Case Law Details
Kerala State Welfare Corporation for Forward Communities Limited Vs ITO (Kerala High Court)
Reply Filed in Time Ignored by AO- Kerala HC Quashes 154 Rectification & Directs AO to Reconsider 154 Rectification After Hearing Assessee
The petitioner, Kerala State Welfare Corporation for Forward Communities Ltd., challenged the rectification order u/s 154 & consequential demand. For AY 2017-18, the AO issued notice dated 13.11.2024 requiring objections by 21.11.2024. The petitioner filed reply on 20.11.2024, but without considering the same, AO passed rectification order u/s 154 stating that no objection had been filed.
Before the High Court, it was argued that the reply had been submitted in time & ignoring it violated principles of natural justice. The Revenue admitted that reply was indeed filed before the deadline but overlooked in the rectification proceedings.
The Court held that non-consideration of a timely filed objection was a clear violation of natural justice. Accordingly, rectification order & demand were quashed. The matter was remitted to AO with a direction to reconsider the objection & pass fresh orders after granting hearing. AO was directed to complete the process within three months.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is an assessee under the provisions of the Income Tax Act. Pertaining to the assessment year 2017-2018, the assessment was completed as per Ext.P1, and the appeal filed against the same is pending consideration. In the meantime, Ext.P3 notice was issued by the 2nd respondent, to the petitioner under Section 154 of the Income Tax Act 1961, for rectifying certain mistakes. As per Ext.P3 notice, which is dated 13.11.2024, the petitioner was to furnish a reply on or before 21.11.2024 via email. According to the petitioner a reply in this regard was submitted on 20.11.2024 as evidenced by Ext.P4. However, without considering the same Ext.P5 rectification order was passed under Section 154 of the Income Tax Act, by stating that the petitioner failed to submit any objection. This writ petition is submitted by the petitioner in such circumstances, challenging Ext.P5.
2. I have heard the learned counsel for the petitioner and the learned Standing Counsel for the respondents.
3. The learned Standing Counsel for the respondents submits that the Ext.P4 objection was submitted before the time limit fixed for the same as per Ext.P3. A perusal of Ext.P5 would indicate that despite the fact that the petitioner submitted the reply to the Ext.P3 in time, it was not taken into account and a rectification order under Section 154 of the Income Tax Act was passed, as if the petitioner failed to submit any reply. Since the submission of the reply in time by the petitioner to the notice under Section 154 of the Income Tax Act is an admitted fact, the non consideration of the same is amounting to the violation of the principles of natural justice and hence interference is required.
Accordingly, this writ petition is disposed of, quashing Ext.P5 rectification order and Ext.P6 consequential demand, with a direction to the 2nd respondent to consider Ext.P4 objection submitted by the petitioner and to pass fresh orders after giving the petitioner an opportunity for being heard. This shall be done within a period of three months from the date of receipt of a copy of this judgment.
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