GIGY ANTONY vs. INCOME-TAX OFFICER,

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WP(C)/28243/2022HC KeralaKLHC01059727202214 February 2023Bench: HONOURABLE MR. JUSTICE T.R.RAVI5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the assessment order (Ext.P16) could not be sustained because the mandatory procedure prescribed under Section 144C of the Income Tax Act, 1961, was not followed. The Court noted that Section 144C outlines a specific procedure for assessing non-resident Indians, requiring the Assessing Officer to forward a draft of the proposed assessment order to the assessee. In this case, no draft order was issued; only an intimation to show cause on proposed variations was sent. The Court found this procedural lapse to be fatal to the assessment order. Consequently, the writ petition was allowed, and Ext.P16 order was set aside. The competent authority was permitted to proceed with a fresh assessment if deemed necessary, and all consequential actions based on Ext.P16 were also set aside.

What were the facts?

The petitioner, Gigy Antony, an NRI, filed a writ petition challenging an assessment order (Ext.P16) issued against him. The Income Tax Officer, Corporate Range-2, Kochi, and the Joint Commissioner of Income-Tax, Corporate Range-2, Kochi, were respondents, along with the Additional Commissioner of Income-Tax, National Faceless Assessment Centre, Delhi. The petitioner contended that the assessment procedure followed was incorrect. Specifically, the procedure prescribed under Section 144C of the Income Tax Act for non-resident Indians was not adhered to. Instead of a draft assessment order, only a show-cause notice on proposed variations was issued to the petitioner. The assessment year is not explicitly stated.

What were the issues?

1. Whether the assessment order, issued without following the procedure prescribed under Section 144C of the Income Tax Act, 1961, is sustainable? (Question of law and fact, turning on Section 144C). Assessee's contentions: The petitioner argued that as an NRI, the assessment should have been conducted under Section 144C, which mandates the issuance of a draft assessment order to the assessee. The petitioner stated that no such draft order was issued, and only a show-cause notice was provided, which deviates from the prescribed procedure. Therefore, the assessment order is invalid. Revenue's contentions: The judgment does not record any specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 144C

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI TUESDAY, THE 14TH DAY OF FEBRUARY 2023 / 25TH MAGHA, 1944 WP(C) NO. 28243 OF 2022 PETITIONER: GIGY ANTONY MUNDACKAL HOUSE, KOTHAMANGALAM PO ERNAKULAM - 686 673, KERALA, INDIA, REPRESENTED BY HIS POWER OF ATTORNEY, NITISH SHENOY BY ADVS. NITISH SATHESH SHENOY SUKUMAR NAINAN OOMMEN SHERRY SAMUEL OOMMEN RESPONDENTS: 1 INCOME-TAX OFFICER, CORPORATE RANGE - 2 CENTRAL REVENUE BUILDING, IS PRESS ROAD, KOCHI, PIN - 682018 2 JOINT COMMISSIONER OF INCOME-TAX CORPORATE RANGE - 2, CENTRAL REVENUE BUILDING, IS PRESS ROAD, KOCHI, PIN - 682018 3 ADDITIONAL COMMISSIONER OF INCOME-TAX NATIONAL FACELESS ASSESSMENT CENTRE, DELHI SRI. JOSE JOSEPH, SC. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 28243 OF 2022 2 T.R. RAVI, J. -------------------------------------------- W.P.(C).No.28243 of 2022 -------------------------------------------- Dated this the 14th day of February, 2023 JUDGMENT The writ petition has been filed by challenging an assessment order issued against the petitioner. The petitioner is an NRI. A separate procedure has been prescribed in the Income Tax Act for carrying out assessment of non-resident Indians in Section 144C. Under Section 144C, the Assessing Officer has to forward a draft of the proposed order of assessment to the assessee, on receipt of which the assessee can either communicate his acceptance or file his objections with the Dispute Resolution Panel and the Assessing Officer. Admittedly, in the case on hand no such draft order of assessment has been prepared and sent to the petitioner. The only document sent to the petitioner is an intimation to show cause on the proposed variations. Since the procedure prescribed has not been followed, the assessment order cannot be sustained. In the result, the writ petition is allowed. Ext.P16 order is set aside. The competent authority may proceed with fresh assessment,

WP(C) NO. 28243 OF 2022 3 if found necessary. Needless to say all consequential action based on Ext.P16 also stands set aside. Sd/- T.R.RAVI JUDGE LEK

WP(C) NO. 28243 OF 2022 4 APPENDIX OF WP(C) 28243/2022 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE POWER OF ATTORNEY DATED 18.05.2022 IN FAVOR OF NITISH SATHEESH SHENOY Exhibit P2 A TRUE COPY OF THE TAX RESIDENCY CERTIFICATES DATED 11 JUNE 2022 BEARING CERTIFICATE NUMBER TRC-13827-2022 ISSUED BY THE FEDERAL AUTHORITY, UNITED ARAB EMIRATES Exhibit P3 A TRUE COPY OF THE TAX RESIDENCY CERTIFICATES DATED 11 JUNE 2022 BEARING CERTIFICATE NUMBER TRC-13825-2022 ISSUED BY THE FEDERAL AUTHORITY, UNITED ARAB EMIRATES Exhibit P4 A TRUE COPY OF THE APPROVAL UNDER SECTION 151 OF THE ACT DATED 19.03.2021 ISSUED BY THE 2ND RESPONDENT Exhibit P5 A TRUE COPY OF THE NOTICE DATED 06.09.2021 ISSUED UNDER SECTION 142(1) OF THE ACT Exhibit P6 A TRUE COPY OF THE ACKNOWLEDGMENT PAGE OF THE RETURN OF INCOME FILED BY THE PETITIONER FOR AY 2017-18 ON 24.09.2021 Exhibit P7 A TRUE COPY OF THE NOTICES DATED 13.11.2021 ISSUED BY THE 1ST RESPONDENT Exhibit P8 A TRUE COPY OF THE NOTICE DATED 10.03.2022 ISSUED BY THE 3RD RESPONDENT Exhibit P9 A TRUE COPY OF THE RESPONSE FURNISHED BY THE PETITIONER ON 22.03.2022 Exhibit P10 A TRUE COPY OF THE RESPONSE FURNISHED BY THE PETITIONER ON 24.03.2022

WP(C) NO. 28243 OF 2022 5 Exhibit P11 A TRUE COPY OF THE NOTICE DATED 26.03.2022 ISSUED BY THE 3RD RESPONDENT Exhibit P12 A COPY OF THE REPLY DATED 28.03.2022 Exhibit P13 THE EXTRACT OF THE FOREIGN EXCHANGE MANAGEMENT (DEPOSIT) REGULATIONS, 2000 Exhibit P14 A TRUE COPY OF THE DETAILS SUBMITTED BY THE PETITIONER ON 30.03.2022 Exhibit P15 JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN SALEM SREE RAMAVILAS CHIT COMPANY (P) LIMITED [2020] 114 TAXMANN.COM 492 Exhibit P16 TRUE COPY OF THE ASSESSMENT ORDER UNDER SECTION 147 READ WITH SECTION 144B OF THE ACT DATED 31.03.2022 ISSUED BY THE 3RD RESPONDENT Exhibit P17 A TRUE COPY OF THE PENALTY NOTICES DATED 26.07.2022, 27.07.2022 AND 27.07.2022 ISSUED UNDER SECTION 270A, 271F AND 271AAC(1) Exhibit P18 A TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN ZUARI CEMENT LIMITED VS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2(1), TIRUPATI (TS-271-HC-2013(AP)

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