THE MALLAPPALLY SERVICE CO-OPERATIVE BANK LTD vs. THE CENTRAL BOARD OF DIRECT TAXES

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WA/2030/2023HC KeralaKLHC01088166202324 November 2023Author: HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE,HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN5 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 found that the appellant had filed written submissions before the Commissioner of Income Tax (Appeals) and participated in a hearing. However, the order passed by the National Faceless Appeal Centre (NFAC) did not reflect the receipt of these written submissions, and the appellant contended that no further notices were served. The Court reasoned that since the appellant had submitted written objections and participated in a hearing, not considering these submissions and passing an order without a proper opportunity of being heard constituted a breach of natural justice. Therefore, the Court set aside the order of the NFAC and directed the NFAC to consider the appeal afresh, affording the appellant an opportunity of being heard. The stay granted originally was directed to continue until the disposal of the appeal. The issue of the assessment itself was not decided on merits.

What were the facts?

The appellant, Mallappally Service Co-operative Bank Ltd., is an assessee under the Income Tax Act, 1961. The assessment for the assessment year 2016-17 was completed by an order dated December 20, 2018. The appellant filed an appeal before the Commissioner of Income Tax (Appeals), Kottayam. A hearing notice was issued, and the appellant's lawyer participated and submitted written submissions. Subsequently, no further notices were issued to the appellant. An order (Ext.P7) was passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for non-appearance on several dates. The appellant's contention is that the written submissions were not reflected in the NFAC's order, and no proof of service for subsequent notices was provided. A learned Single Judge dismissed the writ petition, holding that the appellant did not respond to notices and make written submissions. This intra-court appeal challenges the Single Judge's order.

What were the issues?

1. Whether there was a violation of the principles of natural justice in the proceedings before the Commissioner of Income Tax (Appeals) (NFAC) by not considering the written submissions filed by the appellant and by passing an order without affording a proper opportunity of being heard? Assessee's Contentions: - The appellant participated in the hearing after receiving notice dated November 20, 2019, and submitted written submissions via email on December 5, 2019. - The order passed by the NFAC (Ext.P7) does not reflect the receipt of these written submissions. - Only one notice was received by the appellant, and no other notices were issued. - The respondents have not produced any document to prove the service of notices referred to in Ext.P7. Revenue's Contentions: - The judgment records that the learned Standing Counsel for the respondents appeared. However, their specific arguments regarding the issuance and service of notices or the non-receipt of submissions are not detailed in the provided text.

Which sections of the Income-tax Act were involved?

Section 5(i) of the Kerala High Court Act, 1958

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 A.MUHAMED MUSTAQUE & THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN FRIDAY, THE 24TH DAY OF NOVEMBER 2023 / 3RD AGRAHAYANA, 1945 WA NO. 2030 OF 2023 AGAINST THE JUDGMENT IN WP(C) NO.37204/2023 OF HIGH COURT OF KERALA APPELLANT :- THE MALLAPPALLY SERVICE CO-OPERATIVE BANK LTD REPRESENTED BY ITS SECRETARY MADHULAL.P KEEZHVAIPUR P.O. PATHANAMTHITTA, PIN – 689587 BY ADVS. K.P.PRADEEP HAREESH M.R. SANAND RAMAKRISHNAN T.T.BIJU T.THASMI M.J.ANOOPA RESPONDENTS :- 1 THE CENTRAL BOARD OF DIRECT TAXES , REPRESENTED BY ITS CHAIRMAN DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK NEW DELHI, PIN – 110001 2 INCOME TAX OFFICER WARD 2- THIRUVALLA, VAISHNAVAM ARCADE, T.K. ROAD, THIRUVALLA, PATHANAMTHITTA, PIN – 689101 3 COMMISSIONER OF INCOME TAX (APPEALS) KOTTAYAM, AAYAKAR BHAVAN PUBLIC LIBRARAY BUILDING, SASTHRI ROAD, KOTTAYAM-, PIN – 686001 4 PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, NA-FAC INCOME TAX DEPARTMENT, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI, PIN – 110003 5 COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI, PIN – 110003 BY SRI.V.K.SHAMSUDHIN, G.P ADV.CHRISTOPHER ABRAHAM, SC THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 24.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA NO. 2030 OF 2023 2

JUDGMENT SHOBA ANNAMMA EAPEN

, J

The judgment dated 09.11.2023 rendered by the learned Single Judge, dismissing WP(C) No.37204/2023, is the subject matter of challenge in this intra court appeal filed under Sec.5(i) of the Kerala High Court Act, 1958. The appellant is the writ petitioner.

The appellant is an assessee under the provisions of the Income Tax Act, 1961. The assessment was completed in respect of the assessment year 2016-17 as per Ext.P2 order dated 20.12.2018. Challenging Ext.P2 order, the appellant filed appeal before the third respondent, Commissioner of Income Tax Appeals, Kottayam.

Pursuant to the filing of the appeal, Ext.P4 hearing notice was issued to the appellant and the appellant's lawyer participated in the hearing and submitted written submissions. Thereafter, no notice was issued to the appellant and subsequently, Ext.P7 order was passed by the fifth respondent for non appearance of WA NO. 2030 OF 2023 3 the petitioner on the several date of posting. The learned single judge, after elaborate consideration, dismissed the writ petition holding that the appellant did not respond to the notices issued and no written submissions were made. Aggrieved by this, the appellant has approached this court with this appeal.

We have heard Dr.K.P.Pradeep, learned counsel for the appellant as well as Sri.Christopher Abraham, learned Standing Counsel for the respondents.

On a perusal of Ext.P5, it is seen that the appellant had filed written submission before the third respondent. According to the appellant, the hearing was also conducted by the third respondent. However, Ext.P7 order is seen passed by the fifth respondent – Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC). In Ext.P7 order, the fifth respondent had stated that notice of hearing has been issued a number of times, but nobody attended/replied. It is the case of the appellant that on receipt of Ext.P4 hearing notice dated 20.11.2019, the petitioner, through his lawyer, participated in the hearing and written submissions were also sent through mail on 05.12.2019. However, the order passed by the fifth

WA NO. 2030 OF 2023 4 respondent does not reflect receipt of Ext.P5 written submissions sent by the appellant through e-mail.

The learned counsel for the appellant submits that the only notice received by the appellant is the notice dated 20.11.2019 and no other notices were issued by the respondent. The respondents have not produced any document to prove that the notices referred to in Ext.P7 was served on the appellant, whereas, the appellant has produced before this Court the written submissions filed before the third respondent.

On a consideration of the entire facts of the case, we are of the opinion that there was violation of principles of natural justice in not considering the written objections filed by the appellant and hence, one more opportunity has to be granted. Accordingly, the writ appeal is disposed of, as follows; a) Ext.P7 order is set aside. b) The fifth respondent is directed to consider the appeal filed by the appellant afresh and pass appropriate orders in accordance with law after affording the appellant an opportunity of being heard.

WA NO. 2030 OF 2023 5 c) Till the disposal of the appeal, the stay granted originally shall continue. The appellant shall produce certified copy of this judgment before the fifth respondent for compliance. A.MUHAMED MUSTAQUE, JUDGE SHOBA ANNAMMA EAPEN, JUDGE SMA

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