PARAPURATHCHELANTAKATH PUTHIYAPURAYIL ABOOBACKER vs. THE INCOME TAX OFFICER

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WP(C)/14131/2023HC KeralaKLHC01030601202323 August 2023Bench: HONOURABLE MR.JUSTICE C.S.DIAS8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala, on considering the pleadings and materials on record, and particularly noting the stand of the respondents, held that the notices and the assessment order were liable to be quashed. The Court found that the notice issued under Section 148A(b) dated March 18, 2022, required a reply by March 24, 2022, which was short of the statutory seven clear days mandated by Section 148A(b). This rendered the notice invalid, and consequently, the subsequent order under Section 148A(d) and the notice under Section 148 were also set aside. The Court also noted the petitioner's contention regarding non-compliance with Section 144B(7)(ii) in serving the show-cause notice and draft assessment order. The ratio decidendi is that non-compliance with mandatory procedural requirements, such as providing the statutory notice period or proper service of notices, renders the subsequent proceedings invalid. The Court quashed Exts.P1, P2, P3, and P6 (assessment order) and granted the respondents liberty to issue a fresh notice to the petitioner as per the mandate of Section 148A(b) and in accordance with law. The petitioner was directed to file objections to any fresh notice, which the respondents were to consider and dispose of in accordance with law.

What were the facts?

The petitioner, Parapurathchelanthakath Puthiyaprayil Aboobacker, engaged in the fruit business, filed a writ petition challenging notices and an order issued by the Income Tax Officer (ITO), Ward-3, Kannur. The ITO issued a notice under Section 148A(b) alleging escaped assessment for Assessment Year 2018-19. The petitioner claims he was unaware of this notice and thus couldn't file objections. Subsequently, the ITO issued an order under Section 148A(d) and a notice under Section 148. The petitioner then learned of these proceedings and filed a reply. The National E-Assessment Centre completed the assessment on March 15, 2023, making an addition of Rs. 4,23,42,583/-. The petitioner contended that a show-cause notice and draft assessment order issued on February 17, 2023, were not served as per Section 144B(7)(ii), denying him an opportunity to object. He also argued that the initial notice under Section 148A(b) did not provide the mandatory seven clear days for a reply.

What were the issues?

1. Whether the notice issued by the 1st respondent under Section 148A(b) of the Income Tax Act, 1961, is invalid for failing to provide the petitioner with seven clear days to submit a reply, as mandated by the said provision? 2. Whether the subsequent order under Section 148A(d) and the notice under Section 148 are illegal and invalid due to the invalidity of the initial notice under Section 148A(b)? 3. Whether the assessment order passed by the 2nd respondent is vitiated by non-compliance with the mandatory provisions of Section 144B(7)(ii) of the Act regarding the service of show-cause notice and draft assessment order? Assessee's Contentions: The petitioner argued that the notice under Section 148A(b) was issued without providing the statutory seven clear days for a reply, rendering it illegal. Furthermore, the show-cause notice and draft assessment order were not served in accordance with Section 144B(7)(ii), which mandates real-time alerts and placement in the registered account or email, thereby denying him an opportunity to object. The petitioner relied on the mandate of Section 148A(b) and Section 144B(7)(ii). Revenue's Contentions: The learned Standing Counsel for the respondents fairly conceded that the contentions of the petitioner appeared to be valid, particularly regarding the short period provided in the notice under Section 148A(b).

Which sections of the Income-tax Act were involved?

Section 148A,Section 148A(b),Section 148A(d),Section 148,Section 144B,Section 144B(7)(ii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS WEDNESDAY, THE 23RD DAY OF AUGUST 2023 / 1ST BHADRA, 1945 WP(C) NO. 14131 OF 2023 PETITIONER/S: PARAPURATHCHELANTAKATH PUTHIYAPURAYIL ABOOBACKER AGED 54 YEARS TMC YASSIN FRUITS, TALIPARAMBA P.O, MAIN ROAD, TALIPARAMBA, KANNUR, PIN - 670141 BY ADVS. S.ARUN RAJ C.T.SUJA ARJUN S.RAJ RESPONDENT/S: 1 THE INCOME TAX OFFICER WARD-3, AAYAKAR BHAVAN, KONNOTHUMCHAL, CHOVVA P.O, KANNUR, PIN - 670006 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, ASSESSMENT UNIT, NATIONAL E-ASSESSMENT CENTRE, DELHI INCOME TAX DEPARTMENT, 2ND FLOOR, E- RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI, PIN - 110003 3 THE PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE, PIN - 673001 BY ADVS. JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 14131 OF 2023 2 JUDGMENT The writ petition is filed, inter-alia, to quash Exts.P1 notice, P2 order and P3 notice issued by the 1st respondent. 2. The petitioner's case is that he is doing business in fruits. The 1st respondent had issued Ext.P1 notice under Section 148 A(b) of the Income Tax Act, 1961 (in short, “Act”), alleging that the petitioner's chargeable income for the assessment year 2018-19 has escaped assessment. The petitioner was unaware of Ext.P1 notice and could not file his objection. Subsequently, the 1st respondent issued Ext.P2 order under Section 148A(d) of the Act stating that as the petitioner did not respond to Ext.P1 notice, it is assumed that the petitioner has no explanation to offer. With the afore-cited finding, the 1st respondent issued Ext.P3 notice under Section 148 of the Act. It is then that the petitioner came to learn about the issuance of Ext.P4 notice. The petitioner submitted Ext.P5 reply to the same. Then, the 2nd respondent

WP(C) NO. 14131 OF 2023 3 completed the assessment on 15.03.2023 and passed Ext.P8 assessment order making an addition of Rs.4,23,42,583/-. On a perusal of Ext.P8 order, the petitioner learnt that a show-cause notice along with a draft assessment order was issued on 17.02.2023, calling for objections to be filed on or before 09.03.2023. Ext.P9 show cause notice was not served on the petitioner as contemplated under sub-clause (ii) of sub-section (7) of Section 144B of the Act before completing Ext.P6 assessment. The said provision specifically provides that every notice has to be placed in the registered account of the assesee or sent to his registered email or mobile phone number, which is to be followed by a real time alert. The sending of the real time alert is a mandatory requirement, failing which the notice become ineffective and notice shall not be treated as served. The petitioner was denied an opportunity of filing his objection to the show cause notice and draft assessment order. Ext.P1 notice was issued by the 1st respondent without giving seven clear days time to the petitioner to reply to the

WP(C) NO. 14131 OF 2023 4 show cause notice as per the mandate under Section 148A(b), which renders Ext.P1 notice and the consequential Exts.P2 order and P3 notice as illegal and invalid. Hence, the writ petition. 3. The learned Standing Counsel appearing for the respondents has filed a statement, inter-alia, fairly conceding that the contentions of the petitioner appears to be valid. A perusal of Ext.P1 notice issued under Section 148A(b) shows that the notice dated 18.03.2022 was send to the petitioner with a requirement to submit a reply on or before 24.03.2022, which is short of seven clear days and in turn is against the statutory mandate under Section 148A(b). Therefore Ext.P1 notice is to be declared invalid and the consequential Exts.P2 and P3 orders are to be set aside. 4. Heard; Sri.S. Arun Raj, the learned Counsel appearing for the petitioner and Sri.Christopher Abraham, the learned Standing Counsel appearing for the respondents.

WP(C) NO. 14131 OF 2023 5 5. On a consideration of the pleadings and materials on record, and particularly taking note of the stand of the respondents in the statement filed before this Court, I am of the definite view that Exts.P1 to P3 and P6 assessment order have to be quashed and the petitioner has to be served with a fresh notice following the mandate under Section 148A(b) of the Act and in accordance with law. Resultantly, I order the writ petition as follows: (i) Exts.P1 notice, P2 order, P3 notice and P6 assessment order are quashed. (ii) The respondents would be at liberty to serve a fresh notice to the petitioner as per the mandate under Section 148A(b) of the Act and in accordance with law. (iii) If such notice is served on the petitioner, the petitioner shall place his objection to the same, and the respondents shall consider and dispose

WP(C) NO. 14131 OF 2023 6 of the notice in accordance with law. Sd/- C.S.DIAS JUDGE rkc/23.08.23

WP(C) NO. 14131 OF 2023 7 APPENDIX OF WP(C) 14131/2023 PETITIONER EXHIBITS Exhibit P1 THE TRUE COPY OF THE NOTICE DATED 18-3- 2022 ISSUED UNDER SECTION 148A (B) OF THE IT ACT FOR THE AY 2018-19 OF THE 1ST RESPONDENT Exhibit P2 A TRUE COPY OF THE ORDER DATED 30-3-2022 OF THE 1ST RESPONDENT U/S 148A (D) OF THE ACT FOR THE AY 2018-19 Exhibit P3 A TRUE COPY OF THE NOTICE DATED 30-3- 2022 OF THE 1ST RESPONDENT U/S 148 OF THE ACT FOR THE AY 2018-19 Exhibit P4 A TRUE COPY OF THE SHOW CAUSE NOTICE DATED 18-1-2023 ISSUED U/S 144 OF THE IT ACT BY THE 2ND RESPONDENT Exhibit P5 A TRUE COPY OF THE REPLY DATED 25-1-2023 E-FILED BY THE PETITIONER Exhibit P6 A TRUE COPY OF THE NOTICE DATED 25-1- 2023 ISSUED BY THE 2ND RESPONDENT Exhibit P7 A TRUE COPY OF THE REPLY E-FILED BY THE PETITIONER ON 6-2- 2023 Exhibit P8 A TRUE COPY OF THE ASSESSMENT ORDER DATED 15-3-2023 PASSED U/S 147 R.W.S144B OF THE ACT BY THE 2ND RESPONDENT FOR THE AY 2018-19 Exhibit P9 A TRUE COPY OF THE SHOW CAUSE NOTICE DATED 6-3-2023 WITH THE DRAFT ASSESSMENT ORDER GENERATED BY THE 2ND RESPONDENT Exhibit P10 A TRUE COPY OF THE JUDGMENT DATED 12-5- 2022 IN WP(C) NO. 7385 OF 2022 PASSED BY THE HIGH COURT OF DELHI Exhibit P11 A TRUE COPY OF THE JUDGMENT DATED 20-9- 2022 IN WRIT PETITION NO. 2154 OF 2022

WP(C) NO. 14131 OF 2023 8 PASSED BY THE HIGH COURT OF MUMBAI

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