Case Law Details
Mallisseri Neelakandan Sankaranunni Namboodiri Vs Additional/Joint/Deputy/ACIT/ITO (Kerala High Court)
In a recent decision, the Kerala High Court addressed a case involving the appellant, Mallisseri Neelakandan Sankaranunni Namboodiri, who challenged an assessment order passed by the respondent. The court’s ruling highlights the importance of considering the reply of the assessee before making any assessment decisions. This article delves into the details of the case and the court’s judgment.
Background: Mallisseri Neelakandan Sankaranunni Namboodiri, an agriculturist, filed tax returns for the assessment year 2020-21 under the Income Tax Act. The respondent, an Income Tax Officer, initiated a scrutiny of these returns and issued a pre-assessment notice, seeking the appellant’s objections. However, the appellant’s responses to previous notices were lacking, with a reply received only after a delay.
Assessment Order: Despite the delay, the appellant did submit a reply dated 22.09.2022 before the assessment order was passed (Ext.P3). The primary contention of the appellant was that the reply should have been considered by the respondent while making the assessment decision.
Court’s Findings: The High Court, in its analysis, acknowledged the delay in the appellant’s reply but emphasized that the reply, dated 23.09.2022 (Ext.P2), was received in the respondent’s office before the assessment order (Ext.P3) was issued. The court emphasized the importance of fairness in tax matters and concluded that the Assessing Authority should have referred to the reply and addressed its contents when passing the assessment order.
Court’s Decision: Given that the reply was not considered, and the appellant was not heard before the assessment order was passed, the High Court decided to set aside the assessment order (Ext.P3). The court allowed the Writ Appeal and directed that the appellant would have a personal hearing through video conference before the respondent. The respondent was instructed to provide the video conferencing link at least three days before the hearing. The respondent was also required to issue a fresh and reasoned assessment order, taking into account the contentions in the appellant’s reply, within a period of two weeks.
Conclusion: The Kerala High Court’s judgment in the case of Mallisseri Neelakandan Sankaranunni Namboodiri underscores the significance of fairness and due process in taxation matters. The court’s decision to set aside the assessment order due to the non-consideration of the appellant’s reply serves as a reminder of the duty of the Assessing Authority to consider all relevant information before making an assessment decision. This case exemplifies how the judiciary safeguards the rights of taxpayers and ensures a just and equitable tax assessment process.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner in W.P.(C).No.39309/2022 is the appellant herein aggrieved by the judgment dated 13.07.2023 of the learned Single Judge that dismissed the writ petition preferred by the appellant impugning an order of assessment passed by the respondent on the ground that it was passed without hearing the appellant and without considering the reply that the appellant had preferred to the pre-assessment notice.
2. The brief facts necessary for disposal of this writ appeal are as follows:
The appellant, who is an agriculturist and an assessee under the Income Tax Act [hereinafter referred to as the ‘IT Act’], had filed returns for the assessment year 2020-21 under the IT Act. The returns were subjected to scrutiny by the respondent, who issued Ext.P1 notice seeking the objection of the appellant to the proposed assessment. Although six such notices were apparently issued to the appellant for preferring a reply, it is not in dispute that the appellant did not respond to the earlier notices but responded only to the last notice through a reply dated 22.09.2022. It would appear that without considering the said reply, which was admittedly received by the Office of the respondent prior to the passing of the assessment order, the respondent proceeded to pass Ext.P3 assessment order. The case of the appellant before the writ court was essentially that the reply of the appellant having been received by the respondent before he passed Ext.P3 assessment order, the respondent ought to have considered the said reply also while passing Ext.P3 order that was impugned in the writ petition.
3. The learned Single Judge, who considered the matter, found that it was on account of the fault on the part of the appellant that the assessment order came to be passed without considering the reply of the appellant, and hence, there was no necessity to interfere with P3 order passed by the respondent. The appellant was therefore relegated to his alternate remedy of preferring an appeal against the said assessment order.
4. We have heard Sri.Harisankar V. Menon, the learned counsel for the appellant as also Sri.Navaneeth N. Nath, the learned Standing counsel for the respondent.
4. Before us, it is the submission of Sri.Harisankar V. Menon, the learned counsel for the appellant that since the respondent had received the reply to the pre-assessment notice, albeit after a delay in sending the same, it was not proper or fair on the part of the respondent to have proceeded to pass the assessment order without considering the said reply.
5. Per contra, it is the submission of Sri.Navaneeth N. Nath, the learned Standing Counsel for the respondent that the respondent had provided ample opportunities to the appellant to prefer a reply, and it was only thereafter that the respondent proceeded to pass the assessment order.
6. On a consideration of the rival submissions, we find that while it may be a fact that the appellant had occasioned a delay in preferring a reply to the pre-assessment notice, and it was under those circumstances that Ext.P3 assessment order came to be passed, we find that in the instant case, it is not in dispute that the reply dated 23.09.2022 [Ext.P2] furnished by the appellant to the respondent was received in the Office of the respondent well before the date on which Ext.P3 assessment order was passed. In matters of taxation, the respondent is obliged to mete out fairness to the assessees, and in a situation such as the present, where the reply of the assessee had been received in the Office of the respondent, we would think that the requirement of fairness mandated that the Assessing Authority refer to the said reply also, and deal with the contentions therein, while passing the assessment order. Since the said reply was not considered, as is evident from a perusal of Ext.P3 assessment order, and further the assessee was not heard prior to the passing of the said order, we deem it appropriate to set aside Ext.P3 order in this appeal. Accordingly, we allow this Writ Appeal, by setting aside the impugned judgment of the learned Single Judge as also Ext.P3 assessment order that was impugned in the writ petition, and direct that the appellant shall appear for a personal hearing through video conference before the respondent on 16.10.2023, so as to enable the respondent to pass a fresh assessment order, after hearing the appellant and considering the reply furnished by the appellant. The respondent shall, on its part, furnish the video conferencing link to the appellant at least three days before the date of hearing as above. The respondent shall thereafter pass a fresh and reasoned assessment order adverting to the contentions of the appellant in the reply furnished by him within a period of two weeks.
The Writ Appeal is allowed as above.
