Case Law Details
Genesis Institute Of Medical Science Private Limited Vs ITO (Kerala High Court)
Introduction: The Genesis Institute of Medical Science Private Limited recently secured a favorable outcome in a case against the Income Tax Officer (ITO) in the Kerala High Court. The court quashed penalty proceedings under Section 270A of the Income Tax Act, 1961, for the assessment year 2021-22. The central contention was the absence of a fixed hearing date after the petitioner’s response to the show cause notice.
Detailed Analysis:
1. Background of the Case: The assessment for the petitioner revealed an addition of Rs. 8,37,97,401 to the returned income for the relevant assessment year. The detected amount surfaced during scrutiny assessment proceedings, leading to the initiation of penalty proceedings under Section 270A for under-reporting of income due to misreporting.
2. Challenges and Responses: The petitioner refrained from challenging the assessment order but contested the penalty order under Section 270A. The petitioner received a show cause notice on 9.12.2022, responded on 30.12.2022, and sought an adjournment. Subsequently, another notice on 6.4.2023 prompted the petitioner’s reply on 12.4.2023, supported by judgments from the Income Tax Appellate Tribunal.
3. Violation of Natural Justice: The crux of the judicial intervention lies in the absence of a fixed hearing date before the issuance of the impugned order dated 8.6.2023. The court observed that the order violated principles of natural justice, as no communication of the hearing date occurred after the petitioner’s response to the notice dated 6.4.2023.
4. Court’s Decision and Remand: Kerala High Court, in response to the procedural lapse, set aside the order (Ext.P9) and remanded the matter to the 4th respondent. The court directed the communication of the hearing date to the petitioner through the Income Tax Department’s portal and the provided email address. Emphasizing the petitioner’s responsibility to appear and submit, the court clarified that no further opportunities or adjournments would be granted.
Conclusion: The judgment serves as a reminder of the importance of adhering to natural justice principles in legal proceedings. The Kerala High Court’s intervention ensures a fair opportunity for the petitioner to present its case, emphasizing the significance of a properly communicated hearing date in penalty proceedings under the Income Tax Act. The decision highlights the court’s commitment to upholding procedural fairness in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed impugning order in Ext.P9 dated 8.6.2023 passed under Section 270A of the Income Tax Act, 1961 (“Act”, for short) in respect of the assessment year 2021-22. The assessment with respect to the petitioner was finalised by adding Rs.8,37,97,401/- to the returned income of the petitioner for the assessment year under consideration. It was found that since the said amount was detected during the course of scrutiny assessment proceedings, penalty proceedings under Section 270A of the Act were to be initiated for under-reporting of income in
consequence of misreporting of income.
2. The petitioner has not challenged the assessment order and is only aggrieved by the penalty order passed under Section 270A of the Act. The petitioner was issued show cause notice dated 9.12.2022, for filing its reply by 31.12.2022. In response to the said notice, the petitioner filed its response on 30.12.2022 and requested for adjournment. Thereafter, another show cause notice was served on 6.4.2023 asking the petitioner as to why penalty under Section 270A of the Act for under-reporting of income in consequence of misreporting should not be levied. In response to the said notice, the assessee filed its reply on 12.4.2023 by attaching some judgments passed by the Income Tax Appellate Tribunal.
3. On perusal of the impugned order, Ext.P9, it is evident that no date for hearing was fixed, that after service of the show cause notice dated 6.4.2023 on the petitioner and filing of its reply dated 12.4.2023 to the said show cause notice, the impugned order came to be passed on 8.6.2023. This Court is of the view that since the order impugned has been passed in violation of the principles of natural justice as no date of hearing was communicated to the petitioner after petitioner’s reply dated 12.4.2023 to the show cause notice dated 6.4.2023, the impugned order dated 8.6.2023, Ext.P9, is set aside and the matter is remanded back to the 4th respondent to communicate the date of hearing to the petitioner on the Portal of the Income Tax Department and also through the e-mail- id given to the Income Tax Department. It is made clear that in case the petitioner fails to appear and make submissions in response to the notice of hearing so to be given by the 4th respondent, no further opportunity shall be granted to the petitioner. The petitioner shall not seek any adjournment on the date of hearing so fixed by the 4th respondent.
With the aforesaid observations, the present writ petition stands allowed.
Pending interlocutory application, if any, in the writ petition stands dismissed.
