GENESIS INSTITUTE OF MEDICAL SCIENCE PRIVATE LIMITED,, vs. INCOME TAX OFFICER.,

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WP(C)/21424/2023HC KeralaKLHC01046819202324 November 2023Author: HONOURABLE MR. JUSTICE D. K. SINGH6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned penalty order dated June 8, 2023, passed under Section 270A of the Income Tax Act, 1961, was in violation of the principles of natural justice. The Court noted that no date for hearing was fixed or communicated to the petitioner after it filed its reply dated April 12, 2023, to the show cause notice dated April 6, 2023. Consequently, the Court set aside the penalty order and remanded the matter back to the 4th respondent (National Faceless Penalty Centre) for fresh adjudication. The 4th respondent was directed to communicate a date of hearing to the petitioner through the Income Tax Department's portal and email. The Court clarified that no further opportunity would be granted if the petitioner failed to appear on the fixed date, and the petitioner would not be allowed to seek any adjournment. The writ petition was allowed with these observations.

What were the facts?

Genesis Institute of Medical Science Private Limited (the assessee) filed a writ petition challenging a penalty order dated June 8, 2023, passed under Section 270A of the Income Tax Act, 1961, for the assessment year 2021-22. The assessment for this year had been finalized by adding Rs. 8,37,97,401/- to the returned income, which was detected during scrutiny assessment. The assessee did not challenge the assessment order itself but only the penalty order. The assessee was issued show cause notices on December 9, 2022, and April 6, 2023. The assessee filed replies on December 30, 2022, and April 12, 2023, requesting an adjournment and attaching certain ITAT judgments. The impugned penalty order was passed on June 8, 2023.

What were the issues?

1. Whether the penalty order passed under Section 270A of the Income Tax Act, 1961, is liable to be set aside for violation of the principles of natural justice? (Question of law and fact) The assessee contended that the impugned penalty order was passed in violation of the principles of natural justice because no date of hearing was fixed or communicated after the assessee filed its reply to the show cause notice dated April 6, 2023. The assessee argued that the order was passed mechanically without providing an opportunity to be heard. The revenue contended that the penalty proceedings were initiated correctly and that the assessee had been provided with opportunities to respond. However, the specific arguments of the revenue regarding the compliance with natural justice principles were not explicitly recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 270A

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 DINESH KUMAR SINGH FRIDAY, THE 24TH DAY OF NOVEMBER 2023 / 3RD AGRAHAYANA, 1945 WP(C) NO. 21424 OF 2023 PETITIONER/S: GENESIS INSTITUTE OF MEDICAL SCIENCE PRIVATE LIMITED, 32/1094/1-8, CHALA BYPASS, THOTTADA POST, KANNUR, REPRESENTED BY ITS DIRECTOR SRI. MOHANAN ATHAKASSERY, PIN - 670007 BY ADVS. P.J.ANILKUMAR (A-1768) K.N.SREEKUMARAN N.SANTHOSHKUMAR RESPONDENT/S: 1 INCOME TAX OFFICER., WARD-1, AAYKAR BHAVAN,MELECHOVVA,KANNOTHUMCHAL, KANNUR, PIN - 670006 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, ASSESSMENT UNIT, INCOME TAX DEPARTMENT,NATIONAL FACELESS ASSESSMENT CENTER, NEW DELHI-100001. 3 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRTE, INCOME TAX DEPARTMENT ,NEW DELHI-100001. 4 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS PENALTY CENTRE, INCOME TAX DEPARTMENT, NEWDELHI-100001. BY ADV CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 21424 OF 2023. 2

J U D G M E N T The present writ petition has been filed impugning order in Ext.P9 dated 8.6.2023 passed under Section 270A of the Income Tax Act, 1961 (“Act”, for short) in respect of the assessment year 2021-22. The assessment with respect to the petitioner was finalised by adding Rs.8,37,97,401/- to the returned income of the petitioner for the assessment year under consideration. It was found that since the said amount was detected during the course of scrutiny assessment proceedings, penalty proceedings under Section 270A of the Act were to be initiated for under-reporting of income in consequence of misreporting of income.

2.

The petitioner has not challenged the assessment order and is only aggrieved by the penalty order passed under Section 270A of the Act. The petitioner was issued show cause notice dated 9.12.2022, for filing its reply by 31.12.2022. In response to the said notice, the petitioner filed

WP(C) NO. 21424 OF 2023. 3 its response on 30.12.2022 and requested for adjournment. Thereafter, another show cause notice was served on 6.4.2023 asking the petitioner as to why penalty under Section 270A of the Act for under-reporting of income in consequence of misreporting should not be levied. In response to the said notice, the assessee filed its reply on 12.4.2023 by attaching some judgments passed by the Income Tax Appellate Tribunal.

3.

On perusal of the impugned order, Ext.P9, it is evident that no date for hearing was fixed, that after service of the show cause notice dated 6.4.2023 on the petitioner and filing of its reply dated 12.4.2023 to the said show cause notice, the impugned order came to be passed on 8.6.2023. This Court is of the view that since the order impugned has been passed in violation of the principles of natural justice as no date of hearing was communicated to the petitioner after petitioner's reply dated 12.4.2023 to the show cause notice dated 6.4.2023, the impugned order dated 8.6.2023,

WP(C) NO. 21424 OF 2023. 4 Ext.P9, is set aside and the matter is remanded back to the 4th respondent to communicate the date of hearing to the petitioner on the Portal of the Income Tax Department and also through the e-mail- id given to the Income Tax Department. It is made clear that in case the petitioner fails to appear and make submissions in response to the notice of hearing so to be given by the 4th respondent, no further opportunity shall be granted to the petitioner. The petitioner shall not seek any adjournment on the date of hearing so fixed by the 4th respondent. With the aforesaid observations, the present writ petition stands allowed. Pending interlocutory application, if any, in the writ petition stands dismissed. DINESH KUMAR SINGH

JUDGE jg

WP(C) NO. 21424 OF 2023. 5

Appendix — schedule of exhibits
APPENDIX OF WP(C) 21424/2023 PETITIONER EXHIBITS Exhibit-P1 TRUE COPY OF THE E-ACKNOWLEDGEMENT DOCUMENT BEARING NUMBER: 365669130150322 FOR FILING OF ITR-6 RELATING TO AY-2021-22 DATED 15..03..2022 . Exhibit-P2 TRUE COPY OF THE ORDER U/S 143(3) READ WITH SECTION 144B OF THE ACT DATED 09..12..2022 ISSUED BY THE 2ND RESPONDENT. Exhibit-P3 TRUE COPY OF THE NOTICE U/S.274 READ WITH SECTION 270A OF THE ACT DATED 09..12..2022 ISSUED BY THE 2ND RESPONDENT. Exhibit-P4 TRUE COPY OF THE RESPONSE FILED BY THE PETITIONER DATED 30..12..2022 AGAINST EXT- P3 NOTICE ISSUED BY THE 2ND RESPONDENT. Exhibit-P5 TRUE COPY OF THE NOTICE DATED 06..04..2023 U/S.270A OF THE ACT WITH DIN:ITBA/PNL/F/270A/2023-24/1051916204(1) ISSUED BY THE 2ND RESPONDENT. Exhibit-P6 TRUE COPY OF THE REPLY DATED 12..04..2023 FILED AGAINST EXT-P5 NOTICE THROUGH PORTAL VIDE E-ACKNOWLEDGEMENT NO: 114107141120423. Exhibit-P7 TRUE COPY OF THE INTIMATION OF SCHEDULE OF PERSONAL HEARING THROUGH VIDEO CONFERENCING DATED 25..05..2023 VIDE DIN:ITBA/PNL/S/VC NOTICE/2023-24/1053159249(1). Exhibit-P8 TRUE COPY OF THE WEB PAGE OF THE INCOME TAX DEPARTMENT DATED 30..05..2023 EVIDENCING THE FILING OF THE ADJOURNMENT APPLICATION ALONG WITH ADJOURNMENT APPLICATION AGAINST WP(C) NO. 21424 OF 2023. 6 EXT-P7 NOTICE . Exhibit-P9 TRUE COPY OF THE PENALTY PROCEEDINGS U/S.270A OF THE ACT DATED 08..06..2023 FOR THE ASSESSMENT YEAR 2021-22. Exhibit-P10 TRUE COPY OF THE NOTIFICATION NO: 54/2022 DATED 27..05..2022 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES. Exhibit-P11 TRUE COPY OF THE JUDGMENT IN RENJU VS THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX , IN W.P.(C) 11735/2022 DATED 16..03..2023.

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