Case Law Details
Jesna Steefan Vs Additional/Joint/Deputy/ACIT/ITO (Kerala High Court)
Introduction: In a recent judgment, the Kerala High Court addressed the critical issue of natural justice principles in tax assessments. The case of Jesna Steefan vs. Additional/Joint/Deputy/ACIT/ITO involves the petitioner challenging Exhibits P-2, P-4, P-5 to P-10, with Exhibit P-7 being the assessment order passed under Section 147 read with Section 144B of the Income Tax Act for the assessment year 2017-18.
Detailed Analysis: The petitioner, an assessee, had not filed a return of income for the said assessment year. The assessing authority initiated proceedings based on information suggesting a significant financial transaction during the financial year 2016-17. After issuing notices and granting opportunities, the assessing authority made additions to the total assessable income, leading to tax demands and penalty proceedings.
The crucial aspect of the case revolves around the final opportunity granted on March 30, 2022, through a show cause notice along with a draft assessment order. The petitioner was given only one day to respond to this notice. The Kerala High Court, considering the brief time granted, concluded that virtually no opportunity was provided to the petitioner against the draft assessment order. This, according to the court, constituted a violation of the principles of natural justice.
The court, in its judgment, permitted the petitioner to file a reply to the show cause notice within seven days, starting from the date the link is provided for uploading the reply. The final assessment order was directed to be passed after providing an opportunity of hearing to the petitioner.
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