Case Law Details
Muthu Pitchamuthu Prabu Vs Assistant/Deputy Commissioner of Income Tax (International Taxation) (Madras High Court)
The Madras High Court recently passed a significant judgment in the case of Muthu Pitchamuthu Prabu Vs Assistant/Deputy Commissioner of Income Tax (International Taxation), setting aside an income tax assessment order due to procedural lapses and non-consideration of crucial documents submitted by the petitioner. This case revolves around the assessment order dated 29.03.2024 for the assessment year 2022-23 and addresses critical issues related to natural justice and proper procedural compliance under the Income Tax Act, 1961.
Background and Context: The petitioner, Muthu Pitchamuthu Prabu, filed his return of income for the assessment year 2022-23 on 30.07.2022. Subsequently, a notice dated 31.05.2023 was issued under Section 143(2) of the Income Tax Act, 1961 (the I-T Act). The petitioner responded to this notice on 05.06.2023, and further notices under Section 142(1) of the I-T Act followed, to which the petitioner replied, attaching partial bank statements. Despite these responses, a show cause notice dated 26.03.2024 was issued, questioning the investments made by the petitioner in Zerodha from his ICICI Bank account. In response, the petitioner sent an email on 28.03.2024, attaching several crucial documents, including complete bank statements and Form-16. However, the assessment order was issued without considering these documents.
Petitioner’s Grounds of Challenge:
The petitioner challenged the assessment order on two primary grounds:
1. Non-consideration of Submitted Documents: The petitioner’s main contention was that the documents attached to his email dated 28.03.2024 were not considered by the assessing officer before issuing the impugned assessment order. This oversight led to the addition of a significant amount, Rs.66,33,000/-, to the petitioner’s total taxable income, causing substantial prejudice.
2. Improper Transfer of Assessment: The second contention was that the transfer of the petitioner’s assessment to a different jurisdiction was in violation of Section 127 of the I-T Act. The petitioner argued that the transfer order was not duly authorized, and he did not consent to this transfer.
Respondent’s Defense: The learned junior standing counsel for the respondents, Mr. D. Prabhu Mukunth Arun Kumar, argued that the petitioner had filed his income tax returns specifying his address in Chennai. Hence, the assessment was transferred to the jurisdictional officer, the second respondent. Additionally, the petitioner did not raise any objections during the transfer process.
Court’s Findings and Judgment: Upon reviewing the case, the Madras High Court noted that the email dated 28.03.2024, sent by the petitioner, included attachments such as ICICI and Citibank statements. The court found that the impugned assessment order did not reference these attachments. This omission indicated that the assessment order was issued without considering the submitted documents, violating principles of natural justice. The court acknowledged the petitioner’s statement that he would not press the argument regarding the transfer if the matter was remanded due to the breach of natural justice principles.
Conclusion: In light of the findings, the Madras High Court set aside the impugned assessment order dated 29.03.2024. The case was remanded for reconsideration with specific directions:
1. The respondents were instructed to enable the portal and provide access to the petitioner within two weeks from the receipt of the court’s order.
2. The petitioner was allowed to file a reply and attach all necessary documents within two weeks thereafter.
3. Upon receipt of these documents, the respondents were directed to provide a reasonable opportunity, including a personal hearing, and issue a fresh assessment order within three months.
The writ petition was disposed of on these terms, and no order was made as to costs. Consequently, the connected miscellaneous petitions were also closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition is directed at assessment order dated 29.03.2024 in respect of assessment year 2022-23.
2. Upon the petitioner filing the return of income for the above mentioned year on 30.07.2022, a notice dated 3 1.05.2023 was issued to the petitioner under Section 143(2) of the Income Tax Act , 1961 (the I-T Act). Such notice was responded to 05.06.2023. Subsequent notices were issued under Section 142(1) of the I-T Act and the petitioner replied thereto by annexing the bank statements in part. Being dissatisfied with these replies, show cause notice dated 26.03.2024 was issued calling upon the petitioner to show cause in respect of investments made by the petitioner in Zerodha from his ICICI Bank account. The petitioner issued an email dated 28.03.2024 by annexing several documents including complete bank ents, Form-16 and other documents. The impugned order was issued under these circumstances.
3. Learned counsel for the petitioner assails the impugned order on two grounds. The primary ground of challenge is that the documents enclosed with the petitioner’s email dated 28.03.2024 were not taken into The second ground of challenge is that the petitioner’s assessment was transferred in breach of Section 127 of the I-T Act. This contention is advanced on the ground that the transfer order was not duly authorized in accordance with the statutory prescription and that the petitioner did not consent thereto.
4. In response to these contentions, Mr. D. Prabhu Mukunth Arun Kumar, learned junior standing counsel, submits that the petitioner had filed the income tax returns specifying his address in Chennai, Tamil On such basis, he submits that the assessment of the petitioner was transferred to the jurisdictional officer, namely, the second respondent. He also submits that the petitioner did not raise any objections to such transfer either when his response to the transfer proposal was called for or in any
5. If the Court is inclined to remand the matter on the ground of breach of principles of natural justice, learned counsel for the petitioner submits that he would not press the arguments in relating to the transfer. The said statement is recorded.
6. The petitioner placed on record the email dated 28.03.2024 which is addressed to the assessing officer/second respondent. From the list of attachments thereto, it is clear that the petitioner attached the ICICI Bank statements and Citibank statements. On examining the impugned assessment order, there is no reference to the email or the attachments Since a sum of Rs.66,33,000/- has been added to the total taxable income of the petitioner respect of without taking into account documents submitted by the petitioner before the issuance of the assessment order, great prejudice has been caused to the petitioner. For such reasons, the impugned order is liable to be interfered with.
7. For reasons set out above, the impugned assessment order dated 2024 is set aside and the matter is remanded for re-consideration. The respondents are directed to take necessary steps to enable the portal and provide access to the petitioner within a maximum period of two weeks from the date of receipt of a copy of this order. Within a period of two weeks therefrom, the petitioner is permitted to file a reply and attach all necessary documents. Upon receipt thereof, the respondents are directed to provide a reasonable opportunity, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of additional documents from the petitioner.
8. The Writ Petition is disposed of on the above terms. There shall be no order as to costs. Consequently, the connected miscellaneous petitions are also closed.
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