Case Law Details
Healthcare Global Enterprises Limited Vs Assessment Unit (Karnataka High Court)
The recent judgment by the Karnataka High Court has significant implications for Healthcare Global Enterprises Limited (HGE), revolving around an income tax assessment dispute. Healthcare Global Enterprises Limited filed a petition challenging the validity of the assessment order, computation sheet, demand notice, and a subsequent notice dated 30th April 2024. The crux of HGE’s argument was that they were not provided adequate time to respond to the show cause notices, which led to hurried submissions and denied them the opportunity for a personal hearing.
The court scrutinized the timeline of events, noting that the show cause notice issued on 24th April 2024 required a response within two days, contrary to procedural norms that mandate a seven-day period. HGE managed to submit written responses on time, but the court acknowledged that these were rushed due to the short notice.
The judgment emphasized the importance of natural justice principles, highlighting that the hurried assessment process could prejudice the petitioner’s ability to provide a thorough response. The absence of a personal hearing further compounded this issue, as it prevented HGE from clarifying their submissions adequately.
In response to these arguments, the Revenue authorities contended that the timely submission of written responses should suffice, dismissing claims of procedural impropriety.
Conclusion: After deliberation, the Karnataka High Court ruled in favor of Healthcare Global Enterprises Limited. It set aside the assessment order and the subsequent notice, emphasizing that due process was compromised by the rushed nature of the proceedings. The court directed the authorities to provide HGE with an opportunity for a personal hearing to present their case comprehensively.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the validity of the impugned Assessment Order at Annexure-`A-1′, computation sheet at Annexure-`A-2′, demand notice at Annexure-`A-3′ and has also sought for grant of refund that is lawfully due to it. The petitioner has also challenged the notice dated 30.04.2024 at Annexure-` A-4′.
2. Learned counsel for the petitioner would submit that the show cause notice issued on 24.04.2024 had directed furnishing of reply by 26.04.2024, which was inadequate time and despite reply being made within short period of time made available, prejudice has been caused as the reply was made hurriedly and subsequently. It is submitted that another reply came to be filed on 28.04.2024. The same was also hurriedly filed as very short time was made available. It is further submitted that in the absence of hearing, the order being passed on 30.04.2024 within two days after reply at Annexure-`P-1′ would reflect hurried manner in which the order was passed. It is also submitted that the petitioner also was deprived of personal hearing to make out the clarification in pursuance to its reply dated 26.04.2024 at Annexure`P-1′ and dated 28.04.2024 at Annexure-`Q-1′ and in the absence of such hearing to make out clarification, the petitioner has been prejudiced.
3. Learned counsel Sri E. I. Sanmati, appearing for the respondents-Revenue submits that the reply having been made out in writing, and if that were to be so, the contention that there has been violation of principles of natural justice cannot be accepted.
4. After hearing both side, it must be noticed that the show cause notice at Annexure-`N’, issued on 24.04.2024 at 10.35 hours sought for a reply by 26.04.2024 by 00 hours. This by itself is in violation of the Standard Operating Procedure at Annexure-`S’. At N.1.3 of the Standard Operating Procedure, it provides that the response time for show cause notice ought to be seven days.
5. No doubt, in the present case, written response has been made within the time sought for by the Revenue and the first of such reply at Annexure-` P-1′ was made on 04.2024 and upon subsequent opportunity, another reply was made on 28.04.2024 at Annexure-`Q-1′. However, furnishing of replies within short time can be construed to be replies filed in order to meet the timeline and in case of such replies filed within short time, contention of prejudice due to lack of sufficient time to make out a reply and lack of opportunity of personal hearing to make out clarifications, as raised by the assessee, requires acceptance.
6. However, in the present case, learned counsel for the petitioner submits that replies have already been filed at Annexure-`P-1′ and Annexure-`Q-1′ and petitioner may be afforded an opportunity of personal hearing as the order was passed on 30.04.2024 within less than a week of filing of replies at Annexure-`P-1′ and Annexure-`Q-1′. It is submitted that the petitioner may be permitted to have opportunity of a personal hearing to explain his reply and in the event of further clarification sought for, petitioner may be reserved liberty to make out his additional reply or furnish the documents.
7. The contention of the petitioner requires acceptance as the process of consideration of replies cannot be hurried in the light of last date for completion of assessment, which in the present case, was 30.04.2024. The petitioner’s reply at Annexure-`P-1’and Annexure-`Q-1′ requires sufficient consideration and if an opportunity of personal hearing is furnished, not only would the petitioner be in a position to make out clarification, but, it would afford sufficient time for the Assessing Officer to consider detailed replies and to pass the orders.
Accordingly, impugned Assessment Order at Annexure-`A-1′ and the notice dated 30.04.2024 at Annexure-`A-4′ are set aside. The matter is relegated to the stage of providing an opportunity of personal hearing to the petitioner consequent to the replies at Annexure-`P-1′ and Annexure-`Q-1′.
It is made clear that the authority must take note of the time available under Section 163(6) of the Income Tax Act, so as to avoid passing of an order at the fag end, which, in the present case, has caused prejudice to the assessee. All contentions are kept open.
The petitioner may await necessary intimation from the concerned authority and is at liberty to upload the order of this Court.
Writ Petition stands disposed off accordingly.
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