Case Law Details
We Connect Agencies Vs Additional/Joint/Deputy/Assistant CIT/ITO (Kerala High Court)
Introduction: In a significant judgment, the Kerala High Court has quashed an Income Tax assessment order against We Connect Agencies, marking a pivotal moment for the enforcement of procedural rights in tax assessments. The case, stemming from the assessment year 2018-2019, revolved around the petitioner’s challenge against an order that was issued without providing an opportunity for a hearing, in clear violation of the principles of natural justice.
Detailed Analysis: The heart of the dispute lies in the Income Tax Department’s decision to complete the assessment for the year 2018-2019, resulting in a substantial demand against We Connect Agencies. Following the adverse assessment, the petitioner sought redress through an appeal, which was subsequently dismissed via the contested order (Ext.P5), purportedly without considering the petitioner’s submissions or providing a chance for oral arguments.
The petitioner’s counsel highlighted a critical procedural lapse, noting that despite uploading the submissions well before the deadline (on 23-08-2023), the appellate authority erroneously concluded that no submissions were made before 08-09-2023. This oversight, coupled with the failure to conduct a hearing, formed the crux of the legal challenge.
The Kerala High Court, upon reviewing the facts and submissions, identified a clear breach of procedural fairness. The court observed that the appellate authority’s decision was made on an incorrect premise regarding the submission of documents and without extending the fundamental right of a hearing to the petitioner. This led to the quashing of the Ext.P5 order and the restoration of the appeal for reconsideration, with specific instructions to consider the petitioner’s submissions (Ext.P4) and to ensure that a hearing is conducted.
Conclusion: This judgment by the Kerala High Court reinforces the indispensability of procedural fairness in the adjudication of tax disputes. By setting aside the assessment order for the lack of a hearing, the court has underscored the importance of affording taxpayers an opportunity to present their case fully and fairly. The decision not only provides relief to We Connect Agencies but also sets a precedent that emphasizes the need for administrative bodies, including the Income Tax Department, to adhere strictly to the principles of natural justice. This case serves as a reminder of the judiciary’s role in safeguarding the rights of individuals and entities against procedural oversights and errors in the tax assessment process.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Petitioner is an assessee under the Income Tax Act, 1961. By Ext.P1 order the assessment in respect of the assessment year 2018-2019 was completed by the assessing officer resulting in a substantial demand on the petitioner. The petitioner filed an appeal before the 2nd respondent. The said appeal has now been rejected by Ext.P5 order.
2. The learned counsel appearing for the petitioner would submit that Ext.P5 order has been issued without affording an opportunity of hearing to the petitioner and without considering the submissions filed by the petitioner as per P4. Specific reference is made to paragraph No.5 of Ext.P5 order to show that the appellate authority has proceeded on the basis that the petitioner had not uploaded its submissions before 08-09-202 3, whereas Ext.P4 will show that the submissions were uploaded as early as on 23-08-2023.
3. Heard the learned Standing Counsel appearing for the respondents.
4. Having heard the learned counsel for the petitioner and the learned Standing Counsel appearing for the respondents and having regard to the fact that a reading of Ext.P5 itself indicates that though the submissions of the petitioner were uploaded on 23-08-2023, the appeal was decided by the appellate authority on the basis that no such submissions were filed before 08-09-2023 and without affording an opportunity of hearing to the petitioner. Therefore Ext.P5 can only be set aside. The appellate authority is required to pass orders after considering Ext. P4 and after affording an opportunity of hearing to the petitioner.
5. Therefore, Ext.P5 is quashed. Ext.P2 appeal is restored to the file of the 2nd respondent. The 2nd respondent shall reconsider the appeal taking note of Ext.P4 and after affording an opportunity of hearing to the petitioner.
Writ petition is disposed of as above.
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