M/S. WAYANAD SOCIAL SERVICE SOCIETY, vs. THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX /

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WP(C)/12399/2021HC KeralaKLHC01033618202123 July 2021Author: HONOURABLE MR. JUSTICE A.M.BADAR6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the principles of natural justice were not followed in passing the impugned assessment order dated May 23, 2021. The court noted that the State of Kerala was under lockdown from May 5, 2021, and the petitioner had a deadline of May 10, 2021, to file their reply. The petitioner's request for an extension, communicated via Ext.P14, was not considered before finalizing the assessment. Consequently, the court found the assessment order to be in patent violation of the principles of natural justice and Section 144B of the Income Tax Act. The impugned assessment order was quashed and set aside. The matter was remanded to the respondent for a fresh assessment, requiring them to follow the principles of natural justice, invite a reply from the petitioner, and pass a fresh order within three months from the date of the judgment's communication.

What were the facts?

The petitioner, M/s. Wayanad Social Service Society, received a draft assessment order with a deadline of May 10, 2021, to file a reply. The petitioner informed the respondent, the National E-Assessment Centre, Delhi, via communication Ext.P14 that the State of Kerala was under partial lockdown from May 5, 2021, and complete lockdown from May 8, 2021. Due to these restrictions, their legal consultant was unable to work, and they requested an extension of time. However, the respondent proceeded to finalize the assessment and passed an order on May 23, 2021, noting the petitioner's failure to reply, effectively ignoring the petitioner's request for an extension.

What were the issues?

1. Whether the assessment order dated May 23, 2021, passed by the respondent was in violation of the principles of natural justice, considering the lockdown situation in Kerala and the petitioner's request for an extension of time to file a reply to the draft assessment order? Assessee's Contention: The petitioner argued that the respondent ignored their communication (Ext.P14) requesting an extension of time due to the COVID-19 lockdown in Kerala. They contended that this failure to consider their request and proceed with the assessment without a reply violated the principles of natural justice. Revenue's Contention: The learned Standing Counsel appearing for the respondent opposed the petition.

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 A.M.BADAR FRIDAY, THE 23RD DAY OF JULY 2021 / 1ST SRAVANA, 1943 WP(C) NO. 12399 OF 2021 PETITIONER/S: M/S. WAYANAD SOCIAL SERVICE SOCIETY, 1, MANANTHAVADY, WAYANAD, KERALA-670645, REPRESENTED BY ITS SECRETARY, FR. POWLOSE KOOTTALA JOSEPH. BY ADVS. HARISANKAR V. MENON MEERA V.MENON RESPONDENT/S: THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX /INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, DELHI-110001. s SRI. CHRISTOPHER ABRAHAM , STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 12399 OF 2021 2

JUDGMENT

Heard both sides.

2.

The learned counsel appearing for the petitioner submits that petitioner was served with draft assessment order and he was granted time to file reply to that draft assessment order by 10.05.2021. My attention is drawn to the communication of the petitioner to the respondent intimating to the respondent that the State of Kerala is under complete lockdown from 08.05.2021, which was preceded by partial lockdown from 05.05.2021. It was informed to the respondent that because of the lockdown, legal consultant of the petitioner is not working and a prayer was made for extension of time. However, it seems that without extending any time, the respondent proceeded to finalise the assessment and passed assessment order on 23.05.2021, with an observation that the assessee has failed to reply to the show cause notice. Communication of the assessee which is at Ext.P14 is completely ignored by the respondent.

WP(C) NO. 12399 OF 2021 3

3.

Learned Standing Counsel appearing for the respondent opposed the petition.

4.

I have considered the submissions so advanced. It is writ large from the records that principles of natural justice were not followed while passing the impugned assessment order at Ext.P15 on 23.05.2021. The State of Kerala was in partial lockdown from 05.05.2021 and under complete lockdown from 08.05.2021. The petitioner was granted time upto 10.05.2021 for filing reply to the draft assessment order. The petitioner sought extension of time as seen from the communication at Ext.P14. Without considering that request, the assessment was finalised. In this view of the matter, the impugned assessment order is passed in patent violation of principles of natural justice as well as Section 144B of the Income Tax Act. Hence, the writ petition is allowed with the following order:-

The impugned assessment order at Ext.P15 is quashed and set aside. The matter is relegated to the respondent for undertaking fresh assessment, by following principles of natural justice, by inviting reply from the petitioner and then passing necessary order according to law, within a period of three months from the date of communication of this WP(C) NO. 12399 OF 2021 4 judgment, as suggested by the learned Standing Counsel for the respondent. The learned Standing Counsel to communicate this judgment to the concerned respondent for compliance. A.M.BADAR JUDGE ajt

WP(C) NO. 12399 OF 2021 5

Appendix — schedule of exhibits
APPENDIX OF WP(C) 12399/2021 PETITIONER EXHIBITS Exhibit P1 COPY OF NOTICE ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX DATED 22/09/2019. Exhibit P2 COPY OF REPLY FILED BY THE PETITIONER BEFORE ASSISTANT COMMISSIONER OF INCOME TAX (E- VERIFICATION) DATED 09/01/2020. Exhibit P3 COPY OF NOTICE ISSUED BY THE RESPONDENT DATED 08/05/2020. Exhibit P4 COPY OF E-PROCEEDINS RESPONSE ACKNOWLEDGEMENT. Exhibit P5 COPY OF REPLY FILED BY THE PETITIONER BEFORE THE INCOME TAX OFFICER. Exhibit P6 COPY OF NOTICE ISSUED BY THE RESPONDENT TO THE PETITIONER DATED 14/10/2020. Exhibit P7 COPY OF NOTICE ISSUED BY THE RESPONDENT TO THE PETITIONER DATED 27/11/2020. Exhibit P8 COPY OF E-PROCEEDINGS RESPONSE ACKNOWLEDGEMENT DATED 27/11/2020. Exhibit P9 COPY OF NOTICE ISSUED BY THE RESPONDENT TO THE PETITIONER DATED 22/02/2021. Exhibit P10 COPY OF REPLY SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT DATED 07/03/2021. Exhibit P11 COPY OF NOTICE ISSUED BY THE RESPONDENT DATED 18/03/2021. Exhibit P12 COPY OF THE REPLY FILED BY THE PETITIONER BEFORE THE RESPONDENT DATED 25/03/2021. WP(C) NO. 12399 OF 2021 6 Exhibit P13 COPY OF NOTICE ISSUED BY THE RESPONDENT TO THE PETITIONER DATED 03/05/2021. Exhibit P14 COPY OF WEBPAGE OF THE DEPARTMENT EVIDENCING THE ADJOURNMENT REQUEST DATED 25/05/2021. Exhibit P14(a) COPY OF WEBPAGE OF THE DEPARTMENT EVIDENCING THE ADJOURNMENT REQUEST DATED 25/05/2021. Exhibit P15 COPY OF ASSESSMENT ORDER ISSUED BY THE RESPONDENT FOR THE YEAR 2018-2019. Exhibit P16 COPY OF NOTIFICATION NO. SO 3264(E) ISSUED BY THE MINISTRY OF FINANCE, NEW DELHI DATED 12/09/2019. Exhibit P16(a) COPY OF NOTIFICATION NO. SO 2745(E) ISSUED BY THE MINISTRY OF FINANCE, NEW DELHI DATED 13/08/2020.

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