PLY PARK, vs. INCOME TAX OFFICER,

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WP(C)/10311/2023HC KeralaKLHC01023319202315 January 2024Author: HONOURABLE MR. JUSTICE D. K. SINGH7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that there was a violation of the principles of natural justice. The Court agreed with the petitioner's counsel that in the absence of a specified date for submission of the response to the show cause notice dated February 23, 2023, the petitioner had a bona fide belief that their request for adjournment to March 17, 2023, was accepted. Since the impugned order (Ext.P6) was passed on March 14, 2023, prior to the believed deadline, the order was considered bad in law and liable to be set aside. The Court allowed the writ petition, set aside the impugned order, and remanded the matter back to the assessing authority. The assessing authority was directed to open the link for the petitioner to upload their response. If the petitioner failed to upload the response within the prescribed time, the assessing authority could pass a fresh order. If the petitioner filed the response, the assessing authority was to consider it and provide an online opportunity of hearing before finalizing the assessment.

What were the facts?

The petitioner, Ply Park, is an assessee under the Income Tax Act, 1961, who failed to file its return of income for Assessment Year 2018-19. Information flagged by the CBDT indicated cash deposits of Rs. 1,26,41,200/- and withdrawals of Rs. 31,87,595/- in the financial year 2017-18. The petitioner was issued a notice under Section 148 and a show cause notice under Section 148A(b) proposing to assess the cash deposit as income that had escaped assessment under Section 147. The petitioner requested an adjournment to March 17, 2023, to file a response. However, the assessment order (Ext.P6) was finalized on March 14, 2023, before the petitioner could submit its response.

What were the issues?

1. Whether there was a violation of the principles of natural justice, and consequently, the assessment order dated March 14, 2023, is bad in law, turning on Section 148A(b) and Section 147 of the Income Tax Act, 1961. Assessee's Contention: The petitioner argued that a violation of natural justice occurred because they requested an adjournment to March 17, 2023, to respond to the show cause notice dated February 23, 2023. The status of their request on the Income Tax Department's portal suggested time was granted, but without a specific date. The petitioner bona fide believed they had until March 17, 2023, to respond. Since the assessment order was passed on March 14, 2023, before this date, it should be set aside and the matter remanded for a fresh opportunity to respond. Revenue's Contention: The Income Tax Department's Senior Standing Counsel could not dispute that the adjourned date for submitting the response was not mentioned and that the portal indicated the request was 'open' without a specific date for submission.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A(b),Section 147

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 15TH DAY OF JANUARY 2024 / 25TH POUSHA, 1945 WP(C) NO. 10311 OF 2023 PETITIONER/S: PLY PARK, 10/350-1, PRIYADARSHINI ROAD, NEAR AROMA THEATER, PALAKKAD-678001 REPRESENTED BY SRI. BASHITH P.B., PARTNER, AGED 40 YEARS. BY ADVS. P.J.ANILKUMAR (A-1768) K.N.SREEKUMARAN N.SANTHOSHKUMAR RESPONDENT/S: 1 INCOME TAX OFFICER, WARD-2, AAYKAR BHAVAN, ENGLISH CHURCH ROAD, PALAKKAD- 678014. 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, ASSESSMENT UNIT, INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI-100001. 3 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, INCOME TAX DEPARTMENT, NEW DELHI-100001. BY ADV CHRISTOPHER ABRAHAM OTHER PRESENT: SRI.JOSE JOSEPH-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 10311 OF 2023 2

J U D G M E N T The petitioner is an assessee under the provisions of the Income Tax Act, 1961 ('Act', for short). The petitioner did not file its return of income for the assessment year 2018-19. However, as per the information flagged in accordance with the risk management strategy formulated by the CBDT, the petitioner had deposited cash of Rs.1,26,41,200/- in the Bank account and had withdrawn cash of Rs.31,87,595/- in the financial year 2017-18 relevant to the assessment year 2018-

19.

The petitioner was issued notice under Section 148 of the Act and was provided an opportunity of being heard under Section 148A(b) of the Act. The petitioner was issued show cause notice to explain as to why the said cash deposit of Rs.1,26,41,200/- should not be assessed as income chargeable to tax, which had escaped assessment within the meaning of the provision of Section 147 of the Act for the assessment year 2018-19. The petitioner in WP(C) NO. 10311 OF 2023 3 response to the notice dated 23.2.2023 had requested for adjournment to 17.3.2023 and the web portal of the Income Tax Department would suggest that the said request was considered, but no date was given for filing the response. The petitioner was of the opinion that the petitioner had been granted time up to 17.3.2023 to give response to the notice dated 23.2.2023. However, before 17.3.2023, the assessment order got finalised vide Ext.P6 on 14.3.2023. Learned counsel for the petitioner submits that there has been violation of the principles of natural justice, inasmuch as the petitioner requested on 2.3.2023 for adjournment to give response to the notice dated 23.2.2023, and the status of the said request would suggest that the petitioner was granted time for response, but without date. Therefore, the petitioner had bona fide believed that the petitioner was granted time till 17.3.2023. As the order impugned was passed before 17.3.2023, i.e. on 14.3.2023, there was violation of principles of natural justice and the WP(C) NO. 10311 OF 2023 4 order, Ext.P6, needs to be set aside and the matter needs to be remanded back for providing one more opportunity to the petitioner to file response to the show cause notice dated 23.2.2023, and after hearing the petitioner, the assessing authority may finalise the assessment.

2.

Sri.Jose Joseph, learned Senior Standing Counsel for the Income Tax Department, is not in a position to dispute that on petitioner's request adjournment date for submission of the response to the show cause notice dated 23.2.2023 was not mentioned and it is also not reflected from Ext.P4, whether the request was accepted or not, because the status of the request would show open. However, no adjourned date for submission of response was mentioned.

3.

I am in agreement with the learned counsel for the petitioner that in the absence of date mentioned for submission of the response to the show cause notice dated 23.2.2023, the petitioner had bona fide believed that the petitioner's

WP(C) NO. 10311 OF 2023 5 request for adjournment to 17.3.2023 to give response to the show cause notice dated 23.2.2023 was accepted. However, before 17.3.2023, the impugned order, Ext.P6, has been passed on 14.3.2023, and therefore, I am of the considered view that there was violation of the principles of natural justice. For that reason, the impugned order is bad in law and is liable to be set aside.

4.

In view of the above, the present writ petition is allowed and the impugned order, Ext.P6, dated 14.3.2023 is set aside and the matter is remanded back to the 2nd or the 3rd respondent, as the case may be, to open the link provided to the petitioner for uploading the response to the show cause notice dated 23.2.2023. If the petitioner fails to upload the response within the time prescribed for the same, the assessing authority would be free to pass fresh order or the same order in Ext.P6. However, if the petitioner files response to the show cause notice dated 23.2.2023 on receiving intimation of the link provided to him

WP(C) NO. 10311 OF 2023 6 having been opened for uploading the response, the assessing authority will consider the response to the show cause notice dated 23.2.2023 and also provide an online opportunity of hearing to the petitioner before finalising the process. With the aforesaid direction and observation, the present writ petition stands finally disposed of. Pending interlocutory application, if any, in the present writ petition stands dismissed. DINESH KUMAR SINGH

JUDGE jg

WP(C) NO. 10311 OF 2023 7

Appendix — schedule of exhibits
APPENDIX OF WP(C) 10311/2023 PETITIONER EXHIBITS Exhibit-P1 TRUE COPY OF THE NOTICE U/S 148 DATED 31..03..2022 ISSUED BY THE 1ST RESPONDENT. Exhibit-P2 TRUE COPY OF THE NOTICE U/S 143(2) DATED 21..09..2022 ISSUED BY THE 2ND RESPONDENT Exhibit-P2(a) TRUE COPY OF THE RESPONSE FILED BY THE PETITIONER DATED 06..10..2022 AGAINST EXT-P2 . Exhibit-P3 TRUE COPY OF THE NOTICE U/S.144 DATED 23..02..2023 ISSUED BY 2ND RESPONDENT. Exhibit-P4 TRUE COPY OF THE WEB PAGE OF THE INCOME TAX DEPARTMENT DATED 27..02..2023 EVIDENCING THE FILING OF THE ADJOURNMENT APPLICATION ON THE INCOME TAX PORTAL. Exhibit-P5 TRUE COPY OF THE REPLY MAIL DATED 09..03..2023 ALONG WITH SUPPORTING DOCUMENTS Exhibit-P6 TRUE COPY OF THE ASSESSMENT ORDER DATED14..03..2023 FOR THE ASSESSMENT YEAR 2018-19 ISSUED BY THE 2ND RESPONDENT. Exhibit-P7 TRUE COPY OF THE JUDGMENT IN RENJU VS THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX , W.P.(C) 11735/2022 DATED 16..03..2023

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