Case Law Details
Viswabharathi Medicals Vs ITO (Kerala High Court)
Kerala High Court dismissed the writ petition stating that the impugned order cannot be held to be in violation of principles of natural justice as the said order was preceded by a show cause notice and the petitioner was given an opportunity to reply to the same.
Facts- The petitioner had approached the Court being aggrieved by the fact that reassessment proceedings have been initiated against the petitioner under the provisions of the Income Tax Act, 1961 in respect of assessment year 2016-17 illegally and without jurisdiction.
It is the case of the petitioner that the petitioner filed its return of income for the assessment year in question within the due date and the same was processed accepting the return. Thereafter, notice was issued to the petitioner on 25.06.2021 u/s. 148 of the Income Tax Act, 1961 and the petitioner was required to show cause as to why the reassessment proceedings should not be continued in terms of the judgment of the Supreme Court which held that all notices issued u/s. 148 of the Income Tax Act on or after 01.04.2021 shall be governed by the provisions introduced by way of amendment w.e.f 01.04.2021.
Conclusion- Held that impugned order cannot be held to be in violation of principles of natural justice as the said order was preceded by a show cause notice and the petitioner was given an opportunity to reply to the same. It is also clear that the petitioner was heard before the order was issued. The contention of the petitioner that the matters set out in the reply to the show cause notice have not been properly considered cannot be stated to be a violation of principles of natural justice.
Order has considered the submission made by the petitioner and has found that the contentions taken have to be examined in the reassessment proceedings which, will follow. The officer holds that the nature of transactions mentioned in the show cause notice which have been explained in the reply of the assessee dated 03.06.2022 require detailed examinations with necessary evidence in support of assessee’s claim during the reassessment proceedings. I am, therefore, of the view that there is no ground on which order can be interfered with in exercise of jurisdiction under Article 226 of the Constitution of India. The writ petition fails and it is accordingly dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner has approached this Court being aggrieved by the fact that reassessment proceedings have been initiated against the petitioner under the provisions of the Income Tax Act, 1961 in respect of assessment year 2016-17 illegally and without jurisdiction. It is the case of the petitioner that the petitioner filed its return of income for the assessment year in question within the due date and the same was processed accepting the return. Thereafter, Ext.P4 notice was issued to the petitioner on 25.06.2021 under Section 148 of the Income Tax Act, 1961 and the petitioner was required to show cause as to why the reassessment proceedings should not be continued in terms of the judgment of the Supreme Court which held that all notices issued under Section 148 of the Income Tax Act on or after 01.04.2021 shall be governed by the provisions introduced by way of amendment w.e.f 01.04.2021.
2. The petitioner submitted a reply to the show cause notice. After affording to the petitioner an opportunity of hearing, Ext.P7 order has been issued rejecting the objections raised by the petitioner and finding that the reassessment proceedings should continue against the petitioner. According to the petitioner, Ext.P7 is illegal and unsustainable in law.
3. Adv.K.S.Hariharan Nair, the learned counsel appearing for the petitioner firstly contends that Ext.P7 order has been issued in violation of principles of natural justice in as much as the contentions taken by the petitioner in reply to the show cause notice have not been properly considered in Ext.P7 order. Secondly, it is contended that Ext.P7 order cannot be sustained as the reassessment proceedings are in respect of assessment year 2016-17 and the proceedings are beyond the time prescribed in Section 149 of the Income Tax Act, 1961. It is also submitted that a reading of Ext.P7 suggests that there is complete non application of mind by the officer and that he proceeded to issue Ext.P7 order mechanically and without appreciating the contentions taken by the petitioner in the reply to the show cause notice. The learned counsel for the petitioner also relies on the judgments of the Delhi High Court in Rithala Education Society v. Union of India and Others [W.P. (C)No.11334/2022 & C.M.No.33392/2022] and Divya Capital One Private Limited v. Assistant Commissioner of Income Tax [W.P.(C)No.7406/2022], to contend that in almost similar circumstances, the orders similar to Ext.P7 had been set aside and the matter was remanded to the officer concerned for fresh consideration.
4. The learned Standing Counsel appearing for the respondent Department submits that there is absolutely no violation of natural justice in as much as every possible opportunity was extended to the petitioner and he was personally heard before Ext.P7 order was passed. It is submitted that Ext.P7 order itself shows that the contentions taken by the petitioner with reference to bank accounts had to be examined minutely in the assessment proceedings and therefore, the reassessment proceedings have to continue to determine whether any income has escaped assessment. It is submitted that the petitioner is not prejudiced by Ext.P7 order as the petitioner will get a full opportunity at the time of reassessment. It is submitted that the decisions of the Delhi High Court, which have been relied on by the learned counsel for the petitioner were rendered in completely different fact circumstances and therefore, cannot be pressed into consideration by the petitioner to substantiate its case. It is also pointed out that the reassessment notice is within time as the case falls within Section 149(1)(b) of the Income Tax Act, which provides for a time limit of 10 years from the end of the assessment year in question and not under Section 149(1)(a) of the Income Tax Act where the time limit is only three years.
5. Having heard the learned counsel for the petitioner and the learned counsel appearing for the respondent Department, I am of the opinion that there is considerable merit in the contentions taken by the learned counsel appearing for the respondent Department. Ext.P7 order cannot be held to be in violation of principles of natural justice as the said order was preceded by a show cause notice and the petitioner was given an opportunity to reply to the same. It is also clear that the petitioner was heard before Ext.P7 order was issued. The contention of the petitioner that the matters set out in the reply to the show cause notice have not been properly considered cannot be stated to be a violation of principles of natural justice. The judgments relied on by the learned counsel for the petitioner indicate that they were rendered in completely different fact circumstances. In the judgment in Rithala Education Society (supra), the Delhi High court has taken the view that since the final order proposing to proceed with the reassessment proceedings was issued without considering the reply filed by the petitioner in that case, on 03.04.2022, the order had to be quashed and the matter had to be remanded for consideration of the authority. In Divya Capital One Private Limited (supra), the Court finds that the order had been passed in violation of principles of natural justice as the petitioner in that case was not given a reasonable time to file a reply. These situations are completely different from the fact situation in this case and therefore, I am of the view that the law laid down in the judgments of the Delhi High Court, which have been referred to by the learned counsel for the petitioner do not apply. I also note that Ext.P7 order has considered the submission made by the petitioner and has found that the contentions taken have to be examined in the reassessment proceedings which, will follow. The officer holds that the nature of transactions mentioned in the show cause notice which have been explained in the reply of the assessee dated 03.06.2022 require detailed examinations with necessary evidence in support of assessee’s claim during the reassessment proceedings. I am, therefore, of the view that there is no ground on which Ext.P7 order can be interfered with in exercise of jurisdiction under Article 226 of the Constitution of India. The writ petition fails and it is accordingly dismissed.
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