Allowed

Anavilasam Service Co-Operative Bank Limited v. the Assistant Commissioner of Income Tax

Kerala HC1 Oct 2021WP(C)/11960/2021

Case brief

AI extract

What is this about?

In a writ petition, the Kerala High Court held that the Income Tax assessment order was liable to be set aside as it suffered from the infirmity of violating principles of natural justice. The assessing officer failed to refer to or consider the petitioner's reply and documents submitted in response to a show-cause notice. The court set aside the order and directed fresh proceedings. (3 paras.)

What did the court decide?

Set aside the assessment order; direct respondent to consider reply and pass fresh orders within 60 days.

Anavilasam Service Co-Operative Bank… — Constitutional and Fundamental Rights | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS

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FRIDAY, THE 1^ST DAY OF OCTOBER 2021 / 9TH ASWINA, 1943

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WP(C) NO. 11960 OF 2021

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PETITIONER:

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ANAVILASAM SERVICE CO-OPERATIVE BANK LIMITED NO.1182, ANAVILASAM SCB BUILDING, ANAVILASAM P.O., MURICKADY, KUMILY, KERALA-685 535, REPRESENTED BY ITS SECRETARY, INDIRA.

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BY ADVS. ANIL D. NAIR R.SREEJITH TELMA RAJU SANGEETH JOSEPH JACOB CHRISTINA ANNA PAUL

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RESPONDENT:

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THE ASSISTANT COMMISSIONER OF INCOME TAX NATIONAL E-ASSESSMENT CENTRE, DELHI-110 003.

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BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) NO. 11960 OF 2021

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BECHU KURIAN THOMAS, J.

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W.P.(C)No. 11960 of 2021

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Dated this the 1^st day of October, 2021

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JUDGMENT

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Petitioner is a primary agricultural credit society. As an assessee, petitioner had filed its return for the assessment year 2018-19 and claimed deduction under section 80P of the Income Tax Act, 1961 (for short ‘the Act’). Though petitioner was served with notices under section 142(1) of the Act and appropriate replies were filed to such notices, it is now complained that the reply filed by the petitioner was not even referred to, while passing the order of assessment. Petitioner further contends that though an appeal is available under section 246A of the Act, failure to consider the reply submitted by the petitioner amounts to violation of the principles of natural justice. It is also contended that had the reply of the petitioner been considered, the nature of the assessment order could have been different.

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A statement has been filed on behalf of the

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WP(C) NO. 11960 OF 2021

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respondent stating that the assessment proceedings were initiated by issue of Ext.P1 notice under section 143(2) of the Act, which was followed by a notice under section 142(1), which is produced as Ext.P3, in which several queries were raised and clarifications sought for, to which the assessee offered clarifications by Ext.P4. Another notice under section 142(1) of the Act was issued to the petitioner, which was responded to by Ext.P6 letter which was yet again followed by Ext.P7 notice under section 142(1) seeking further explanation on the deduction claimed under section 80P(2)(d) of the Act. Respondent has also mentioned in the statement that the assessee had responded to the aforesaid notice by Ext.P8 letter and attempted to justify the claim of deduction by producing a copy of the certificate from the Registrar of Co-operative Societies. According to the respondent, it is thereafter that the draft assessment order was issued where the disallowance of the claim under section 80P(2)(d) of the Act was proposed as per Ext.P9 to which Ext.P10 objection was filed by the assessee. It was after all these procedures

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WP(C) NO. 11960 OF 2021

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that the assessing officer finalised the assessment order by issuing Ext.P11 wherein the claim under section 80P(2)(d) of the Act was disallowed.

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I have heard the arguments of Adv.Anil D. Nair, the learned counsel for the petitioner as well as Adv. Christopher Abraham, the learned Standing Counsel for the respondent.

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As rightly argued by the learned Standing Counsel for the respondent, this Court will not interfere normally under Article 226 of the Constitution of India on orders of assessment issued by the assessing authorities. It is equally settled that when there is a violation of the principles of natural justice, this Court can step in, even against assessment orders, to avoid the unnecessary travails of an assessee, in pursuing the statutory remedies.

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In the instant case, Ext.P9 show cause notice was issued on 22.03.2021 directing the petitioner to show cause as to why the assessment should not be completed as per the draft assessment order. The response of the petitioner was also sought for in the said show-cause notice. Petitioner’s

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WP(C) NO. 11960 OF 2021

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response to Ext.P9 is produced as Ext.P10, wherein it has raised an objection of some substance, however brief it may be. Certain documents were also produced along with Ext.P10. However, while issuing the order of assessment, it is seen that there is no reference at all to the response submitted by the petitioner nor is there any consideration of the document produced along with Ext.P10. Whether the contentions raised by the petitioner in Ext.P10 or whether the document produced along with Ext.P10 may have a bearing upon the case is not a matter which this Court can go into at this stage. An order of assessment is the foundation on which the rights of the assessee depend upon. It is necessary that the assessing authority considers the objections filed by the petitioner especially when a showcause notice in the form of Ext.P9 had been issued, eliciting the response of the petitioner. Failure to consider the said response offered by the petitioner in the facts of the case is a negation of the rights of natural justice. In the said view of the matter, I find that the order of assessment suffers from

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WP(C) NO. 11960 OF 2021

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the infirmity of violation of the principles of natural justice and is liable to be set aside.

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Accordingly, I set aside Ext.P11 assessment order dated 19-04-2021 issued by the respondent and direct the respondent to consider and pass fresh orders for the assessment year 2018-19, relating to the petitioner, after affording an opportunity of hearing to the petitioner, as expeditiously as possible, and untrammelled by any of the observations of this Court in this judgment. The decision as aforesaid shall be taken within an outer time limit of 60 days from today.

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The writ petition is allowed as above.

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Sd/-

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BECHU KURIAN THOMAS JUDGE

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AJ/01.10.2021

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WP(C) NO. 11960 OF 2021

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APPENDIX OF WP(C) 11960/2021

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PETITIONER EXHIBITS

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Exhibit	P1 TRUE COPY OF	NOTI	CE	DATED 22.09.2019.
Exhibit	P2 TRUE COPY OF DATED 07.10.	THE 2019.	REP	LY TO THE NOTICE
Exhibit	P3 TRUE COPY OF	NOTI	CE	DATED 01.12.2020.
Exhibit	P4 TRUE COPY OF DATED 15.12.	THE 2020.	REP	LY TO THE NOTICE
Exhibit	P5 TRUE COPY OF	NOTI	CE	DATED 16.02.2021.
Exhibit	P6 TRUE COPY OF DATED 01.03.	THE 2021.	REP	LY TO THE NOTICE
Exhibit	P7 TRUE COPY OF	NOTI	CE	DATED 08.03.2021.
Exhibit	P8 TRUE COPY OF DATED 13.03. CERTIFICATES	THE 2021 .	REP ALO	LY TO THE NOTICE NG WITH THE
Exhibit	P9 TRUE COPY OF	NOTI	CE	DATED 22.03.2021.
Exhibit	P10 TRUE COPY OF 26.03.2021.	THE	REP	LY TO THE NOTICE
Exhibit	P11 TRUE COPY OF	THE	ORD	ER DATED 19.04.2021.
Exhibit	P12 TRUE COPY OF SUPREME COUR	THE T DAT	JUD ED	GMENT OF THE HON'BLE 12.01.2021.

Anavilasam Service Co-Operative Bank Limited v. the Assistant Commissioner of Income Tax

Case brief

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Anavilasam Service Co-Operative Bank Limited v. the Assistant Commissioner of Income Tax

Case brief

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