M/S. SASTHA GOLD WORKS vs. DEPUTY COMMISSIONER OF INCOME TAX

WP(C)/10704/2021HC KeralaKLHC01029248202114 March 2024Author: HONOURABLE MR. JUSTICE GOPINATH P.5 pages

AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order (Ext.P4) was indeed passed in violation of the principles of natural justice. The court noted that the petitioner had clearly requested a 15-day extension to produce details, which was received by the assessing authority. Despite this request, the assessing authority proceeded to complete the assessment on April 8, 2021, without providing any response to the petitioner's request or granting the requested time. This failure to consider the adjournment request and provide an opportunity to produce documents was deemed a clear breach of natural justice. Consequently, the court quashed the assessment order and restored the matter to the file of the assessing authority. The assessing authority was directed to pass fresh orders after providing the petitioner with an opportunity of hearing and a chance to produce supporting documents. The petitioner was directed to upload necessary documents within one week of receiving the judgment. The court also noted that the assessment order could be set aside notwithstanding the availability of an alternative remedy.

What were the facts?

The petitioner, M/s. Sastha Gold Works, filed a writ petition challenging the assessment order for the assessment year 2018-2019, issued by the Deputy Commissioner of Income Tax (1st respondent). The challenge was based solely on the violation of principles of natural justice. The petitioner contended that after receiving a show-cause notice, they requested a 15-day extension to produce certain details, which was received by the assessing authority. However, the assessment was completed on April 8, 2021, without considering this request. The revenue argued that the petitioner was given several opportunities and was deliberately delaying proceedings, and that any grievance should be addressed through the appellate authority.

What were the issues?

1. Whether the assessment order passed for the assessment year 2018-2019 is liable to be quashed for violation of the principles of natural justice, specifically concerning the non-consideration of the assessee's request for an adjournment? (Question of law and fact, concerning principles of natural justice and procedural fairness under the Income-tax Act, 1961). Assessee's contention: The assessment order (Ext.P4) was passed in violation of natural justice as the assessing authority failed to consider the petitioner's request for a 15-day extension (Ext.P2) to produce details, despite acknowledging its receipt (Ext.P3), and proceeded to complete the assessment on April 8, 2021, before the requested extension period expired. Revenue's contention: The petitioner is not entitled to relief as they were provided with multiple opportunities. The petitioner was allegedly attempting to delay the proceedings, and therefore, their request for an extension could not be accommodated. The revenue further argued that the petitioner has an alternative remedy of filing an appeal against the assessment order.

Which sections of the Income-tax Act were involved?

Income-tax Act, 1961

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 GOPINATH P. THURSDAY, THE 14TH DAY OF MARCH 2024 / 24TH PHALGUNA, 1945 WP(C) NO. 10704 OF 2021 PETITIONER: M/S. SASTHA GOLD WORKS VI/628B, VATTANTHRA, ALAGAPPANAGAR, THRISSUR-680 302, REPRESENTED BY ITS PARTNER RAJU K.S. BY ADVS. SRI.A.KUMAR SRI.P.J.ANILKUMAR SMT.G.MINI(1748) SRI.P.S.SREE PRASAD RESPONDENTS: 1 DEPUTY COMMISSIONER OF INCOME TAX NATIONAL E-ASSESSMENT CENTRE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI -110 003. 2 INCOME TAX OFFICER, WARD 2(1), AAYAKAR BHAVAN, SAKTAN THAMPURAN NAGAR, THRISSUR-680 001. BY ADVS JOSE JOSEPH, SC, FOR INCOME TAX CYRIAC TOM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.10704/2021 -:2:-

J U D G M E N T The petitioner has approached this Court challenging Ext.P4 order of assessment issued under the provisions of the Income-tax Act, 1961 for the assessment year 2018-2019. The only ground upon which the assessment is challenged is violation of principles of natural justice.

According to the petitioner, on receipt of Ext.P1 show cause notice, the petitioner had submitted Ext.P2 request for 15 days time (till 19-04-2021) to produce certain details. It is submitted that Ext.P3 shows that Ext.P2 was received by the assessing authority. It is submitted that, however, by Ext.P4, the assessment was completed on 08-04-2021 without considering Ext.P2 request made by the petitioner.

The learned Standing Counsel appearing for the Income-tax Department would submit that the petitioner is not entitled to any relief. It is submitted that several opportunities were given to the petitioner, as is evident from the impugned assessment order. It is submitted that the petitioner was purposefully trying to delay the completion of proceedings and therefore the request of the petitioner in Ext.P2 could not be considered. It is submitted that if the petitioner in any manner aggrieved by Ext.P4 order of assessment, it is for the petitioner to approach the Appellate Authority by filing a duly constituted appeal.

Having heard the learned counsel for the petitioner and the learned Standing Counsel for the Income-tax department, I am of the view that the petitioner is entitled to succeed. It is clear from Exts.P2 and P3 that the petitioner had made a request for grant of 15 days time to produce certain details before the assessing authority. The request was for time till 19-04-2021 to produce the details. However, the assessing authority without favouring the petitioner with any reply to Ext.P2 completed the assessment on 08-04-2021. This is clearly a violation of principles of natural justice. Therefore, Ext.P4 can be set aside notwithstanding the availability of any alternative remedy.

Accordingly, Ext.P4 will stand quashed and the assessment of the petitioner for the assessment year 2018-2019 will stand restored to the file of the 1st respondent, who shall pass fresh orders after affording an opportunity of hearing to the petitioner and providing to the petitioner an opportunity to produce documents in support of its claim. The petitioner shall upload the necessary documents within a period of one week from the date of receipt of a certified copy of this judgment. Thereafter, the 1st respondent shall complete the assessment proceedings afresh as above. Writ petition is disposed of accordingly..

GOPINATH P.

JUDGE ats

Appendix — schedule of exhibits

APPENDIX OF WP(C) 10704/2021 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF THE SHOW CAUSE NOTICE, DATED 30.03.2021 ISSUED BY 1ST RESPONDENT. EXHIBIT P2 TRUE COPY OF THE REQUEST DATED 05.04.2021 TO THE 1ST RESPONDENT. EXHIBIT P3 TRUE COPY OF SCREEN SHOT OF THE DASH BOARD INDICATING THE RECEIPT OF THE RESPONSE. EXHIBIT P4 TRUE COPY OF THE ASSESSMENT ORDER DATED 08.04.2021 ISSUED BY 1ST RESPONDENT. EXHIBIT P5 TRUE COPY OF THE PENALTY NOTICE DATED 08.04.2021 ISSUED BY 1ST RESPONDENT.

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