Case Law Details
N. Kannammal Vs Assessment Unit (Madras High Court)
Introduction: The Madras High Court recently heard a writ petition filed by N. Kannammal challenging the assessment order passed by the Assessment Unit under section 143(3) r.w.s. 144B of the Income Tax Act, 1961, dated 07.12.2022. The petitioner contended that the order was unjust as it failed to consider her submitted reply and did not afford her an opportunity for a personal hearing.
Background: N. Kannammal had filed her income tax return for the Assessment Year 2021-22. Subsequently, her case was selected for scrutiny, and a show cause notice dated 24.11.2022 was issued, asking her to explain why the assessment should not be completed as per the Draft Assessment Order. The petitioner filed a timely reply on 01.12.2022, well within the specified deadline of 01.12.2022 at 13:19 hours. However, the impugned order dated 07.12.2022 stated that no such reply had been received, raising concerns about due process.
Petitioner’s Arguments: Mr. N.V. Narayanan, the learned counsel for the petitioner, argued that the respondent failed to consider the petitioner’s reply and issued the order without granting a personal hearing. He asserted that the impugned order was, therefore, unjust and should be set aside.
Respondent’s Response: The learned Senior Standing Counsel for the respondent explained that, before the reply was reflected in the Income Tax Business Application-Permanent Accountant Number (ITBA-PAN), the proposal had already been submitted to the department. The delay in reflection was attributed to the normal processing time, and the reply was considered only after the proposal was sent for approval and the final assessment order was passed.
Court’s Consideration: After careful consideration of both parties’ submissions and a review of the available records, the court noted that, indeed, the petitioner had submitted her reply within the stipulated timeframe. However, due to administrative delays in the ITBA-PAN system, the respondent claimed not to have considered the reply before passing the final assessment order.
Court’s Decision: The court found the impugned order unsustainable not only due to the non-consideration of the petitioner’s reply but also for a violation of the principles of natural justice. Accordingly, the writ petition was allowed, and the order dated 07.12.2022 was set aside. The matter was remitted back to the respondent for fresh consideration, directing them to take into account the petitioner’s reply dated 01.12.2022. Furthermore, the court mandated that the respondent provide the petitioner with an opportunity for a personal hearing before passing the assessment order, with a stipulated timeframe of three months from the date of receipt of the court’s order.
Conclusion: The case of N. Kannammal vs. Assessment Unit serves as a reminder of the critical importance of adhering to due process in administrative proceedings, especially in matters of taxation. The court’s intervention in setting aside the assessment order underscores the significance of fairness and procedural justice in legal proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition is filed challenging the assessment order passed by the respondent under section 143(3) r.w.s. 144B of Income Tax Act, 1961, dated 07.12.2022.
2. Mr. N.V. Narayanan, learned counsel appearing for the petitioner submitted that the petitioner filed her return of income for the AY 202 1-22. The petitioner’s case was selected for scrutiny by the respondent and initially, a show cause notice dated 24.11.2022 was issued requiring the petitioner to show cause, as to why, the assessment should not be completed as per Draft Assessment Order. In the said show cause notice, the respondent provided time to file reply on or before 01.12.2022 at 13:19 hours and though the petitioner has filed her reply on 01.12.2022, in the impugned order dated 07.12.2022, in paragraph 12, it has been stated that the petitioner has not filed any reply. Further, the learned counsel contended that no opportunity of personal hearing was provided to the petitioner before passing the impugned order. Therefore, the petitioner submitted that without considering the reply filed by the petitioner and without providing any opportunity of personal hearing, the impugned order came to be passed and hence the same is liable to be set aside.
3. Per contra, the learned Senior Standing Counsel appearing for the respondent drew the attention of this Court to para No.7 of the counter affidavit filed by the respondent, wherein, it has been stated at the remarks column as follows ”...Before the reply got reflected in the ITBA, the proposal was submitted to the Department…” and submitted that generally it takes one to two days for the submissions to get reflected in the case history of Income Tax Business Application-Permanent Accountant Number (ITBA-PAN) and in the present case, the reply submitted by the petitioner/assessee on 01.12.2022 got reflected in ITBA only after the proposal was sent to ILDP for approval, followed by which draft order was submitted to NFAC on 06.12.2022 and thereafter, final assessment order was passed on 07.12.2022. Therefore, the respondent was not able to consider the reply of the petitioner while passing the impugned order. However, he fairly submitted that if any order is passed by this court, the same would be complied with by the department.
4. Considered the submissions made by the petitioner and the learned Senior Standing Counsel for the respondent and perused the materials available on record.
5. Though the petitioner filed her reply to the show cause notice dated 24.11.2022 within the time limit prescribed i.e., before 01.12.2022 at 19 hours, the respondent has not considered the same on account of the fact that the reply got reflected in ITBA-PAN only after the proposal was sent to ILDP for approval, which culminated in passing the final assessment order on 07.12.2022, by recording, as if the petitioner has not filed her reply. Thus, considering the fact that the reply filed by the petitioner got reflected in ITBA only after the assessment proposal was sent to ILDP for approval, the respondent-Department has not considered the petitioner’s reply while passing the impugned order dated 07.01.2022. Apart from non consideration of the reply filed by the petitioner, it is the grievance of the petitioner that the impugned order came to be passed on 07.12.2022 without granting an opportunity of personal hearing to the petitioner. Therefore, this Court is of the view that the impugned order is not sustainable not only due to non-consideration of the reply filed by the petitioner but also suffers from violation of the principles of natural justice. Hence, this Court is inclined to set aside the impugned order.
6. Accordingly, this Writ Petition is allowed, the impugned order dated 07.12.202 passed by the respondent is set aside and the matter is remitted back to the respondent for fresh consideration, in which case, the respondent is directed to consider the reply filed by the petitioner dated 01.12.2022 and after affording an opportunity of personal hearing to the petitioner shall pass the assessment order within a period of three months from the date of receipt of a copy of this order. No costs. Consequently, the connected miscellaneous petition is closed.
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