Case Law Details
Tamil Nadu Discharged Prisoners’ Aid Society Vs Additional-Joint-Deputy-ACIT-ITO (Madras High Court)
Introduction: In a recent legal development, the Madras High Court addressed a matter involving the Tamil Nadu Discharged Prisoners’ Aid Society and the Additional-Joint-Deputy Assistant Commissioner of Income Tax (ITO). The case highlights the court’s decision to provide relief to a non-profit organization that encountered technical difficulties while attempting to file their tax returns.
Background of the Case: The petitioner, Tamil Nadu Discharged Prisoners’ Aid Society, has challenged an Assessment Order issued for the Assessment Year 2014-2015, bearing reference ITBA/AST/S/147/2021-22/1041668774(1), dated 26.03.2022. The specific grievance of the petitioner pertains to a notice they received under Section 148 of the Income Tax Act, 1961 on 31.03.2021.
Technical Issue and Delay: The petitioner faced a unique challenge due to a technical issue. They were unable to access the internet for uploading their reply and returns in response to the notice dated 31.03.2021. The reason for this technical setback was the forgetting of the password required for online access. The petitioner made numerous attempts to reset the password, which ultimately succeeded on 07.04.2022. However, by this time, the impugned Assessment Order for the same year had already been issued on 26.03.2022.
Nature of the Petitioner: It’s essential to note that the petitioner, Tamil Nadu Discharged Prisoners’ Aid Society, is a non-profit organization primarily engaged in charitable activities and not profit-making ventures. This distinction plays a significant role in the court’s decision.
Request for Participation: The petitioner, considering the technical challenges they faced and their non-profit nature, sought one more opportunity to participate in the proceedings and respond to the notice effectively.
The Court’s Decision: The Madras High Court, after carefully considering the facts and arguments presented by both the petitioner’s counsel and the learned Senior Standing Counsel representing the respondents, acknowledged the genuineness of the petitioner’s issue. The court noted that the technical problems they faced had prevented them from participating in the proceedings leading up to the impugned Assessment Order.
Exercising Discretion: Taking into account the delayed password reset, which occurred after the impugned Assessment Order was already issued, the court exercised its discretion under Article 226 of the Constitution of India in favor of the petitioner. The court quashed the Assessment Order and remitted the case back to the respondents. This decision enables the petitioner to upload their returns in response to the notice dated 31.03.2021 for the Assessment Year 2014-2015.
Compliance with Procedures: In line with the decision of the Hon’ble Supreme Court in K. N. Driveshafts (India) Ltd. vs. Income Tax Officer and Others (2003), the respondents are directed to facilitate the petitioner’s response and then follow the required procedures for reopening the assessment for the Assessment Year 2014-2015. The court further clarified that the time elapsed from the date of the impugned order until the date of the communication of the certified copy of this order shall be excluded for the purpose of Section 153 of the Income Tax Act, 1961.
Conclusion: The judgment in the case of Tamil Nadu Discharged Prisoners’ Aid Society vs. Additional-Joint-Deputy-ACIT-ITO showcases the court’s willingness to provide relief in situations where technical difficulties have prevented an entity, particularly a non-profit organization, from effectively participating in tax proceedings. The court’s decision underscores the principle of fairness in legal processes and the importance of equitable treatment for all types of entities, irrespective of their profit status.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner has challenged the impugned Assessment Order bearing ITBA/AST/S/147/2021-22/1041668774(1) dated 26.03.2022 for the Assessment Year 2014-2015.
2. The specific grievance of the petitioner is that the petitioner had received a notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the IT Act) on 31.03.2021. However, the said notice was manually served to the petitioner.
3. It is submitted that due to non-use of the e-mail facility, the password was forgotten and therefore, the petitioner was in continuous communication with the Department to reset the password to enable the petitioner to file a reply and upload the returns pursuant to a notice under Section 148 of the IT Act on 31.03.2021.
4. It is submitted that after several rounds of communication with the Web Manager, the password was successfully reset only on 07.04.2022 by which time, the impugned Assessment Order dated 26.03.2022 came to be passed.
5. The learned counsel for the petitioner would submit that the petitioner is an entity (non-profit organization), which is not engaged in making profit.
6. It is therefore submitted that one opportunity may be granted to the petitioner to participate in the proceedings afresh.
7. The learned Senior Standing Counsel for the respondents on the other hand would submit that the grievance of the petitioner has been resolved. It is therefore submitted that the writ petition is devoid of merits.
8. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents.
9. The case of the petitioner appears to be genuine inasmuch as the petitioner was unable to access the internet facility for uploading the reply/returns. Consequently, the petitioner also could not participate in any of the proceedings, which preceded the impugned Assessment Order dated 26.03.2022.
10. Considering the fact that the password was reset only on 07.04.2022 and considering the fact that the impugned Assessment Order came to be passed on 26.03.2022, I am of the view, this is a fit case for exercising discretion under Article 226 of the Constitution of India in favour of the petitioner by quashing the impugned Assessment Order and to remit the case back to the respondents to allow the petitioner to upload the returns in response to the notice under Section 148 of the IT Act dated 31.03.2021 for the Assessment Year 2014-2015.
11. Thereafter, the respondents shall comply with the procedure in terms of the decision of the Hon’ble Supreme Court in K. N. Driveshafts (India) Ltd. Vs. Income Tax Officer and Others, (2003) 259 ITR 19 (SC) (2003) 1 SCC 72 and thereafter dispose the objections if any of the petitioner for reopening the assessment for the Assessment Year 2014-2015 and to proceed accordingly. It is made clear the time after the impugned order was passed till date of communication of certified copy of this order shall stand excluded for the purpose of Section 153 of the IT Act, 1961.
12. The respondents are directed to facilitate the petitioner to upload the reply/returns within a period of thirty days from the date of receipt of a copy of this order.
13. This Writ Petition stands disposed of with the above observations. No costs. Consequently, connected Writ Miscellaneous Petitions are closed.
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