RAJAKUMARI SHOPPING MALL LLP vs. PRINCIPAL COMMISSIONER OF INCOME TAX

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WP(C)/10674/2021HC KeralaKLHC01029149202130 April 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the exercise of revisional jurisdiction under Section 263 of the Income Tax Act necessitates giving the assessee an opportunity of being heard. The Court found that neither the impugned order (Ext.P4) nor the notice preceding it demonstrated that such an opportunity was granted to the petitioner. Consequently, there was an infraction of the statutory provision and a violation of the basic requirement of an opportunity of being heard, thus breaching the principles of natural justice. The Court was satisfied that the petitioner need not be relegated to statutory remedies due to this fundamental flaw. The Court set aside Ext.P4 and directed the Principal Commissioner to pass fresh orders after issuing proper notice and granting an opportunity of hearing to the petitioner within two months from the date of receipt of the judgment. The ratio decidendi is that a Section 263 order passed without affording the assessee an opportunity of hearing is void ab initio for violating principles of natural justice.

What were the facts?

The petitioner, Rajakumari Shopping Mall LLP, challenged an order (Ext.P4) passed by the Principal Commissioner of Income Tax (1st respondent) under Section 263 of the Income Tax Act. The petitioner argued that the order violated the principles of natural justice, specifically the right to be heard. The petitioner contended that neither the impugned order nor the preceding notice indicated that any opportunity of hearing was granted. The assessment years are not specified. The amount in dispute is not stated. The procedural history involves the issuance of the Section 263 order and the subsequent writ petition challenging it on grounds of natural justice.

What were the issues?

1. Whether the order passed under Section 263 of the Income Tax Act, 1961, is liable to be set aside for violation of the principles of natural justice, specifically the right to an opportunity of being heard? (Question of law) The assessee (petitioner) argued that Section 263 inherently requires an opportunity of being heard, and this was not provided, thus violating principles of natural justice. The assessee relied on the statutory provision itself as implying this requirement. The revenue (respondents) did not record any specific arguments in the judgment regarding the violation of natural justice. However, the presence of the Standing Counsel suggests they would have defended the order.

Which sections of the Income-tax Act were involved?

Section 263

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 BECHU KURIAN THOMAS FRIDAY, THE 30TH DAY OF APRIL 2021 / 10TH VAISAKHA, 1943 WP(C).No.10674 OF 2021(H) PETITIONER: RAJAKUMARI SHOPPING MALL LLP AMC 11/1556, CITY PLAZA, NEAR PVT. BUS STAND, ATTINGAL, TRIVANDRUM 695 101, REPRESENTED BY DESIGNATED PARTNER. BY ADVS. SRI.ANIL D. NAIR SRI.R.SREEJITH SMT.TELMA RAJU SRI.SANGEETH JOSEPH JACOB SMT.CHRISTINA ANNA PAUL RESPONDENTS: 1 PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAWAN, 1ST FLOOR, KOWDIAR P.O., TRIVANDRUM-695 003. 2 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 (2), TRIVANDRUM-695 003. OTHER PRESENT: SC-SRI.CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.04.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.10674 OF 2021(H) 2 BECHU KURIAN THOMAS, J ------------------------------------- WP(C) No.10674 of 2021 ------------------------------------- Dated this the 30th day of April 2021

J U D G M E N T Petitioner challenges Ext.P4, an order passed in exercise of the powers under Section 263 of the Income Tax Act (IT Act). Eventhough there are statutory remedies under the IT Act against Ext.P4, petitioner confines his challenge against Ext.P4 solely on the ground of violation of the principles of natural justice, which according to him, is inbuilt into the provisions of Section 263. 2. On a reading of Section 263, it is evident that the exercise of revisional juri iction ought to be after giving the assessee an opportunity of being heard.

3.

Neither the impugned order nor the notice preceding the order shows that any opportunity as having been granted to the petitioner.

4.

I have heard Adv. Anil D. Nair, the learned counsel for the petitioner as well as the learned Standing Counsel, Adv.Christopher Abraham.

WP(C).No.10674 OF 2021(H) 3

5.

After perusing the impugned orders, I am satisfied that there has been an infraction of the statutory provision and that too, of the basic requirement of an opportunity of being heard. Since the principles of natural justice have been violated, this Court is of the view that the petitioner need not be relegated to the statutory remedies at this instance. If the impugned order is set aside and a fresh opportunity is granted, the same would cater to the needs of law.

6.

Accordingly, I set aside Ext.P4 and direct the 1st respondent to pass fresh orders, after issuing proper notice for hearing and after granting an opportunity of hearing to the petitioner, in accordance with law. The same shall be done within a period of 2 months from the date of receipt of a copy of this judgment. This writ petition is allowed as above. BECHU KURIAN THOMAS, JUDGE Skk//03052021

WP(C).No.10674 OF 2021(H) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 31.12.2018 FOR THE YEAR 2016- 17 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P2 TRUE COPY OF THE NOTICE DATED 8.3.2021 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. EXHIBIT P3 TRUE COPY OF REPLY TO THE NOTICE OF THE 1ST RESPONDENT FILED BY THE PETITIONER. EXHIBIT P4 TRUE COPY OF ORDER DATED 29.03.2021 ISSUED BY THE 1ST RESPONDENT. RESPONDENTS' EXHIBITS: NIL

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