P.K.UNNIKRISHNAN vs. THE PRINCIPAL COMMISSIONER OF INCOME TAX

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WP(C)/20684/2022HC KeralaKLHC01042596202227 June 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the assessment order (Ext.P4) was liable to be set aside. The Court found that the petitioner was not given reasonable time to reply to the proposals contained in the draft assessment order (Ext.P3), as he was served with the draft on March 31, 2022, and asked to reply by 3:30 PM on the same day. The Court reasoned that this did not constitute a fair opportunity to respond. The ratio decidendi is that a taxpayer must be afforded reasonable time to respond to a draft assessment order under Section 144B, and a deadline of a few hours on the same day of service is insufficient. The Court directed that the petitioner be given reasonable time to reply to the proposals in Ext.P3, specifically within 7 days from the date a suitable link is provided by the department. Proceedings are to be completed thereafter after affording an opportunity of hearing. No issue was expressly left undecided.

What were the facts?

The petitioner, P.K. Unnikrishnan, approached the High Court of Kerala challenging an assessment order (Ext.P4) issued under Section 144B of the Income Tax Act. The petitioner contended that he was served with a draft assessment order (Ext.P3) on March 31, 2022, and was required to submit a reply by 3:30 PM on the same day. The petitioner argued that this did not provide sufficient opportunity to respond, making the final assessment order illegal. The Revenue, represented by the Standing Counsel, acknowledged that the draft assessment order was served on March 31, 2022, with a reply deadline of 3:30 PM on the same day. The Revenue also stated that the petitioner had an effective alternative remedy before the appellate authority.

What were the issues?

1. Whether the assessment order (Ext.P4) issued under Section 144B of the Income Tax Act is illegal and unsustainable due to the petitioner not being afforded sufficient opportunity to reply to the draft assessment order (Ext.P3)? (Question of law and fact, turning on Section 144B). Assessee's Contention: The petitioner argued that the finalization of the draft assessment order without providing adequate time to reply to its proposals rendered the order illegal and unsustainable. Revenue's Contention: The Revenue contended that the petitioner had an effective alternative remedy before the appellate authority and could raise all contentions, including the lack of sufficient opportunity, before that forum. They argued there was no reason for the petitioner to approach the High Court directly under Article 226 of the Constitution of India. However, the Revenue fairly admitted that the draft assessment order was served on March 31, 2022, with a reply deadline of 3:30 PM on the same day.

Which sections of the Income-tax Act were involved?

Section 144B

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 GOPINATH P. MONDAY, THE 27TH DAY OF JUNE 2022 / 6TH ASHADHA, 1944 WP(C) NO. 20684 OF 2022 PETITIONER: P.K.UNNIKRISHNAN, AGED 60 YEARS, HAREKRISHNA, PULIYAPARAMBU, KODUNTHIRAPULLY, PALAKKAD-678004. BY ADVS. HARISANKAR V. MENON MEERA V.MENON R.SREEJITH K.KRISHNA RESPONDENTS: 1 THE PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE-673001. 2 ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME-TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-110001. OTHER PRESENT: SRI. JOSE JOSEPH (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P(C).No.20684/2022 2

J U D G M E N T Petitioner has approached this Court challenging Ext.P4 assessment order issued under Section 144 B of the Income Tax Act. The specific case of the petitioner is that the petitioner was served with Ext.P3 draft assessment order on 31.03.2022, calling upon the petitioner to submit reply on the same date before 3:30P.M. on the same day. It is submitted that the finalization of draft assessment order by Ext.P4 without giving sufficient opportunity to the petitioner to reply to the draft assessment order is illegal and unsustainable.

2.

I have heard the learned Standing Counsel appearing for the respondent department. The learned Standing Counsel submits that the petitioner has an effective alternative remedy against Ext.P4 and it is open to the petitioner to take all contentions before the appellate authority including the contention that sufficient opportunity was not given to the petitioner to reply to the proposals contained in the draft assessment order. It is submitted that there is no reason whatsoever for the petitioner to approach this Court directly under Article 226 of the Constitution of India challenging Ext.P4 order. However it is very fairly admitted that Ext. P3 draft assessment order was served on 31.03.2022, calling upon the petitioner to submit reply by 3:30 p.m., on the same day.

3.

Having regard to the facts and circumstances of the case and considering the contentions raised by the learned counsel for the petitioner and the learned Standing Counsel for the department, I am of the opinion that Ext.P4 order is liable to be set aside. It is directed that the petitioner shall be given reasonable time to reply to the proposals contained in Ext.P3 draft assessment order. The petitioner shall file a reply to the proposals contained in Ext.P3 draft assessment order within 7 days from the date on which a suitable link is provided to the petitioner by the department. Thereafter, the proceeding shall be completed in accordance with law after affording an opportunity of hearing to the petitioner. GOPINATH P.

JUDGE ats

Appendix — schedule of exhibits
APPENDIX OF WP(C) 20684/2022 PETITIONER EXHIBITS EXHIBIT P1 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2015-16 DATED 30.3.2021. EXHIBIT P2 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT DATED 29.3.2022. EXHIBIT P3 COPY OF SHOW CAUSE NOTICE ISSUED BY THE 2ND RESPONDENT DATED 31.3.2022. EXHIBIT P4 COPY OF ASSESSMENT ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2015-16 DATED 31.3.2022. EXHIBIT P5 COPY OF NOTICE ISSUED BY THE 2ND RESPONDENT DATED 31.3.2022. EXHIBIT P6 COPY OF JUDGMENT IN WP(C) NO.11540/2021 OF THIS HON'BLE COURT DATED 15.3.2022.

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