Thomas John Muthoot V. The Commissioner of Income Tax (Appeals)- III and Deputy Commissioner of Income Tax, Central Circle

WP(C)/10359/2024

AI Insights

The case involves Thomas John Muthoot, the petitioner, who challenged the order Ext.P12 issued by the Commissioner of Income Tax (Appeals)-III. The dispute arose from a notice (Ext.P10) requiring the petitioner to produce bank account statements for the financial years 2013-14 to 2019-20. The petitioner requested additional time to compile these voluminous documents, which was not responded to before the issuance of Ext.P12. The petitioner argued that this constituted a denial of natural justice. The Income Tax Department opposed the writ, citing previous opportunities given to the petitioner to produce the necessary documents. The court found that the failure to respond to the petitioner's request for additional time violated the principles of natural justice, thus allowing the writ petition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 804907 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 14-03-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SUSIE VARGHESE
• Assessee Lawyers: G GOPINATHAN NAIR; AKHIL SURESH
• Keywords: Income tax appeal; Natural Justice; Voluminous documents; Bank account statements; Collection of data
• Section: 250

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 14TH DAY OF MARCH 2024 / 24TH PHALGUNA, 1945 WP(C) NO. 10359 OF 2024 PETITIONER/S: THOMAS JOHN MUTHOOT, AGED 60 YEARS S/O MATHEW M THOMAS, MUTHOOT HOUSE, KOZHENCHERRY, PATHANAMTHITTA, PIN - 689641 BY ADVS. G.HARIKUMAR (GOPINATHAN NAIR) AKHIL SURESH RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX, (APPEALS)- III POORNIMA, 28/243, NEAR MANORAMA JUNCTION, PANAMPILLY NAGAR, KOCHI, PIN - 682036 2 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, AYAKAR BHAVAN, KOWDIAR P O, TRIVANDRUM, PIN - 695003 OTHER PRESENT: SUSIE B. VARGHESE-SR.SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C)No.10359 of 2024 2 J U D G M E N T The petitioner has approached this Court challenging Ext.P12 order issued by the Commissioner of Income Tax (Appeals)-III dated 31.10.2023 on a short ground. According to the petitioner, the Commissioner of Income Tax (Appeals) had issued Ext.P10 notice requiring the petitioner to produce before him bank account statements for the financial years 2013-14 to 2019-20 before the next date of hearing. It is submitted that Ext.P10 notice will show that the date of notice is 12.10.2023, and the next date of hearing was fixed as 17.10.2023. It is submitted that since the details requested were voluminous and required the collection of data from various bank accounts across the country, the authorized representative of the petitioner filed Ext.P11 request seeking two weeks’ time for compiling the bank statements and for producing it before the Commissioner WP(C)No.10359 of 2024 3 of Income Tax (Appeals). It is submitted that, without giving any reply to Ext.P11 request (either accepting the request or rejecting it), the Commissioner of Income Tax (Appeals) proceeded to pass Ext.P12 order on 31.10.2023. It is submitted that the documents were crucial for the adjudication of the issues, and the documents are now readily available with the petitioner. It is submitted that the petitioner may be permitted to produce the documents before the Commissioner of Income Tax (Appeals), and thereafter, fresh orders may be passed by the Commissioner of Income Tax (Appeals) after affording an opportunity of hearing to the petitioner or his authorized representative. 2. Sri.P .S.Raman, the learned senior counsel appearing for the petitioner, on the instructions of Sri.G.Harikumar, would reiterate the contentions taken in the writ petition and submit that since this is a case where the petitioner is alleging denial of natural justice, the petitioner is well within his rights to challenge WP(C)No.10359 of 2024 4 Ext.P12 order under Article 226 of the Constitution of India notwithstanding the availability of any alternate remedy. 3. Smt.Susy B Varghese, the learned senior Standing Counsel appearing for the Income Tax Department, would vehemently oppose the grant of any relief to the petitioner. It is pointed out from Ext.P12 order that several opportunities were extended to the petitioner both at the appellate stage and in the remand proceedings referred to in Ext.P12 order. It is submitted that the petitioner had purposefully failed to produce the necessary documents. Therefore, the petitioner cannot now contend that Ext.P12 order was issued without affording proper opportunity to the petitioner to produce the documents before the Appellate Authority. Specific reference is made to the findings in paragraph 4.5 of Ext.P12 order to show that, despite all opportunities, the petitioner had failed to produce the documents before the Commissioner of Income Tax (Appeals). It is submitted WP(C)No.10359 of 2024 5 that if the petitioner is in any manner aggrieved by Ext.P12 order, it is for the petitioner to avail statutory remedies, and a writ petition under Article 226 of the Constitution of India is not maintainable before this Court. It is submitted that the matter involves a substantial revenue impact. 4. Having heard the learned senior counsel appearing for the petitioner and the learned senior Standing Counsel appearing for the Income Tax Department, I am of the view that the petitioner is entitled to succeed. Paragraphs 4.3, 4.4 and 4.5 of Ext.P12 order read as follows; “4.3 Since the assessment in this case is being done in the capacity of the assesse as “individual”, it is the responsibility of the appellant to furnish the details of bank accounts held by him in his personal capacity and to furnish the details of credits in it with satisfactory explanation. Further, in order to verify the availability of funds from advance of property and sale of property from FY 2016-17 onwards, verification of bank account balance is necessary. The appellant was given one more opportunity to reconcile the closing balances with WP(C)No.10359 of 2024 6 the cash at bank, cash in hand deposits and investments in personal capacity, vide notice dated 06.02.2023. 4.4 In response appellant furnished reply on 09.02.2023, in which the bifurcation of Cash at bank, cash in hand, deposits and investments in personal capacity were furnished for FY 2019-20 only, by which the availability of funds for introduction of capital fund during the FY 2019-20 is not verifiable. Another opportunity to furnish the break up of the same for all the AYs from 2015-16 was granted to the appellant on 14.02.2023. The same was furnished on 17.02 2023. 4.5 The appellant was also required to produce the bank account statements to prove that funds of advance for sale of property, sale proceeds and dividends were available from bank accounts for transfer to current account. However, appellant submitted only the certificates from the banks showing the closing balances for each year. Thus, by not submitting the account statements for the respective FYs showing that these funds were deposited in these bank accounts, failed to prove that these funds were available for transfer to the current account.” It is clear from a reading of the aforesaid paragraphs of Ext.P12 order that in response to a notice dated 06.02.2023, the petitioner had furnished replies along WP(C)No.10359 of 2024 7 with documents on 09.02.2023. In reply to a further notice issued on 14.02.2023, replies were furnished on 17.02.2023. It is seen from Ext.P10 notice that the petitioner was required to produce bank account statements in respect of all bank accounts maintained by him from the financial year 2013-14 to the financial year 2019-20 on or before 17.10.2023. It is not discernible from Ext.P12 whether there was any earlier demand by the authorities for the production of bank account statements for the period from 2013-14 to 2019-20. Moreover, from a reading of paragraphs 4.3 and 4.4 of Ext.P12 order, it appears that the petitioner had co- operated with the demands for the production of documents. That apart, even if it assumed for a moment that the petitioner had not availed opportunities given to him at the appellate stage and in the remand proceedings, it must be noted that the Appellate Authority had itself decided to grant a further opportunity to the petitioner to produce the bank account statements WP(C)No.10359 of 2024 8 by issuing Ext.P10 notice on 12.10.2023. The petitioner had sought for two weeks’ time to produce those documents. However, without favouring the petitioner with any reply, either rejecting or accepting the request made in Ext.P11, the Appellate Authority proceeded to pass Ext.P12 order. This, in my view, is a violation of principles of natural justice. 5. However, taking into consideration the submission of the learned senior Standing Counsel appearing for the Income Tax Department that the revenue impact is considerable and also taking into account the fact that the proceedings have been pending for quite some time, I of the opinion that the petitioner must be required to produce all documents that he wishes to rely upon before the Appellate Authority within a specified date. In the light of the aforesaid findings, this writ petition is allowed by setting aside Ext.P12 order and directing that the petitioner be given time till 26.03.2024 WP(C)No.10359 of 2024 9 to produce all documents that he wishes to rely upon, including the documents specified in Ext.P10 notice before the Appellate Authority. Thereafter, the Appellate Authority shall pass fresh orders after affording to the petitioner an opportunity to be heard. I make it clear that I have not expressed any opinion on the merits of the matter and that it will be open to the Appellate Authority to pass fresh orders in accordance with the law after affording an opportunity of hearing to the petitioner, as aforesaid. The writ petition is ordered accordingly. Sd/- GOPINATH P ., JUDGE rkj WP(C)No.10359 of 2024 10 APPENDIX OF WP(C) 10359/2024 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER AY 2020-21 DATED 22.03.2022 Exhibit P2 TRUE COPY OF THE APPEAL TO THE 1ST RESPONDENT DATED 22.04.2022 ALONG WITH STAY PETITION Exhibit P3 TRUE COPY OF THE JUDGMENT IN WP (C) NO.29085/2022 DATED 06.09.2022 OF THIS HON'BLE COURT Exhibit P4 TRUE COPY OF THE NOTICE DATED 05.01.2023 Exhibit P5 TRUE COPY OF THE LETTER DATED 27.01.2023 WITHOUT ANNEXURES Exhibit P6 TRUE COPY OF THE NOTICE DATED 06.02.2023 Exhibit P7 TRUE COPY OF THE LETTER DATED 13.12.2022 ALONG WITH CASH FLOW STATEMENT Exhibit P8 TRUE COPY OF THE NOTICE U/S 250 OF IT ACT DATED 24.07.2023 Exhibit P9 TRUE COPY OF THE NOTICE DATED 04.09.2023 Exhibit P10 TRUE COPY OF THE NOTICE DATED 12.10.2023 Exhibit P11 TRUE COPY OF THE LETTER DATED 17.10.2023 Exhibit P12 A TRUE COPY OF THE ORDER DATED 31.10.2023 PASSED BY THE 1ST RESPONDENT UNDER SECTION 250 OF THE INCOME TAX ACT Exhibit P13 TRUE COPY OF THE RELEVANT PAGES OF THE BANK STATEMENTS OF THE PETITIONER "