KODAKKADAN HAMJADALI, vs. ASSISTANT COMMISSIONER OF INCOME TAX

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WP(C)/11496/2022HC KeralaKLHC01023651202230 January 2024Bench: HONOURABLE MR. JUSTICE D. K. SINGH12 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned assessment orders dated March 23, 2022, were vitiated because the petitioner was not afforded an adequate opportunity to file his responses/replies. The Court noted that it was admitted that the petitioner was not communicated any order declining his requests for time until March 24, 2022, to file his replies. Therefore, the assessment orders were set aside. The petitioner was granted a period of fifteen days from the date of the order to file his response to the show cause notices/pre-assessment notices dated March 4, 2022/March 17, 2022. The Court clarified that no further opportunity would be granted. If the petitioner filed the replies as directed, fresh assessment orders would be passed in accordance with the law. The ratio decidendi is that failure to communicate the rejection of a request for time to respond to notices, leading to non-filing of a response and subsequent ex-parte assessment, violates natural justice.

What were the facts?

The petitioner, Kodakkadan Hamjadali, filed four writ petitions challenging assessment orders dated March 23, 2022, passed by the Assistant Commissioner of Income Tax, Central Circle, Thiruvananthapuram. These orders pertained to assessment years 2015-16, 2017-18, 2014-15, and 2016-17. For assessment years 2014-15 and 2015-16, the petitioner received pre-assessment notices on March 4, 2022, and requested time until March 24, 2022, to respond. Similarly, for assessment years 2016-17 and 2017-18, notices under Section 142(1) were received on March 4, 2022, with a request for a response by March 24, 2022. However, the petitioner did not receive any communication rejecting these requests. Subsequently, show cause/pre-assessment notices dated March 17, 2022, were issued, to which the petitioner did not file replies, leading to the final assessment orders being passed on March 23, 2022.

What were the issues?

1. Whether the petitioner was afforded adequate opportunity of hearing before the finalization of the assessment orders dated March 23, 2022, thereby adhering to the principles of natural justice, concerning assessment years 2014-15 to 2017-18? Assessee's Contention: The petitioner argued that he had a reasonable belief that his requests for time until March 24, 2022, to file responses to the notices were accepted, as no communication rejecting these requests was received. Consequently, he did not file responses to the show cause/pre-assessment notices. This resulted in a violation of natural justice and vitiated the impugned assessment orders. Revenue's Contention: The revenue contended that the petitioner had been issued numerous notices but failed to reply to them. While the petitioner sought time until March 24, 2022, for notices dated March 4, 2022, these requests were not considered, and subsequent show cause/pre-assessment notices dated March 17, 2022, were issued. The petitioner ought to have filed replies to these notices but failed to do so, leading to the finalization of assessment orders.

Which sections of the Income-tax Act were involved?

Section 142(1)

AI-generated summary — verify with the full judgment below

Heard together (4 matters)

WP(C) NO. 11434 OF 2022
WP(C) NO. 11477 OF 2022
WP(C) NO. 11496 OF 2022
WP(C) NO. 11501 OF 2022

Read from the judgment's own cause title. This page is filed under one of them.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 30TH DAY OF JANUARY 2024 / 10TH MAGHA, 1945 WP(C) NO. 11434 OF 2022 PETITIONER/S: KODAKKADAN HAMJADALI, AGED 53 YEARS BABU NIVAS, 1ST MILE KALOT, NEDIYIRUPPU, KONDOTTY POST, MALAPPURAM -673 638, KERALA. BY ADVS. ANIL D. NAIR TELMA RAJU ARAVIND SREEKUMAR EDATHARA VINEETA KRISHNAN RESPONDENT/S: ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THIRUVANANTHAPURAM-695003. OTHER PRESENT: SMT.SUSIE B. VARGHESE-SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30.01.2024, ALONG WITH WP(C) Nos.11477, 11496 & 11501 of 2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 11434 OF 2022 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 30TH DAY OF JANUARY 2024 / 10TH MAGHA, 1945 WP(C) NO. 11477 OF 2022 PETITIONER/S: KODAKKADAN HAMJADALI, AGED 53 YEARS BABU NIVAS, 1ST MILE KALOT, NEDIYIRUPPU, KONDOTTY POST, KONDOTTY, MALAPPURAM-673 638, KERALA. BY ADVS. ANIL D. NAIR TELMA RAJU ARAVIND SREEKUMAR EDATHARA VINEETA KRISHNAN RESPONDENT/S: ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, THIRUVANANTHAPURAM-695 003. SMT.SUSIE B. VARGHESE-SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30.01.2024, ALONG WITH WP(C).11434/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 11434 OF 2022 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 30TH DAY OF JANUARY 2024 / 10TH MAGHA, 1945 WP(C) NO. 11496 OF 2022 PETITIONER/S: KODAKKADAN HAMJADALI, AGED 53 YEARS BABU NIVAS, 1ST MILE KALOT, NEDIYIRUPPU, KONDOTTY POST, KONDOTTY, MALAPPURAM - 673 638, KERALA. BY ADVS. ANIL D. NAIR TELMA RAJU EDATHARA VINEETA KRISHNAN RESPONDENT/S: ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, THIRUVANANTHAPURAM - 695 003. SMT.SUSIE B. VARGHESE-SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30.01.2024, ALONG WITH WP(C).11434/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 11434 OF 2022 4 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 30TH DAY OF JANUARY 2024 / 10TH MAGHA, 1945 WP(C) NO. 11501 OF 2022 PETITIONER/S: KODAKKADAN HAMJADALI, AGED 53 YEARS BABU NIVAS, 1ST MILE KALOT, NEDIYIRUPPU, KONDOTTY POST, KONDOTTY, MALAPPURAM - 673 638, KERALA. BY ADVS. ANIL D. NAIR TELMA RAJU EDATHARA VINEETA KRISHNAN ARAVIND SREEKUMAR RESPONDENT/S: ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, THIRUVANANTHAPURAM – 695 003. SMT.SUSIE B. VARGHESE-SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30.01.2024, ALONG WITH WP(C).11434/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 11434 OF 2022 5 J U D G M E N T [WP(C) Nos.11434, 11477, 11496 & 11501 of 2022] These writ petitions have been filed by the very same petitioner impugning the assessment orders dated 23.3.2022 issued under the provisions of the Income Tax Act, 1961, for the assessment years 2015-16, 2017-18, 2014-15 and 2016-17, respectively. 2. Learned counsel for the petitioner submits that for the assessment years 2014-15 and 2015-16, the petitioner was served with show cause notices/pre-assessment notices dated 4.3.2022. Petitioner sought time till 24.3.2022 to file his responses/replies to the said show cause notices. Similarly for the assessment years 2016-17 and 2017-18 also, on receipt of notices dated 4.3.2022 under Section 142(1) of the Income Tax Act, 1961, the petitioner sought time up to 24.3.2022 to file his responses/replies. However, it appears that the said requests were not considered and in the meantime, show cause notices/pre-assessment

WP(C) NO. 11434 OF 2022 6 notices dated 17.3.2022 were issued to the petitioner for the said assessment years. The petitioner did not file his replies/responses to the said show cause notices/pre-assessment notices. Therefore, final assessment orders came to be passed on 23.3.2022 for the four assessment years, i.e., 2014-15 to 2017-18. 3. Learned counsel for the petitioner submits that the petitioner had the reasonable belief that his requests for time up to 24.3.2022 to file his responses/replies have been accepted as he did not receive any communication rejecting the requests and, therefore, he did not file his response to the said show causes/pre-assessment notices. Therefore, the petitioner was not afforded adequate opportunity of hearing before finalisation of the assessment orders dated 23.3.2022 and there has been violation of the principles of natural justice and the impugned assessment orders are vitiated to that extent. 4. On the other hand, Smt.Susie B.Varghese, learned Senior Standing Counsel for the Income Tax

WP(C) NO. 11434 OF 2022 7 Department, has submitted that the petitioner was issued numerous notices, but he never came forward to reply any of the notices issued and that only in respect of the notices dated 4.3.2022 issued under Section 142(1) of the Act, the petitioner sought time for filing response/reply till 24.3.2022. However, the said requests were not considered and show cause notices/pre-assessment notices dated 17.3.2022 were issued. On receipt of the pre-assessment notices, the petitioner ought to have filed his replies. However, he did not file any reply and, therefore, the assessment orders have been finalised. 5. I have considered the submissions and perused the paper books. 6. Admittedly, the petitioner was not communicated any order declining his requests seeking time up to 24.3.2022 to file his replies to the notices. 7. Considering the aforesaid fact, I am of the view that the impugned assessment orders dated 23.3.2022 have been vitiated as the petitioner was

WP(C) NO. 11434 OF 2022 8 not afforded adequate opportunity for filing his responses/replies. Thus, the impugned assessment orders, Ext.P8 in WP(C) Nos.11434 & 11496 of 2022 and Ext.P9 in WP(C) Nos.11477 & 11501 of 2022 are set aside. The petitioner is permitted to file his response within a period of fifteen (15) days to the show cause notices/pre-assessment notices dated 4.3.2022/17.3.2022. It is made clear that no further opportunity shall be granted to the petitioner. If the petitioner files reply to the show cause notices/pre-assessment notices as above, the same shall be considered and fresh assessment orders shall be passed, in accordance with law. The present writ petitions stand finally disposed of as above. Pending interlocutory application, if any, in the present writ petitions stands dismissed. Sd/- DINESH KUMAR SINGH

JUDGE jg

WP(C) NO. 11434 OF 2022 9 APPENDIX OF WP(C) 11477/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ACKNOWLEDGEMENT OF RETURN FILED FOR THE A.Y. 2017-18. Exhibit P2 TRUE COPY OF THE NOTICE UNDER SECTION 143(2) DATED 18.11.2021 ISSUED BY THE RESPONDENT., Exhibit P3 TRUE COPY OF THE NOTICE UNDER SECTION 142(10 DATED 22.11.2021. Exhibit P4 TRUE COPY OF THE NOTICE UNDER SECTION 143(2) DATED 18.11.2021 ISSUED BY THE RESPONDENT. Exhibit P5 TRUE COPY OF THE REPLY TO SEC. 142(1) NOTICE DATED 23.12.2021 ISSUED BY THE RESPONDENT. Exhibit P6 TRUE COPY OF THE NOTICE DATED 04.03.2022 ISSUED UNDER SECTION 142(1) BY THE RESPONDENT. Exhibit P7 TRUE COPY OF THE ADJOURNMENT REQUEST DATED 08.03.2022 SUBMITTED BY THE PETITIONER. Exhibit P8 TRUE COPY OF THE PRE- ASSESSMENT NOTICE DATED 17.03.2022. Exhibit P9 TRUE COPY OF THE ASSESSMENT ORDER DATED 23.02.2022 ISSUED BY THE RESPONDENT.

WP(C) NO. 11434 OF 2022 10 APPENDIX OF WP(C) 11496/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ACKNOWLEDGMENT OF RETURN FILED THE A.Y.2014-15. Exhibit P2 TRUE COPY OF THE NOTICE UNDER SECTION 143(2) DATED 18/11/2021 ISSUED BY THE RESPONDENT. Exhibit P3 TRUE COPY O HE NOTICE UNDER SECTION 142(1) DATED 22/11/2021. Exhibit P4 TRUE COPY OF THE E-PROCEEDING UNDER SEC. 143(2) DATED 18/11/2021 ISSUED BY THE RESPONDENT. Exhibit P5 TRUE COPY OF THE REPLY TO SEC. 142(I) NOTICE DATED 23/12/2021 ISSUED BY THE RESPONDENT. Exhibit P6 TRUE COPY OF THE PRE-ASSESSMENT NOTICE DATED 04/03/2022 ISSUED BY THE RESPONDENT. Exhibit P7 TRUE COPY OF THE ACKNOWLEDGMENT SEEKING ADJOURNMENT ELECTRONICALLY. Exhibit P8 TRUE COPY OF THE ASSESSMENT ORDER DATED 23/03/2022 ISSUED BY THE RESPONDENT.

WP(C) NO. 11434 OF 2022 11 APPENDIX OF WP(C) 11501/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ACKNOWLEDGMENT OF RETURN FILED FOR THE A.Y.2016-2017. Exhibit P2 TRUE COPY OF THE NOTICE UNDER SECTION 143(2) DATED 18/11/2021 ISSUED BY THE RESPONDENT. Exhibit P3 TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 22/11/2021. Exhibit P4 TRUE COPY OF THE REPLY TO NOTICE UNDER SEC. 143(2) DATED 07/12/2021 ISSUED BY THE RESPONDENT. Exhibit P5 TRUE COPY OF THE REPLY TO SEC. 142(1) NOTICE DATED 23/12/2021 ISSUED BY THE RESPONDENT. Exhibit P6 TRUE COPY OF NOTICE DATED 4/3/2022 ISSUED UNDER SEC. 142(1) BY THE RESPONDENT. Exhibit P7 TRUE COPY OF THE REQUEST DATED 8/3/2022 SUBMITTED BY THE PETITIONER. Exhibit P8 TRUE COPY OF THE PRE-ASSESSMENT NOTICE DATED 21/3/2022. Exhibit P9 TRUE COPY OF THE ASSESSMENT ORDER DATED 23/03/2022 ISSUED BY THE RESPONDENT.

WP(C) NO. 11434 OF 2022 12 APPENDIX OF WP(C) 11434/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ACKNOWLEDGMENT OF RETURN FILED FOR THE A.Y. 2015-16. Exhibit P2 TRUE COPY OF THE NOTICE UNDER SECTION 143(2) DATED 18.11.2021 ISSUED BY THE RESPONDENT. Exhibit P3 TRUE COPY OF THE NOTICE UNDER SECTION 142(1) DATED 22.11.2021. Exhibit P4 TRUE COPY OF THE REPLY TO NOTICE UNDER SEC. 143(2) DATED 7.12.2021 ISSUED BY THE RESPONDENT. Exhibit P5 TRUE COPY OF THE REPLY TO SEC. 142(1) NOTICE DATED 23.12.2021 ISSUED BY THE RESPONDENT. Exhibit P6 TRUE COPY OF THE PRE-ASSESSMENT NOTICE DATED 4.3.2022 ISSUED BY THE RESPONDENT. Exhibit P7 TRUE COPY OF THE ACKNOWLEDGMENT SEEKING ADJOURNMENT ELECTRONICALLY. Exhibit P8 TRUE COPY OF THE ASSESSMENT ORDER DATED 23.3.2022 ISSUED BY THE RESPONDENT.

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