SYNTHITE INDUSTRIES PRIVATE LIMITED vs. THE ADDITIONAL / JOINT /DEPUTY /ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER

WP(C)/12756/2022HC KeralaKLHC01025760202210 February 2023Author: HONOURABLE MR. JUSTICE T.R.RAVI4 pages

AI SummaryRemanded

What did the High Court hold?

The High Court held that the show cause notice dated March 23, 2022, requiring a response by March 24, 2022, followed by an order on March 25, 2022, was violative of the principles of natural justice. The court found considerable force in the assessee's submission that the very purpose of a show cause notice is lost when such a short period is given for response, and an order is passed immediately thereafter. The court stated that the law requires sufficient time to be given to the assessee to show cause, and the issuance of a show cause notice is not merely a formality preceding a pre-determined order. Therefore, Ext.P7 could not be legally sustained. The court quashed Ext.P7 and directed the appropriate authority to redo the process in accordance with the law, allowing the petitioner to show cause in a meaningful manner.

What were the facts?

The assessee, Synthite Industries Private Limited, filed a writ petition before the High Court of Kerala challenging an order, identified as Ext.P7, dated March 25, 2022. This order was preceded by a show cause notice dated March 23, 2022, which required the assessee to respond by March 24, 2022. The assessee contended that the short notice period rendered the show cause notice ineffective and violated the principles of natural justice. The respondents are various income tax authorities, including the National Faceless Assessment Centre and Principal Chief Commissioner of Income Tax.

What were the issues?

1. Whether the show cause notice dated 23/03/2022, requiring a response by 24.03.2022, and the subsequent order dated 25/03/2022, violated the principles of natural justice by not providing sufficient time for the assessee to show cause? (Question of law and fact, turning on principles of natural justice and procedural fairness). Assessee's Contentions: The petitioner argued that the issuance of a show cause notice is not a mere formality and that the extremely short notice period (one day) effectively nullified the purpose of the notice. They contended that the order was pre-decided and the process was not conducted in accordance with the law, specifically violating the principles of natural justice. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue.

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 T.R.RAVI FRIDAY, THE 10TH DAY OF FEBRUARY 2023 / 21ST MAGHA, 1944 WP(C) NO. 12756 OF 2022 PETITIONER: SYNTHITE INDUSTRIES PRIVATE LIMITED VIII 683-A CORPORATE HOUSE, KADAYIRUPPU, KOLENCHERRY, ERNAKULAM-682 311, KERALA , REPRESENTED BY ITS MANAGING DIRECTOR MR. VARGHESE JACOB. BY ADVS. JOSEPH MARKOSE (SR.) ABRAHAM JOSEPH MARKOS V.ABRAHAM MARKOS ISAAC THOMAS ALEXANDER JOSEPH MARKOS SHARAD JOSEPH KODANTHARA RESPONDENT 1 THE ADDITIONAL / JOINT /DEPUTY /ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI-110 001. 2 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI-110 001. 3 DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(1), KOCHI-682 018. 4 THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI-682 018. SRI. JOSEPH MARKOSE, SR. SRI. JOSE JOSEPH, SC. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 12756 OF 2022 2 T.R.RAVI, J. ---------------------------------------- WP (C) No.12756 of 2022 ------------------------------------------- Dated this the 10th day of February, 2023

JUDGMENT The writ petition has been filed challenging Ext.P7 order on the ground that it is violative of the principles of natural justice. Admittedly, Ext.P7 which is issued on 25/03/2022 was preceded by a show cause notice dated 23/03/2022 which required the assessee to show cause by 24.03.2022. The submission of the petitioner is that the very purpose of issuing a show cause notice is lost when the assessee is asked to show cause the next day and an order is passed on the very next day. I find considerable force in the above submission. The requirement of law is that the assessee should be given sufficient time to show cause. The issuance of a show cause notice is not a mere formality to precede an order which is already pre-decided. As such, Ext.P7 cannot be legally sustained.

WP(C) NO. 12756 OF 2022 3 In the result, Ext.P7 is quashed. There will be a direction to the appropriate authority to re-do the process in accordance with the procedure laid down by law after permitting the petitioner to show cause in a meaningful manner. T.R.RAVI sn JUDGE

WP(C) NO. 12756 OF 2022 4

Appendix — schedule of exhibits

APPENDIX OF WP(C) 12756/2022 PETITIONER'S EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 20.12.2018 FOR AY 2016-17 ISSUED BY THE 3RD RESPONDENT. Exhibit P2 TRUE COPY OF THE ORDER U/S 263 OF THE 4TH RESPONDENT DATED 8.3.2021. Exhibit P3 TRUE COPY OF THE NOTICE U/S 142(1) DATED 30.9.2021 ISSUED BY THE 1ST RESPONDENT. Exhibit P4 TRUE COPY OF THE REPLY DATED 15.10.2021, WITHOUT ANNEXURES, FURNISHED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P5 TRUE COPY OF THE SHOW CAUSE NOTICE AND DRAFT ASSESSMENT ORDER DATED 23.3.2022 ISSUED BY THE 1ST RESPONDENT. Exhibit P6 TRUE COPY OF THE INTERIM REPLY DATED 24.3.2022 OF THE PETITIONER BEFORE THE 1ST RESPONDENT. Exhibit P7 TRUE COPY OF THE ASSESSMENT ORDER DATED 25.3.2022 PASSED BY THE 1ST RESPONDENT. Exhibit P8 TRUE COPY OF THE JUDGMENT DATED 11.1.2022 IN WP(C) NO.12052 OF 2021. RESPONDENT'S EXHIBITS : NIL //TRUE COPY// PA TO JUDGE

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