Smt. Sujatha Revikumar V. Joint Commissioner of Income Tax Assessing Unit, National Faceless Assessment Centre, Delhi

WP(C)/6742/2023

AI Insights

The case involves Smt. Sujatha Revikumar, the proprietrix of M/S Gayathri Bankers, who is engaged in money lending against gold ornaments. During the assessment year 2021-22, the petitioner wrote off a significant amount due to fraud by staff, which was not properly assessed. The case was selected for a faceless assessment under the National Faceless Assessment scheme. The petitioner contested that the final assessment order (Ext.P14) was issued without following the proper procedural steps outlined in Section 144B of the Income Tax Act, 1961, specifically the lack of a draft assessment order and the opportunity to respond to it. The court referenced several precedents where similar procedural lapses led to the setting aside of assessment orders.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 796746 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 12-01-2024
• Assessment Year: misc
• Other Referred Cases: National Faceless Assessment Centre & Ors. v. Automotive Manufacturers (P) Ltd., Ellathkandi Khaleel Ahammed Vs. Union of India & Ors.
• Laws Referred To: Kerala Money Lenders Act, 1958, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: ASWIN GOPAKUMAR; ANWIN GOPAKUMAR; ADITYA VENUGOPALAN; NIKITHA PAULSON; MAHESH CHANDRAN; GAUTHAM E J; AVINASH KURUNGOT
• Keywords: Draft Assessment Order; Faceless assessment; Money lending; Natural Justice; Gold loans
• Section: 142(1); 143(2); 144B

Judgement Text

"W.P.(C)No.6742 of 2023 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI FRIDAY, THE 12TH DAY OF JANUARY 2024 / 22ND POUSHA, 1945 WP(C) NO. 6742 OF 2023 PETITIONER: SMT.SUJATHA REVIKUMAR PROPREITRIX, M/S GAYATHRI BANKERS, KALANJOOR, PATHANAMTHITTA, PIN - 689694 BY ADVS. SRI ASWIN GOPAKUMAR SRI ANWIN GOPAKUMAR SRI ADITYA VENUGOPALAN MS.NIKITHA SUSAN PAULSON SRI MAHESH CHANDRAN SRI GAUTHAM KRISHNA E.J. SRI AVINASH KURUNGOT RESPONDENT: JOINT COMMISSIONER OF INCOME TAX ASSESSING UNIT, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI, PIN – 110001 BY ADV. SRI JOSE JOSEPH (SC) THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.12.2023, THE COURT ON 12.01.2024 DELIVERED THE FOLLOWING: W.P.(C)No.6742 of 2023 2 T.R. RAVI, J. -------------------------------------------- W.P.(C)No.6742 of 2023 -------------------------------------------- Dated this the 12th day of January, 2024 JUDGMENT The petitioner, through various proprietorship concerns is engaged in the business of money lending on deposit of gold ornaments as security and is functioning on the basis of licenses issued under the Kerala Money Lenders Act, 1958. During the assessment year 2021-22, the petitioner had written off a sum of Rs.7,68,97,170/- on account of fraud committed by some staff, who had made false entries regarding gold loans. It is stated that a police case has been registered and the same is being proceeded with. After the introduction of the National Faceless Assessment, the case of the petitioner was selected for the purpose of faceless assessment as is evident from Ext.P1 notice. The grievance of the petitioner is that the assessment has been concluded as per Ext.P14 without following the procedure which is prescribed under Section 144B of the Income Tax Act, 1961 ('the Act' for short). As per Section 144B (1) (xvi) of the Act, on receipt of the income or loss determination proposal from the assessment unit, the National Faceless Assessment Centre may convey to the assessment unit to prepare draft order in accordance with the income or loss W.P.(C)No.6742 of 2023 3 determination proposal which shall thereafter prepare a draft order or assign the income or loss determination proposal to a review unit through an automated allocation system for conducting review of such proposal. Going by the procedure, the draft assessment order is to be conveyed to the assessee who can submit his response to the draft assessment. The Statute also gives a right to the assessee for requesting a personal hearing in case there is any variation which is prejudicial to the assessee as proposed in the draft assessment order. The petitioner submits that in the case on hand, Ext.P14 has been issued even without preparing a draft assessment order. It is hence submitted that the procedure prescribed by law has been violated and consequently there is also a violation of principles of natural justice, since the petitioner is not put on notice by issuing a draft assessment order. This Court as well as the Hon’ble Supreme Court have in several similar matters set aside the assessment orders and directed the assessing Authority to re-do the assessment in accordance with the procedure laid down in Section 144B. See National Faceless Assessment Centre & Ors. v. Automotive Manufacturers (P) Ltd. [2023 SCC Online SC 631], Ellathkandi Khaleel Ahammed Vs. Union of India & Ors. [2022 SCC Online KER 8978]. 2. A reading of Ext.P14 would clearly show that even W.P.(C)No.6742 of 2023 4 though notices had been issued under Sections 143 (2) and Section 142, there has been no draft assessment order prepared as contemplated in Section 144B. Nor has the petitioner been issued with a copy of such draft assessment order, if any. In view of the statutory provision and the decisions of this Court and the Hon’ble Supreme Court, Ext.P14 is set aside with liberty to the respondents to issue fresh assessment orders after complying with the procedure prescribed in Section 144B of the Income Tax Act, 1961. The respondents are directed to drop any further proceedings that have been undertaken pursuant to Ext.P14. Sd/- T.R. RAVI JUDGE dsn W.P.(C)No.6742 of 2023 5 APPENDIX OF WP(C) 6742/2023 PETITIONER EXHIBITS EXT.P1 TRUE COPY OF THE NOTICE INTIMATION BEARING DIN NO. ITBA/AST/S/61/2022-23/1043604077(1) DATED 27.06.2022 ISSUED BY THE RESPONDENT EXT.P2 TRUE COPY OF THE NOTICE UNDER SECTION 143 (2) OF THE ACT BEARING DIN NO. ITBA/AST/S/143(2)/2022- 23/1043607079(1) DATED 28.06.2022 ISSUED BY THE RESPONDENT EXT.P3 TRUE COPY OF THE NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT, 1961 BEARING DIN NO. ITBA/AST/F/142(1)/ 2022-23/1044920300(1) DATED 25.08.2022 EXT.P4 TRUE COPY OF THE REPLY DATED 06.08.2022 SUBMITTED BY THE PETITIONER TO EXT. P-3 NOTICE EXT.P5 TRUE COPY OF THE NOTICE DATED 27.10.2022 BEARING DIN NO. ITBA/AST/F/142(1)/2022-23/1046487509(1) ISSUED BY THE RESPONDENT UNDER SECTION 142(1) EXT.P6 TRUE COPY OF REPLY DATED 17.11.2022 SUBMITTED BY THE PETITIONER EXT.P7 TRUE COPY OF SHOW CAUSE NOTICE BEARING DIN NO. ITBA/AST/F/143(3)(SCN)/2022-23/1047605108(1) DATED 23.11.2022 EXT.P8 TRUE COPY OF THE REPLY DATED 29.11.2022 EXT.P9 TRUE COPY OF THE SHOW CAUSE NOTICE BEARING NO. ITBA/AST/F/143(3)(SCN)/2022-23/1048002798(1) DATED 14.12.2022 EXT.P10 TRUE COPY OF THE REPLY DATED 21.12.2022 SUBMITTED BY THE PETITIONER EXT.P11 TRUE COPY OF THE REQUEST SUBMITTED BEFORE THE JOINT COMMISSIONER OF INCOME TAX, KOLLAM RANGE, KOLLAM FOR DIRECTIONS TO THE ASSESSING UNIT DATED 21.12.2022 EXT.P12 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 22.12.2022 BEARING DIN NO. ITBA/AST/F/143(3)(SCN)/2022- 23/1048182243(1) EXT.P13 TRUE COPY OF THE REPLY DATED 23.12.2022 EXT.P14 TRUE COPY OF THE DEMAND NOTICE BEARING DIN &NOTICE NO. ITBA/AST/S/156/2022-23/1048335804 (1) AND ASSESSMENT ORDER BEARING DIN NO. ITBA/AST/S/143(3)/ 2022- 23/1048335664(1) DATED 29.12.2022 ISSUED BY RESPONDENT "