RAJASEKARAN NITHIYANANDHAMM vs. PRINCIPAL COMMISSIONER OF INCOME TAX-1, THANE AND ORS

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WP/4108/2022HC BombayHCBM01045472202128 August 2023Bench: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court quashed and set aside the impugned order dated March 26, 2021, and remanded the matter to the Principal Commissioner of Income Tax-1, Thane, for de-novo consideration. The Court found that there was no record to indicate that a notice under Section 139(9) was sent to the assessee. Even if such a notice was issued, the fact that the return was processed under Section 143(1) implied that any defect had been rectified. Regarding the personal hearing, the Court noted that only one working day's notice was given for a hearing scheduled on March 23, 2021, which was insufficient, particularly during the Covid-19 pandemic. The Court also observed that the respondent had delayed considering the revision application for over 14 months. Furthermore, the notice was sent to an outdated email address. The Court directed that the application be disposed of within eight weeks, with the Principal Commissioner providing personal hearing to the petitioner after giving at least five working days' advance notice. The order to be passed should be on merits, addressing all submissions made by the petitioner.

What were the facts?

The petitioner, Rajasekaran Nithiyanandhamm, an individual, filed his return of income for Assessment Year 2017-18 on July 29, 2017, declaring a total income of Rs. 63,33,732/- and claiming a refund of Rs. 15,36,924/-. The return was processed by the CPC on March 25, 2019, resulting in a demand of Rs. 2,17,670/-. The petitioner filed a revision application under Section 264 of the Income-tax Act, 1961, on January 21, 2020, seeking revision of the Section 143(1) intimation. He contended that the CPC failed to consider deductions under Section 10, interest on housing loan, and deductions under Chapter VIA, amounting to Rs. 1,83,995/-, and also failed to consider TDS of Rs. 12,922/- on interest income taxed under 'income from other sources'. The Assessing Officer reported that the petitioner did not respond to a defective letter under Section 139(9) dated June 7, 2018. The impugned order rejected the petitioner's application.

What were the issues?

1. Whether the revision application filed by the assessee under Section 264 of the Income-tax Act, 1961, was liable to be rejected on the ground that the assessee failed to respond to a notice under Section 139(9) of the Act. 2. Whether the assessee was afforded adequate opportunity of personal hearing before the rejection of his revision application. Assessee's Contentions: - The assessee argued that there was no record to indicate that a notice under Section 139(9) was sent. Even if it was, the return was processed under Section 143(1), implying the defect was rectified. - The assessee contended that the notice for personal hearing dated March 20, 2021, for a hearing on March 23, 2021, provided only one working day's notice, which was insufficient, especially during the peak of the Covid-19 pandemic. The notice was also sent to an old email ID of his former employer. - The assessee highlighted that the revision application was filed on January 21, 2020, and the respondent sat over the file for over 14 months before issuing a short notice for hearing. Revenue's Contentions: - The revenue, through the Assessing Officer's report, contended that the assessee did not respond to a defective letter under Section 139(9) dated June 7, 2018, and made no sincere efforts to rectify mistakes within the available time.

Which sections of the Income-tax Act were involved?

Section 10,Section 139(9),Section 143(1),Section 264

AI-generated summary — verify with the full judgment below

401-aswp-4108-2022.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4108 OF 2022 Rajasekaran Nithiyanandhamm … Petitioner Versus Principal Commissioner of Income Tax-1, Thane & Ors. … Respondents Mr. Dharan Gandhi with Ms. Aanchal Vyas for Petitioner. Mr. Ajeet Manwani with Ms. Samiksha Kanani, for Respondent. CORAM K. R. SHRIRAM & DR. N. K. GOKHALE, JJ. DATED: 28th August 2023 P.C. : 1. Petitioner is an individual, who used to work with the company by name M/s. Dow Agrosciences India Private Limited. He used to get annual taxable salary income of Rs.63,33,732/- on which tax of Rs.15,36,924/- was deducted at source. Employer of Petitioner also took into account various exemptions and allowances under Section 10 of the Income-tax Act, 1961 ("Act"), profession tax, loss from the house property, etc. Page 1 of 5 Shivgan

401-aswp-4108-2022.doc 2. For the Assessment Year 2017-18, Petitioner filed return of income on 29th July 2017 declaring total income of Rs.63,33,732/- and claimed refund of Rs.15,36,924/-. Return was processed by Centralised Processing Centre ("CPC") on 25th March 2019 determining a demand of Rs.2,17,670/-. 3. Petitioner filed a revision application under Section 264 of the Act on 21st January 2020 for revision of intimation under Section 143(1) of the Act. In the application, Petitioner has claimed that the CPC, while processing the return, has not considered deduction for allowances exempted under Section 10 of the Act amounting to Rs.1,83,995/-, interest on housing loan and deduction under Chapter VIA. Petitioner also mentioned that income of Rs.1,29,220/- under the income from other sources has been taxed but the TDS deducted on interest income amounting to Rs.12,922/- has not been considered. 4. Assessing Officer was directed to submit his report after taking into consideration correctness of the contentions of the assessee. Assessing Officer submitted a report in which Assessing Officer has stated that before processing of return on 25th March Page 2 of 5 Shivgan

401-aswp-4108-2022.doc 2019, the Assessee was sent one defective letter dated 7th June 2018 under Section 139(9) of the Act to which "Apparently" Assessee did not respond. The Assessing Officer has also submitted that mistake was totally attributable to the Assessee and he has made no sincere efforts to rectify the mistakes within available time though ample reminders were sent. Other than bald statement, we do not find any detail. It is also stated in the impugned order that thereafter notice was issued to assessee on 20th March 2021 providing an opportunity to put forth his case, which was not availed by Assessee and hence, decision was made on the basis of facts and materials on record. Paragraph 6 of the impugned order says "Considering the above mentioned facts, petition of Assessee, submissions made by Assessee and report of the Assessing Officer, I find that assessee's contention is not acceptable." Based on this, application of assessee has been rejected. 5. Having considered pleadings and hearing the counsel, we find that there is no record to indicate any notice under Section 139(9) of the Act was sent. In any event, Section 139(9) of the Act provides that if the defect is intimated to the Assessee and the Page 3 of 5 Shivgan

401-aswp-4108-2022.doc defect is not rectified within time provided, notwithstanding anything contained in any provision of the Act, the return shall be treated as invalid return and the provisions of the Act shall apply to the Assessee as if the Assessee failed to file return. Admittedly, return has been processed under Section 143(1) of the Act because in paragraph 3 of the impugned order itself it is mentioned "............ it is seen that before processing of return on 25th March 2019.....". Therefore, even assuming a defect intimation dated 7th June 2018 had been issued under Section 139(9) of the Act, we have to proceed on the basis that defect has been rectified. 6. Next point is regarding the notice of personal hearing given on 20th March 2021 by Respondent No.1. The notice has been digitally signed on 20th March 2021 at 2.51 pm, a Saturday. The hearing is fixed at 11.30 a.m. on 23rd March 2021, Tuesday. Therefore, effectively only one working day notice has been given. There is no explanation as to why such a short notice was given and we could only assume that Respondent No.2 in the last minute realised. Limitation was expiring on 31st March 2021. The Revision Application admittedly was filed on 21st January 2020 and Respondent No.1 sat over the file for more than 14 months. Page 4 of 5 Shivgan

401-aswp-4108-2022.doc We have to also note that it was the time when the second Pandemic of Covid was at its peak. It is also averred in the Petition that Petitioner had joined another company M/s. Atul Limited on 4th July 2019 and e-mail of the notice for hearing was sent to the email id that Petitioner has disclosed of his earlier company, i.e., M/s.

Dow

Agrosciences

India

Private

Limited- nrajasekaran@dow.com. 7. Therefore, we hereby quash and set aside the impugned order dated 26th March, 2021 and remand the matter to Respondent No.1 for de-novo consideration. Application shall be disposed within eight weeks. Before passing any order, Respondent No.1 shall give personal hearing to Petitioner notice whereof shall be communicated at least five working days in advance. Order to be passed shall be order on merits on Petitioner's claims in the application dealing with all submissions of Petitioner. (DR. N. K. GOKHALE, J.) (K. R. SHRIRAM, J.) Page 5 of 5 Shivgan SHAMBHAVI NILESH SHIVGAN Digitally signed by SHAMBHAVI NILESH SHIVGAN Date: 2023.08.31 13:14:45 +0530

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