kazi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: V P NARAYANAN
• Keywords: Assessment Order; Digital Signature; Income Tax; Natural Justice; Violation
• Section: 147; 144

Judgement Text

" WP(C) NO. 11946 OF 2023 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. TUESDAY, THE 6TH DAY OF AUGUST 2024 / 15TH SRAVANA, 1946 WP(C) NO. 11946 OF 2023 PETITIONER/S: SHRI.NAVEEN BABU NECHIKATTIL, AGED 48 YEARS 4/448 NECHIKATTIL, VILAYUR WEST, PATTAMBI, PALAKKAD,- 679309, KERALA BY ADV V.P.NARAYANAN RESPONDENT/S: 1 THE NATIONAL FACELESS ASSESSMENT CENTRE, MAYUR BHAWAN, CONNAUGHT LANE, BARAKHAMBA ROAD, NEW DELHI 110001, REPRESENTED BY THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (NAFAC) 2 THE ASSESSMENT UNIT, NATIONAL E-ASSESSMENT CENTER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL STADIUM, NEW DELHI, PIN - 110003 3 THE INCOME TAX OFFICER, WARD -2, AAYAKAR BHAVAN, INCOME TAX OFFICE, ENGLISH CHURCH ROAD, PALAKKAD, KERALA, PIN - 678014 SRI. JOSE JOSEPH, SR. SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06.08.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT WP(C) NO. 11946 OF 2023 2 JUDGMENT Petitioner has approached this Court, challenging Ext.P8 order of assessment under the provisions of the Income Tax Act,1961, for the assessment year 2018-19, principally, on the ground that the same was issued in violation of principles of natural justice. 2. A reading of the pleadings in the writ petition will indicate that there has been some negligence on the part of the petitioner in promptly replying to the notices issued by the Assessing Authority. However, the fact remains that the petitioner had filed Ext.P7 reply on 19.03.2023. Ext.P8 assessment order though dated 17.03.2023, has been digitally signed by the Assessing Officer only on 20.03.2023. A Division Bench of this Court while dealing with an almost similar issue [judgment dated 06.10.2023 in W.A. No.1693 of 2023] held as follows:- ‘’6. On a consideration of the rival submissions, we find that while it may be a fact that the appellant had occasioned a delay in preferring a reply to the pre- assessment notice, and it was under those circumstances that Ext.P3 assessment order came to be passed, we find that in the instant case, it is not in dispute that the reply dated 23.09.2022 [Ext.P2] furnished by the appellant to the respondent was received in the Office of the respondent well before the date on which Ext.P3 assessment order was WP(C) NO. 11946 OF 2023 3 passed. In matters of taxation, the respondent is obliged to mete out fairness to the assessees, and in a situation such as the present, where the reply of the assessee had been received in the Office of the respondent, we would think that the requirement of fairness mandated that the Assessing Authority refer to the said reply also, and deal with the contentions therein, while passing the assessment order. Since the said reply was not considered, as is evident from a perusal of Ext.P3 assessment order, and further the assessee was not heard prior to the passing of the said order, we deem it appropriate to set aside Ext.P3 order in this appeal. Accordingly, we allow this Writ Appeal, by setting aside the impugned judgment of the learned Single Judge as also Ext.P3 assessment order that was impugned in the writ petition, and direct that the appellant shall appear for a personal hearing through video conference before the respondent on 16.10.2023, so as to enable the respondent to pass a fresh assessment order, after hearing the appellant and considering the reply furnished by the appellant. The respondent shall, on its part, furnish the videoconferencing link to the appellant at least three days before the date of hearing as above. The respondent shall thereafter pass a fresh and reasoned assessment order adverting to the contentions of the appellant in the reply furnished by him within a period of two weeks. ‘’ 3. Learned Senior Standing Counsel appearing for the Income Tax Department would submit that the petitioner had not filed any replies within time in response to the earlier notices and even Ext.P7 was filed beyond the time granted by the Assessing Authority. It is submitted that, in such circumstances, the petitioner has not made out any case for interference in exercise of jurisdiction vested in this Court under Article 226 of the Constitution of India. WP(C) NO. 11946 OF 2023 4 4. Having heard the learned counsel appearing for the petitioner and the learned Senior Standing Counsel appearing for the Income Tax Department, I am of the view that the observations of the Division Bench in the judgment dated 06.10.2023 in Writ Appeal No.1693 of 2023 equally applies to the facts of this case as well. Though the petitioner may not have responded to the earlier notices issued to him, the fact remains that on 19.03.2023, the petitioner had uploaded a reply (Ext.P7). Though Ext.P8 assessment order is dated 17.03.2023, it was digitally signed by the officer only on 20.03.2023. Therefore, it must be held that prior to the date on which the order was actually signed by the officer, Ext.P7 reply had been uploaded by the petitioner. In that view of the matter, Ext.P8 order has been issued in violation of the principles of natural justice. Therefore, notwithstanding any alternative remedy available to the petitioner, it is open to this Court to interfere with Ext.P8 assessment order. Accordingly, the writ petition is allowed. Ext.P8 is quashed. The assessment of the petitioner for the year 2018-19 will stand restored to the file of the 1st respondent, who shall pass fresh orders, after affording an opportunity of hearing to WP(C) NO. 11946 OF 2023 5 the petitioner. Consequently, any proposal for initiation of penalty will also stand set aside, making it clear that fresh proposal for imposition of penalty can be issued, after completion of the assessment, if the circumstances so warrant. Sd/- GOPINATH P. JUDGE ajt WP(C) NO. 11946 OF 2023 6 APPENDIX OF WP(C) 11946/2023 PETITIONER EXHIBITS Exhibit P1 THE TRUE COPY OF THE COMPLIANCE CERTIFICATE OBTAINED BY THE PETITIONER FROM ASST. DISTRICT CO-ORDINATOR OF AKSHAYA DISTRICT PROJECT OFFICE, PALAKKAD DATED 06.06.2008 Exhibit P2 A TRUE COPY OF THE CERTIFICATE DATED 28-03- 2017. Exhibit P3 THE TRUE COPY OF THE CLOSURE PROCEEDINGS OF THE SECTION 148A (D) DATED 31.03.2022 ISSUED BY THE 3RD RESPONDENT. Exhibit P4 THE TRUE COPY OF THE NOTICE UNDER SECTION 148 ISSUED BY THE 3RD RESPONDENT. Exhibit P5 THE TRUE COPY OF THE ACKNOWLEDGEMENT OF RETURN FILED FOR AY 2018-19. Exhibit P6 THE TRUE COPY OF THE SHOW CAUSE NOTICE DATED 14.02.2023 ISSUED BY THE 2ND RESPONDENT. Exhibit P7 THE TRUE COPY OF THE REPLY ALONG WITH ANNEXURES. Exhibit P8 A TRUE COPY OF THE ASSESSMENT ORDER DATED 17- 03-2023 ISSUED UNDER SECTION 147 R.W.S 144 OF THE ACT FOR AY 2018-19 BY THE 2ND RESPONDENT Exhibit P9 A TRUE COPY OF THE PENALTY NOTICE DATED 17- 03-2023. Exhibit P10 TRUE COPY OF THE SCREENSHOT OF THE PROCEEDINGS UNDER SECTION 147 FOR THE ASSESSMENT YEAR 2018-19 Exhibit P11 A TRUE COPY OF THE JUDGMENT IN WRIT TAX NO 78 OF 2022 HON&’BLE ALLAHABAD HIGH COURT (DAUJEE ABHUSHAN BHANDAR PVT. LTD. V. UNION OF INDIA) DATED 10-03-2022 WP(C) NO. 11946 OF 2023 7 Exhibit P12 TRUE COPY OF JUDGMENT OF THE HON’BLE MADHYA PRADESH HIGH COURT (COMMISSIONER OF INCOME TAX V. BALACHAND AJIT KUMAR) REPORTED IN (2003) 263 ITR 610 MP Exhibit P13 TRUE COPY OF JUDGMENT OF THE HON’BLE HIGH COURT OF BOMBAY (SUBHKARAN AND SONS V. N.A. KAZI) REPORTED IN (1985) 152 ITR 231 BOM. "