PUTHUKAI VAYANINGAD VAIRAJATHAN EASWARANTE KSHETHRA COMMITTEE, vs. THE INCOME TAX OFFICER,

Heard Ms. Divya Raveendran, learned Counsel for the petitioner and Mr. Christopher Abraham, learned Senior Standing Counsel for the the Income Tax Department.

These writ petitions has been filed impugning Exhibit P-3 assessment order dated 31.03.2022 and the penalty orders under Sections 271 (1) (c) and 271 (1) (b) of the Income Tax Act, 1961 dated 22.09.2022 and 20.09.2022 respectively. These orders have been passed after the matter was remanded back by the Income Tax Appellate Tribunal, Cochin Bench, Cochin vide Exhibit P-2 Order dated 07.10.2020. The Tribunal in paragraph 5 of the said Order dated 07.10.2022 noticed the fact that the Treasurer of the petitioner Sri. C. V. Krishnan was in judicial custody and therefore, no effective representation could be made which required assistance of Chattered Accountant. It was also noticed that the Books of Accounts were available only with Sri. C. V. Krishnan who was in judicial custody. Noticing the violation of the principles of WP(C) NO. 37467 & 15844 OF 2022 4 natural justice, the case was restored to the file of the Assessing Officer for re-adjudication after granting the assessee an adequate and effective opportunity of hearing. On remand also, the notice was served when Sri. C. V. Krishnan was in judicial custody and was in Jail. He sought for time for filing the reply to the notice under Section 142 (1) of the Income Tax Act. But since the last date for finalising the assessment proceedings was expiring on 31.03.2021, without granting extension of time, the assessment order came to be passed under Section 144 read with Section 254 of the Income Tax Act, 1961 and the tax was assessed at Rs. 3,20,665/- with direction to initiate the penalty proceedings under Section 271B, 271 (1) (b) and 271 (1) (c) of the Act.

The factors and grounds which were taken note of by the Income Tax Appellate Tribunal in its Order dated 07.10.2020 were present when the present impugned assessment order and penalty orders came to be passed. I am of the considered view that the petitioner was not afforded with adequate and effective opportunity of being heard as directed by the Tribunal and there has been a violation of the principles of natural justice in finalising the assessment and penalty orders impugned in these writ petitions.

Considering the aforesaid facts, these writ petitions are allowed and the impugned assessment and penalty orders are set aside and the matter is remanded back to the Assessing Authority to pass fresh order after considering the reply to be filed by the assessee and documents produced. The petitioner is granted three weeks time from today to file reply to the notices under Section 142 (1) and produce all the evidence and records for examination before the Assessing Authority. The petitioner should be afforded an opportunity of hearing by the Assessing Authority before finalising the assessment order. It is made clear that no further opportunity shall be granted to the petitioner for filing the reply to the notice under Section 142 (1) or producing the evidence and documents. It is also made clear that only one opportunity of being heard shall be granted by the Assessing Officer to the petitioner before finalising the assessment order. With the aforesaid directions, these writ petitions are hereby allowed. DINESH KUMAR SINGH JUDGE Svn