Biju Paul Vs ACIT (Madras High Court)
Introduction: In a recent judgment, the Kerala High Court ruled in the case of Biju Paul vs ACIT, highlighting a critical aspect of tax assessment procedures – the principle of natural justice. The petitioner, an assessee under the Income Tax Act, challenged the validity of the show-cause notice and subsequent assessment order, emphasizing the denial of an opportunity for a personal hearing.
Detailed Analysis: The crux of the matter revolves around the assessment year 2015-16. The petitioner failed to file the return for this assessment year, prompting the authorities to reopen the case under Section 147 of the Income Tax Act. The assessment order, dated 29.03.2022, noted a notice under Section 148 issued on 30.03.2021, instructing the petitioner to file the income return within 30 days. However, the petitioner did not comply.
Subsequently, three notices under Section 142(1) were issued on 11.11.2021, 21.12.2021, and 12.03.2022. In response to the last notice, the petitioner requested a personal hearing, communicated via email on 21.03.2022. Unfortunately, the petitioner was not granted a personal hearing, and the time granted for compliance was only three days, raising concerns about the sufficiency of the opportunity provided.
Recognizing a breach of the principle of natural justice, specifically the denial of a personal hearing and inadequate time for compliance, the court set aside the assessment order. The court deemed it appropriate to remand the matter back to the National Faceless Assessment Centre, New Delhi, directing them to provide the petitioner with a fair opportunity to be heard before finalizing the fresh assessment order.
Conclusion: The Kerala High Court’s decision in Biju Paul vs ACIT underscores the significance of adhering to the principles of natural justice in tax assessments. Denying the petitioner a personal hearing and providing an insufficient time window for compliance were crucial factors leading to the quashing of the assessment order.
As the case is remitted for a fresh assessment, it emphasizes the importance of procedural fairness and due process in income tax proceedings. This judgment serves as a reminder to tax authorities about the need to uphold the principles of natural justice, ensuring transparency and fairness in assessment processes.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner-an assessee under the provisions of the Income Tax Act has filed the present writ petition impugning Ext.P8 show cause notice and Ext.P9 assessment order dated 29.03.2022 passed under the provisions of Section 147 read with section 144 and 144B of the Income Tax Act. The assessment year involved is 20 15-16.
2. The assessee did not file the return for the said assessment year. The assessee/petitioner case was re-opened under Section 147 by recording the reason under Section 148(2) of the Income Tax Act and obtaining necessary sanction under Section 151 of the Income Tax Act. The assessment order would note that a notice under Section 148 was issued on 30.03.2021requiring the assessee to file/furnish return of his income for the assessment year 20 15-16 within a period of 30 days from the receipt of notice. In response to same, the petitioner -assessee did not furnish the return of his income. Subsequently, 3 notices under Section 142(1) were issued to the petitioner on 11.11.2021, 21.12.2021 and 12.03.2022. In response to the last notice dated 12.03.2022, the petitioner has requested for personal hearing. However, that request has communicated by email dated 21.03.2022. The petitioner was not afforded any opportunity of personal hearing. It is also relevant to note that the time granted by the last notice i.e, 12.03.2022 for compliance was only 3 days.
3. Considering the fact that there has been a violation of the principle of natural justice and the petitioner was not afforded an opportunity of hearing nor sufficient time was granted for filing reply to the notice dated 12.03.2022, under Section 142(1) of the Income Tax Act, I deem it appropriate to set aside the impugned assessment order and remand the matter back to the 1st respondent- the National Faceless Assessment Centre, North Block, New Delhi, for providing an opportunity to the petitioner of being heard before finalisation of the assessment order fresh.
4. Thus, the present writ petition is allowed. Impugned assessment is set aside and the matter is remitted back to the 1st respondent with direction to communicate the petitioner the date of hearing. It is make clear that the petitioner shall not be afforded more than one opportunity of hearing through the facility of video conference. After hearing the petitioner and taking into consideration the submissions the fresh assessment order need to be passed.
With the aforesaid direction, the present writ petition stands finally disposed of.
