MULLAKODI CO-OPERATIVE RURAL BANK LIMITED F1230, vs. ASSESSMENT UNIT,

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WA/709/2024HC KeralaKLHC01107898202407 June 2024Bench: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR,HONOURABLE MR. JUSTICE SYAM KUMAR V.M.5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Department ought not to have acted hastily and should have granted the appellant a reasonable opportunity to effectively respond to the show cause notice. The Court noted that the appellant's request for a short adjournment was not acceded to. Consequently, the assessment order (Ext.P3) was found to be passed without complying with the rules of natural justice. The Court allowed the Writ Appeal, setting aside the impugned judgment of the learned Single Judge and the assessment order. The Court directed the Assessing Officer to pass a fresh order under Section 144 after complying with Section 144B of the Act, ensuring the appellant is heard, within three months of receiving the judgment. No issue was expressly left undecided.

What were the facts?

The appellant, Mullakodi Co-operative Rural Bank Limited, challenged an assessment order (Ext.P3) passed under Section 144 read with Section 144B of the Income Tax Act, 1961, for assessment year 2022-23. The appellant contended that they were not given adequate opportunity to respond to show cause notices. The writ court initially dismissed the petition, finding the appellant uncooperative. However, before the High Court in appeal, the appellant argued that most notices were not received at their email address, and they only received notices in January 2024. They responded to a show cause notice dated January 25, 2024, on February 6, 2024, requesting a ten-day extension, which was not granted.

What were the issues?

1. Whether the assessment order passed under Section 144 read with Section 144B of the Income Tax Act, 1961, was vitiated by a violation of the principles of natural justice, specifically by not affording the assessee adequate opportunity to respond to the show cause notice. Assessee's Contentions: - The appellant argued that most notices issued by the Department were not received at their email address. - They received notices only in January 2024, and in response to the show cause notice dated January 25, 2024, they requested a ten-day adjournment on February 6, 2024, to file their response. - The assessment order was passed without considering this request for a short adjournment. Revenue's Contentions: - The Department initially contended that several notices were issued to the appellant, and the appellant had not responded to them. - However, upon further inquiry, it was admitted that several notices/e-mails bounced and were not actually served.

Which sections of the Income-tax Act were involved?

Section 144,Section 144B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. FRIDAY, THE 7TH DAY OF JUNE 2024 / 17TH JYAISHTA, 1946 WA NO. 709 OF 2024 AGAINST THE ORDER/JUDGMENT DATED IN WP(C) NO.9875 OF 2024 OF HIGH COURT OF KERALA APPELLANT MULLAKODI CO-OPERATIVE RURAL BANK LIMITED F1230, AGED 57 YEARS KP-VI/429A, KOLACHERY MUKKU, KOLACHERY, KANNUR, REPRESENTED BY ITS SECRETARY HARIDASAN C., PIN - 670601 BY ADV S.ARUN RAJ RESPONDENTS 1 ASSESSMENT UNIT, NATIONAL E-ASSESSMENT CENTRE,INCOME TAX DEPARTMENT, 2ND FLOOR, E- RAMP, JAWAHARLAL NEHRU STADIUM, NEW DELHI, PIN - 110003 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKAR BHAVAN, NORTH BLOCK, MANANCHIRA, KOZHIKODE, PIN – 673001 SRI. SC. P.G.JAYASHANKAR THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07.06.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.A.No.709 of 2024 2 J U D G M E N T ============ Dr. A.K.Jayasankaran Nambiar, J. The petitioner in W.P(C) No.9875 of 2024 is the appellant before us, aggrieved by the judgment dated 04.04.2024 of a learned Single Judge. 2. The brief facts necessary for disposal of this appeal are as follows: The appellant had approached the writ court impugning Ext.P3 assessment order passed by the 1st respondent under Section 144 read with Section 144B of the Income Tax Act,1961 ('IT Act' for short) for the assessment year 2022-23.

3.

The case of the petitioner while impugning Ext.P3 assessment order was that, he had not been afforded adequate opportunity to respond to the show cause notice issued to him and that the assessment order was passed in haste without affording him adequate opportunity.

W.A.No.709 of 2024 3 4. The learned Single Judge who considered the matter, found that several notices were issued to the appellant, but he had not responded to any notice that was issued to him by the Department between the period from 02.06.2023 to 31.05.2024. The learned Single therefore found that this was a case where the petitioner was not co-operating with the Department and hence, he could not complain of the assessment order that was eventually passed against him. The writ petition was therefore dismissed by the learned Single Judge. 5. Before us, it is the contention of the learned counsel for the appellant that although the Department stated that it had issued various notices to the appellant, most of those notices were not received in the e-mail address of the appellant. He states that the only notices that he received were in January 2024 and in response to the show cause notice dated 25.01.2024, he had responded by a communication dated 06.02.2024, requesting for ten more days for filing the necessary response to the show cause notice. It was without considering the said request for a short adjournment that Ext.P3 assessment order was passed.

W.A.No.709 of 2024 4 6. Taking note of the said submission of the learned counsel for the appellant, we had required the learned Standing Counsel for the Income Tax Department, Sri.P.G. Jayashankar, to get instructions with regard to the notices/e-mails actually served on the appellant herein. Through a statement filed by the learned Standing Counsel, it is brought to our notice that while the intimation letters and e-mails had been issued from the Department to the appellant, several of them had bounced and were not actually served on the appellant herein. The only two notices that were actually delivered to the appellant were delivered in the month of January 2024, the last of them being the show cause notice on 25.01.2024. We find that in response to the show cause notice, the appellant had by a communication dated 06.02.2024 sought for some time for furnishing the details required by the show cause notices, but the respondents did not accede to the said request.

7.

We are of the view that the Department ought not to have acted hastily and ought to have granted the appellant a reasonable opportunity to effectively respond to the show cause notice. Since in this case, we find that the request of the appellant was not

W.A.No.709 of 2024 5 acceded to, we find Ext.P3 assessment order to be one passed without complying with the rules of natural justice. 8. Accordingly, we allow this Writ Appeal by setting aside the impugned judgment of the learned Single Judge as also Ext.P3 assessment order that was impugned in the writ petition, and direct the 1st respondent to pass a fresh order under Section144 after complying with the provisions of Section 144B of the Act. The 1st respondent shall ensure that the fresh order is passed, after hearing the appellant, within a period of three months from the date of receipt of a copy of this judgment. The Writ Appeal is allowed as above. Sd/-

DR. A.K.JAYASANKARAN NAMBIAR

JUDGE

Sd/- SYAM KUMAR V.M. JUDGE smm

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