Wadakkancherry Service Co-operative Bank Ltd. V. The Income Tax Officer, Ward 2 (1) and The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, Income Tax Assessment Unit, National Faceless Assessment Centre, Delhi

WP(C)/30992/2022

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The case involves M/s. Wadakkancherry Service Co-operative Bank Ltd., which challenged an assessment order under Section 143(3) read with Section 144B of the Income Tax Act, 1961. The petitioner, a primary agricultural society, had reported a miscellaneous income of Rs. 1,30,67,114 in its tax return for the assessment year 2020-21, which was not substantiated with supporting documents. During the assessment proceedings, the petitioner failed to provide necessary details and justifications for the claimed income and deductions. The main contention in the writ petition was the alleged violation of the principles of natural justice, as the petitioner requested a personal online hearing through video conferencing, which was not provided. The Income Tax Department argued that the petitioner did not follow the correct procedure to avail of this facility.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 812674 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 23-01-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON; R SREEJITH; K KRISHNA; PARVATHY MENON
• Keywords: Faceless assessment; Miscellaneous income; Natural Justice; Personal hearing; Video conferencing
• Section: 143(3); 80P; 144B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 23RD DAY OF JANUARY 2024 / 3RD MAGHA, 1945 WP(C) NO. 30992 OF 2022 PETITIONER: M/S. WADAKKANCHERRY SERVICE CO-OPERATIVE BANK LTD., NO. 3279, THALAPPILLY, WADAKKANCHERRY, THRISSUR,PIN – 680582. REPRESENTED BY ITS SECRETARY, MADANAN K. P. BY ADVS. SRI. HARISANKAR V. MENON SMT. MEERA V. MENON SRI. R. SREEJITH SRI. K. KRISHNA SMT. PARVATHY MENON RESPONDENTS: 1 THE INCOME TAX OFFICER, WARD 2 (1), AAYAKAR BHAVAN, SAKTHAN THAMPURAN NAGAR,THRISSUR, PIN – 680001. 2 THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, INCOME TAX ASSESSMENT UNIT, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI, PIN – 100001. BY ADV. SRI. JOSE JOSEPH – SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 30992 OF 2022 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No. 30992 of 2022 ------------------------- Dated this the 23rd day of January, 2024 JUDGMENT 1. Heard Mr. Harisankar V. Menon assisted by Ms. Parvathy Menon, learned Counsel for the petitioner and Mr. Jose Joseph, learned Senior Standing Counsel for the Income Tax Department. 2. The present writ petition has been filed by the petitioner assessee impugning the assessment order in Exhibit P-3 passed under Section 143 (3) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short) on 23.09.2022. 3. The petitioner’s case was selected for scrutiny through CASS under the complete scrutiny category. Petitioner claims to be a primary agricultural society engaged in the business of providing agriculture and agriculture allied loans to its members. 4. The assessee had credited miscellaneous income of Rs. 1,30,67,114/- in its return for the assessment year 2020-21. The nature and source of such income remained unverified on the part of the assessee as the assessee/petitioner did not file any supporting documents in this regard. WP(C) NO. 30992 OF 2022 3 5. During the assessment proceedings, the assessee was required to submit the details and justify its claim of deduction under Section 80P of the Act. The petitioner did not submit any detail and explanation in respect of the miscellaneous income of Rs. 1,30,67,114/-. The assessment order would disclose that the petitioner was issued six notices including the show cause notice dated 02.09.2022. The petitioner did not file any response to the notices issued under Section 143 (2), 142 (1) and reply to the show cause notice was filed only on 15.09.2022. The last date for filing the reply was 02.09.2022. This reply to the show cause notice was not filed before the Faceless Assessment Center but, it was filed before the jurisdictional assessment unit. 6. The assessment order is being challenged only on the ground of violation of the principles of natural justice as in the reply dated 15.09.2022, the petitioner had requested for personal online hearing through video conferencing. According to the petitioner, despite the request having made for personal online hearing through video conferencing, no opportunity of personal hearing was provided and the assessment order has been finalised and, therefore, there has been a violation of the principles of natural justice. Thus the impugned assessment order is vitiated and liable WP(C) NO. 30992 OF 2022 4 to be dismissed. 7. Mr. Jose Joseph, learned Senior Standing Counsel for the Income Tax Department, on the other hand has submitted that as per Section 144B which prescribe the detailed procedure of faceless assessment etc., and Clause 7 of Sub-Section 6 of Section 144B provides that where a variation is proposed in the income or loss determination proposal or draft assessment order, an opportunity is to be provided to the assessee by serving a notice calling upon him to show cause why the assessment should not be completed on such income or loss determination proposal and while filing the reply within the time prescribed in the show cause notice, the assessee may request for personal hearing. He further submits that the manner in which such right could have been exercised was provided in the show cause notice itself in Exhibit P-1 dated 02.09.2022. The petitioner ought to have filed the reply within the time granted i.e. on or before 09.09.2022 and request for personal hearing could have been made by clicking the ‘seek video conferencing’ button available against the show cause notice on e- filing portal. It is also provided that the request could have been made only before expiry of compliance date and time for video conferencing. He, therefore submits that the last date for filing WP(C) NO. 30992 OF 2022 5 reply was 09.09.2022, the petitioner could have opted the facility of personal hearing through video conferencing before 09.09.2022 by submitting the reply online and clicking the ‘seek video conferencing’ button available against the show cause notice. In this case, the petitioner had not filed the reply online and click the ‘seek video conferencing’ button available against the show cause notice but, he had filed the reply before the jurisdictional assessment Officer seeking personal hearing as well. As the procedure prescribed for personal hearing through video conferencing was not followed, no personal hearing has been given. However, the response to the show cause notice dated 02.09.2022 has been considered in the assessment order and, if the petitioner is aggrieved by the said assessment order, the petitioner has remedy before the appellate authority by filing a statutory appeal under the provisions of the Act. 8. I find substance in the submission of Mr. Jose Joseph. Section 144B prescribe a detailed procedure for faceless assessment proceedings. It also provides the procedure for uploading the response to the show cause notice etc., and also for making a request request for online hearing through video conferencing. The petitioner did not followed the prescribed procedure and did not WP(C) NO. 30992 OF 2022 6 submitted his reply on or before 09.09.2022 and did not click the button ‘seek video conferencing’ available against the show cause notice. As the petitioner himself did not comply with the provisions of Section 144B to avail the facility of personal hearing through video conferencing facility, this Court finds no substance in the writ petition and no substance in the submission that there has been a violation of the principles of natural justice. 9. In view thereof, the writ petition is dismissed. However, the petitioner will have liberty to file appeal against the assessment order, if the petitioner is so advised. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 30992 OF 2022 7 APPENDIX OF WP(C) 30992/2022 PETITIONER’S EXHIBITS EXHIBIT P1 COPY OF SHOW CAUSE NOTICE ISSUED BY THE 2ND RESPONDENT DTD. 02-09-2022 EXHIBIT P2 COPY OF REPLY FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DTD. 13-09-2022 EXHIBIT P3 COPY OF ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2020-21 DTD. 23-09-2022 EXHIBIT P4 COPY OF NOTIFICATION NO. SO 2745 (E) ISSUED BY THE UNDER SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, DELHI DTD. 13-08-2020 EXHIBIT P5 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT DTD. 23-09-2022 "