Case Law Details
Leric Reeches Vs ITO (Kerala High Court)
The Kerala High Court recently ruled on a case involving Leric Reeches vs Income Tax Officer (ITO), concerning an assessment order for the year 2016-17. The petitioner couldn’t attend a crucial video conferencing session due to a technical glitch. As a result, the High Court found a violation of principles of natural justice and set aside the assessment order.
The petitioner, represented by Mr. R. V. Easwar, contested the assessment order dated March 13, 2024, under Sections 147, 144, and 144B of the Income Tax Act, 1961. The crux of the argument centered on the denial of effective hearing, a fundamental aspect of natural justice. Despite attempts to participate via video conferencing, technical issues prevented the petitioner from joining the session.
Evidence presented, including a screenshot and email correspondence, substantiated the petitioner’s claim of technical failure. The court acknowledged the failure to provide an opportunity for effective hearing, a critical aspect of fair procedure. Mr. Christopher Abraham, representing the Revenue, did not contest the evidence presented.
In its judgment, the Kerala High Court emphasized the importance of adherence to principles of natural justice, enshrined under Article 14 of the Constitution of India. Recognizing the lack of effective hearing as a violation of these principles, the court set aside the assessment order. The case was remitted back to the second respondent with directions to provide a fresh link for the petitioner’s participation in the hearing.
The judgment of the Kerala High Court in Leric Reeches vs ITO serves as a significant precedent emphasizing the importance of procedural fairness in administrative proceedings. The court’s decision underscores the need for authorities to ensure that all parties are provided with a genuine opportunity to present their case. In this instance, the failure to address technical issues deprived the petitioner of this opportunity, resulting in the nullification of the assessment order. Moving forward, this case highlights the necessity for robust procedural safeguards to uphold the principles of natural justice in legal proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. Heard Mr. R. V. Easwar, learned Senior Counsel for the petitioner assisted by Ms. Rubal Bansal, Prakhar Pandey, Sidharth A. Menon and Mr. Muhammed Aljuq A. and Mr. Christopher Abraham, learned Senior Standing Counsel for the Revenue.
2. The present writ petition has been filed impugning the assessment order dated 13.03.2024 passed under the provisions of Section 147 read with Section 144 and 144B of the Income Tax Act, 1961 for the assessment year 2016-17.
3. The learned Senior Counsel for the petitioner submits that he will confine his arguments only on the point of violation of the principles of natural justice and denial of effective hearing to the petitioner.
4. The petitioner, an assessee under the provisions of the Act, did not file return of his income for the assessment year 2016-17 under Section 139 of the Act.
5. The information available with the Department would suggest that the petitioner has sold an immovable property to M/s. Greenleaf Resorts Private Limited during the financial year 2015-16 relevant to the assessment year 2016-17. The Department was of the view that the capital gains earned by the petitioner in this transaction has escaped assessment for income tax under the provisions of the Act. Therefore, Show Cause Notice was issued to the petitioner and after fixing the hearing on 13.03.2023 and 24.03.2023, the petitioner filed reply to the Show Cause Notice and, thereafter order under Section 148A(d) of the Act was passed on 29.03.2023 for issuing notice under Section 148 of the Act. In response to the said notice, the petitioner filed return of his income for the assessment year in question. In the while, petitioner filed reply to the Show Cause Notice dated 22.12.2023 opted for personal hearing through video conferencing. The petitioner was provided the link, however, the petitioner could not join the link for technical failure on the part of the Department. To that effect, the petitioner had taken the screenshot which has been placed on record as Exhibit P-14 and also addressed e-mail regarding the issue that the petitioner could not log in to address the argument. However, despite this e-mail addressed to the Department, no further opportunity was given to the petitioner and the impugned order has been passed.
6. It is submitted by the learned Senior Counsel for the petitioner that the opportunity of hearing means ‘effective opportunity of hearing’ and that the petitioner could not log in to address the argument because of the technical failure in the website itself, there was no hearing at all. It is submitted that since there has been failure of compliance of the statutory provision of hearing as well as principles of natural justice as enshrined under Article 14 of the Constitution of India, the order suffers from inherent illegality and, therefore, it may be set aside.
7. Mr. Christopher Abraham, learned Senior Standing Counsel for the Revenue is not in a position to dispute the screenshot and the email placed on record by the petitioner.
8. Considering the above submissions and taking note of the fact that the petitioner was not given effective hearing and without providing the effective hearing the impugned assessment order has been passed, I am of the considered view that the order suffers from violation of the principles of natural justice and, therefore, the same is set aside. The matter is remitted back to the 2nd respondent to provide fresh link to the petitioner intimating the date and time for hearing and after hearing the petitioner on the date and time fixed, the assessment order should be finalised expeditiously in accordance with the law.
With the aforesaid directions, the present writ petition stands allowed.
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