HC directs AO to consider objection of Assessee before finalising Assessment Order

Mammed Komban Vs National Faceless Assessment Center (Kerala High Court)

In a recent ruling, the Kerala High Court addressed a crucial issue regarding income tax assessments under Section 147 of the Income Tax Act, 1961. The case involved Mammed Komban challenging a final assessment order issued without considering his response, alleging a breach of natural justice principles.

Mammed Komban, the petitioner, filed a writ petition challenging the final assessment order  issued by the National Faceless Assessment Center under Section 147 read with Sections 144 and 144B of the Income Tax Act. The petitioner argued that despite submitting a response to the draft assessment order, the final assessment order did not take into account his objections.

During the hearing, the petitioner’s counsel highlighted that final assessment order had penal consequences for the petitioner but failed to consider response, which violated the principles of natural justice. The court examined the timelines and submissions, noting that while the respondents argued the response was late, the petitioner claimed insufficient time was provided for submission.

Upon review, the Kerala High Court found merit in the petitioner’s argument. It ruled that the final assessment order, was issued in contravention of the principles of natural justice since it did not consider response to the draft assessment order, which contained substantial objections from the petitioner. Consequently, the court set aside final assessment order.

The court directed the 1st respondent, the National Faceless Assessment Center, to reconsider the draft assessment order  after duly considering response to the draft assessment order and to finalize the assessment expeditiously.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner is an assessee under the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short). This writ petition is filed challenging Ext.P1 5 final assessment order issued under Section 147 read with Sections 144 and 144B of the Act.

2. Pursuant to Ext.P13 show cause notice and draft assessment order, Ext.P14 response was submitted by the petitioner before the 1 ^st respondent. However, the petitioner states that, when Ext.P1 5 final assessment order was issued, it reflected non‑ consideration of Ext.P14 response to the draft assessment notice.

3. Heard the learned counsel for the petitioner and Sri.Christopher Abraham, learned senior Standing Counsel for the respondents.

4. It is submitted by the learned Standing Counsel for the respondents that the petitioner has submitted the response after the expiry of the period for submitting such response. The learned counsel for the petitioner submits that the petitioner got only two days’ time to submit the response.

5. On going through Ext.P15 final assessment order, it is seen that Ext.P14 objection of the petitioner is not taken into consideration. Since Ext.P1 5 brings penal consequences to the petitioner, the 1^st respondent ought to have considered Ext.P14 before finalising the assessment order. I find that Ext.P1 5 is issued in violation of the principles of natural justice. Accordingly, the same is set aside.

6. The 1^st respondent shall finalise Ext.P13 draft assessment order, after considering Ext.P14 objection of the petitioner, expeditiously.

The writ petition is disposed of accordingly.