Absence of Assessment Order: HC Allows Rectification Opportunity & Restores appeal for Denial of Hearing

Kerala Minerals And Metals Limited Vs ACIT (Kerala High Court)

Kerala High Court has set aside income tax assessment orders against Kerala Minerals & Metals Limited (KMML) for assessment years 2014-15, 2016-17, 2017-18, and 2018-19. KMML had challenged the orders before the Appellate Authority, alleging that its request for a personal hearing was ignored. The appeal for 2016-17 was dismissed on the ground that the assessment order was not submitted, while appeals for other years were rejected on merits. The company argued that the absence of an assessment order should have been noticed at the time of filing, allowing it an opportunity to rectify the omission. The court found that denying a hearing violated the principles of natural justice and set aside the orders.

The court emphasized that despite multiple written submissions from KMML requesting a hearing, the Appellate Authority did not provide one. It also noted that the authority failed to consider key issues in the 2016-17 appeal. The court ruled that the company must be given an opportunity to present its case before any decision is made. The matter was remanded for fresh adjudication, directing the authority to hear KMML and issue a new order within six months. The judgment reinforces the requirement for procedural fairness in tax disputes.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

Petitioner is a wholly owned Government company engaged in the business of extraction of minerals and manufacture of titanium dioxide and other products. Petitioner is also an assessee under the Income Tax Act, 1961 (for short, ‘the Act’). For the assessment years 2014-15, 2016-17, 2017-18 and 2018-19, the returns of the petitioner were selected for scrutiny and the assessments were completed after disallowing certain claims.

2. Challenging the orders of assessment, petitioner filed separate appeals before the 3^rd respondent as Ext.P2 and Ext.P2(a) to Ext.P2(c) series. Pursuant to notices issued under Section 250 of the Act, petitioner filed its respective submissions, wherein a specific request for personal hearing was sought in each of the appeals. However, without granting an opportunity of hearing, the appeals were dismissed by Ext.P5 and Ext.P5(a) to Ext.P5(c) orders. In one of the appeals relating to 2016­17 which is produced as Ext.P5(a), the appeal was dismissed for the reason that the assessment order had not been produced along with the memorandum of appeal. Other appeals were dismissed on merits. Aggrieved by the aforesaid orders of the Appellate Authority, petitioner has approached this Court under Article 226 of the Constitution of India mainly alleging violation of principle of natural justice.

3. I have heard Sri.Joseph Markos, the learned Senior Counsel, instructed by Sri.Alexander Joseph Markose, the learned counsel for the petitioner apart from Sri.Christopher Abraham, the learned Senior Standing Counsel for the Income Tax Department.

4. The appeal as relating to the year 2016-17 dismissed as per Ext.P5 (a), reveals that the Appellate Authority noticed that the assessment order was not produced along with the said appeal. However, it is not evident that, at the time of filing the appeal, any defect was noticed by the Appellate Authority regarding the absence of an assessment order. In fact, if there was any omission to produce the assessment order along with the appeal, certainly, the Appellate Authority ought to have noticed the said defect and given an opportunity to the appellant to produce the copy. Having not done so, it has to be assumed that the appeal in respect of the assessment year 2016-17 was filed properly along with the copy of the assessment order. Therefore the finding of the Appellate Authority that the appeal was filed without an assessment order cannot be accepted at this belated stage. The order of the Appellate Authority as relating to 2016-17 has not considered the issue on merits. Therefore, I am of the view that the petitioner cannot be put to prejudice at such a belated stage pointing out the absence of the assessment order especially in the absence of an omission to notice it at the point of first instance. Therefore Ext.P5(a) is liable to be set aside and a reconsideration ought to be directed.

5. As far as the remaining years are concerned, i.e. 2014-15, 2017-18 and 2018-19, the main contention as pointed out earlier is relating to the lack of an opportunity of hearing despite request. A perusal of the aforesaid orders which are produced as Ext.P5, Ext.P5(b) and Ext.P5(c) reveals that the petitioner was issued with notices repeatedly under Section 250 of the Act and on most of those occasions, there was a reply in the form of a submission, wherein a request for grant of an opportunity of hearing was sought by the petitioner. However, the learned Senior Standing Counsel for the respondents could not point out anywhere in the impugned order any reference about any opportunity of hearing granted. The learned Senior counsel for the petitioner, on the other hand asserted that, in fact no such opportunity was granted.

6. A glance at the impugned orders reveal that there is no reference, as rightly pointed out by the learned Senior counsel for the petitioner, to any opportunity of hearing having been granted. Undoubtedly, submissions referred to in the impugned orders indicate only written submissions in contradistinction to actual hearing. In such circumstances, I am satisfied that the impugned orders Ext.P5, Ext.P5(b) and Ext.P5(c) have been issued in violation of the principles of natural justice, entitling the petitioner to invoke the jurisdiction under Article 226 of the Constitution of India.

7. In view of the above discussion, I am satisfied that Ext.P5 series of orders are liable to be interfered with and a fresh consideration be directed.

In the result, Ext.P5, Ext.P5(a), Ext.P5(b) and Ext.P5(c) orders shall stand set aside and the 3^rd respondent Appellate Authority shall hear the matter afresh and pass appropriate orders in accordance with law, after granting an opportunity of hearing to the petitioner, as expeditiously as possible, at any rate, within a period of six months from the date of receipt of a copy of this judgment. In order to avoid technicalities standing in the way of such consideration, petitioner shall produce a copy of the assessment order relating to the year 2016-17, along with the copy of this judgment, without delay.

The writ petition is allowed as above.