ST. FRANCIS DE SALES EDUCATIONAL TRUST V. THE INCOME TAX OFFICER (EXEMPTION)

WP(C)/15590/2023

AI Insights

The case involves St. Francis De Sales Educational Trust, a charitable institution, challenging an assessment order issued by the Income Tax Department. The assessment for the year 2015-16 was reopened due to a cash deposit in the trust's bank accounts. The trust claimed that it was not properly served with a show cause notice and was not given adequate time to respond, leading to an arbitrary and unjustifiable assessment. The court found that the trust was not provided a reasonable opportunity to be heard, which is a fundamental right under the principles of natural justice. Consequently, the court set aside the assessment order and reopened the show cause notice, granting the trust additional time to respond.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748800 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 08-06-2023
• Assessment Year: misc
• Other Referred Cases: W.P.(C) No.11540 of 2021, W.P.(C) No.23767 of 2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: ABRAHAM MARKOS; V MARKOS; ISAAC ALEXANDER JOSEPH MARKOS; P G CHANDAPILLAI; ABRAHAM VITHAYATHIL; AIBEL JOSEPH MARKOSE SR
• Keywords: Assessment Order; Charitable institution; Fair play; Natural Justice; Reasonableness; Show cause notice
• Section: 144B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS THURSDAY, THE 8TH DAY OF JUNE 2023 / 18TH JYAISHTA, 1945 WP(C) NO. 15590 OF 2023 PETITIONER: ST. FRANCIS DE SALES EDUCATIONAL TRUST XIX/559, SFS SEMINARY ETTUMANOOR P.O. KOTTAYAM DISTRICT REPRESENTED BY ITS MANAGING TRUSTEE FR.JOSE PARAPPILLIL, PIN – 686631 BY ADVS. ABRAHAM JOSEPH MARKOS V.ABRAHAM MARKOS ISAAC THOMAS ALEXANDER JOSEPH MARKOS P.G.CHANDAPILLAI ABRAHAM JOHN VITHAYATHIL AIBEL MATHEW SIBY JOSEPH MARKOSE (SR.) RESPONDENTS: 1 THE INCOME TAX OFFICER (EXEMPTION) EXEMPTION WARD , INCOME TAX OFFICE, PUBLIC LIBRARY BUILDING SHASTRI ROAD, KOTTAYAM, PIN – 686001 2 THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI, PIN – 110001 3 THE COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL SCHEME, NEW DELHI, PIN – 110001 4 THE COMMISSIONER OF INCOME TAX (APPEALS) PUBLIC LIBRARY BUILDING SHASTRI ROAD, KOTTAYAM, PIN – 686001 BY ADV CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.15590/2023 -:2:- Dated this the 8th day of June,2023 J U D G M E N T The writ petition is filed challenging Ext P6 assessment order passed by the first respondent. 2. The relevant facts for the determination of the writ petition are: the petitioner is a charitable institution. The petitioner’s assessment for the year 2015-16 was re-opened on the ground that there was a cash deposit in its bank accounts. The petitioner duly filed all responses to the various notices issued by the second respondent. Subsequently, Ext P1 show cause notice was issued to the petitioner on 17.03.2023, under Section 144B of the Income Tax Act, 1961, directing the petitioner to file its reply within three days. In fact, the notice was not served on the petitioner. When the petitioner saw Ext P1 on the web portal, they immediately filed Ext P2 request, on 21.03.2023, seeking enlargement of time by a week, to W.P.(C)No.15590/2023 -:3:- enable the petitioner to file its reply with the supporting documents. However, as the web portal of the respondents was closed, the petitioner was precluded from uploading its reply with the documents. Consequently, the petitioner filed Ext P4 grievance petition on 24.03.2023, which was perfunctorily rejected by the respondents vide Ext P6 response, stating that the assessment was completed on 22.03.2023. Nonetheless, when the petitioner received Ext P5 assessment order, it was revealed that Ext P6 assessment order was passed only on 27.03.2023 and not on 22.03.2023, that too with an usurious demand for Rs.79,00,000/-. The petitioner has not been granted a fair and reasonable opportunity to submit its reply to Ext P1 show cause notice, which is in total disregard to the rudimentary principles of natural justice, fair play and reasonableness. The action of the respondents is arbitrary and unjustifiable. Hence, the W.P.(C)No.15590/2023 -:4:- writ petition. 3. Heard; Sri. Joseph Markos, the learned Senior Counsel appearing for the petitioner and Sri. Christopher Abraham, the learned Standing Counsel appearing for the respondents. 4. Ext P1 show cause notice was issued by the respondents on 17.03.2023, directing the petitioner to submit its reply within three days. The petitioner diligently submitted Ext P2 application, seeking enlargement of time by one week, to enable them to submit the reply, which was turned down. Ext P4 grievance petition submitted by the petitioner was also rejected, by Ext P5 reply on the ground that Ext P6 assessment order was passed on 22.03.2023. Indisputably, Ext P6 was passed only on 27.03.2023. 5. Having considered the pleadings and materials on record, and after hearing the learned counsel for the parties, I have no hesitation to hold that W.P.(C)No.15590/2023 -:5:- the petitioner was not granted a reasonable and fair opportunity for submitting their reply and being heard. The respondents have acted in undue haste and in violation of the basis tenets of fair play, reasonableness and natural justice, as expected of an instrumentality. The action of the respondents warrants interference by this Court by exercising the plenary powers of this Court under Article 226 of the Constitution of India, notwithstanding the alternative statutory remedy available to the petitioner. Resultantly, I allow the writ petition as follows: (i) Ext P6 assessment order is set aside. (ii) Ext P1 show cause notice is re-opened, to enable the petitioner to submit its reply. (iii) The petitioner is granted 10 days’ time from the date of receipt of a certified copy of this judgment, to submit its reply to Ext P1 show cause notice with all the supporting materials. W.P.(C)No.15590/2023 -:6:- (iv) The respondents are directed to open their web portal to facilitate the petitioner to submit its reply along with the documents. (v) The respondents shall consider and dispose of Ext P1 show cause notice, after adverting to the reply submitted by the petitioner, in accordance with law and as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a certified copy of this judgment, after affording the petitioner an opportunity of being heard. (vi) Until such time orders are passed as stated above, all further coercive proceedings as against the petitioner shall stand deferred. DSd/- C.S.DIAS,JUDGE DST/08.06.23 //True copy// P .A.To Judge W.P.(C)No.15590/2023 -:7:- APPENDIX PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE SHOW CAUSE NOTICE ISSUED ON 17.03.2023 EXHIBIT P2 TRUE COPY OF THE PETITIONER'S APPLICATION DATED 21.03.2023 FILED FOR ENLARGMENT OF TIME TOGETHER WITH ACKNOWLEDGMENT EXHIBIT P3 TRUE COPY OF THE REPLY TO SHOW CAUSE NOTICE DATED 23.03.2023 EXHIBIT P4 TRUE COPY 0F THE GRIEVANCE PETITION DATED 24.03.2023 FILED BY THE PETITIONER. EXHIBIT P5 TRUE COPY OF THE RESPONSE DATED 24.03.2023 FROM THE INCOME TAX DEPARTMENT. EXHIBIT P6 TRUE COPY OF THE ASSESSMENT ORDER DATED 27.03.2023 TOGETHER WITH COMPUTATION SHEET AND NOTICE OF DEMAND. EXHIBIT P7 TRUE COPY 0F THE ACKNOWLEDGMENT FOR FILING THE APPEAL TOGETHER WITH THE APPEAL DATED 20.04.2023 FILED BY THE PETITIONER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). EXHIBIT P8 TRUE COPY OF THE STAY PETITION DATED `NIL' FILED BY THE PETITIONER BEFORE THE COMMISSIONER OF INCOME TAN (APPEALS EXHIBIT P9 TRUE COPY OF THE JUDGMENT DATED 15.03.2022 0F THIS HONOURABLE COURT IN W.P.(C) NO.11540 0F 2021. EXHIBIT P10 TRUE COPY OF THE JUDGMENT DATED 19.01.2023 0F THIS HONOURABLE COURT IN W.P.(C) NO.23767 0F 2022 RESPONDENT’S EXHIBITS: NIL "