Allowed

Intergrow Brands Private Limited, v. the Additional/Joint/Deputy/Assistant Commissioner of Income Tax

Kerala HC11 Jan 2022WP(C)/12052/2021

Case brief

AI extract

What is this about?

The Kerala High Court set aside an income tax assessment and penalty order because they were issued without granting the petitioner adequate time to respond to a show cause notice, violating principles of natural justice.

What did the court decide?

Exts.P7 (assessment order) and P8 (penalty notice) set aside; 1st respondent directed to pass fresh orders after granting reasonable opportunity of being heard.

Intergrow Brands Private Limited, Vs the… — Income Tax | Kerala HC (2022)

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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 MURALI PURUSHOTHAMAN

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TUESDAY, THE 11^TH DAY OF JANUARY 2022 / 21ST POUSHA, 1943

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WP(C) NO. 12052 OF 2021

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PETITIONER:

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INTERGROW BRANDS PRIVATE LIMITED, 62/1814A AJAY VIHAR, M.G. ROAD, ERNAKULAM-682016, REPRESENTED BY ITS MANAGING DIRECTOR, MR. ASHOK MANI.

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BY ADVS. JOSEPH MARKOSE (SR.) V.ABRAHAM MARKOS ABRAHAM JOSEPH MARKOS ISAAC THOMAS ALEXANDER JOSEPH MARKOS SHARAD JOSEPH KODANTHARA

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RESPONDENT/S:

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1 THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI-110001.

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2 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI-110001.

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3 ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(1), KOCHI-682018.

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4 THE PRINCIPAL COMMISSIONER OF INCOME TAX, KOCHI-682018.

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R BY JOSE JOSEPH, SC

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.01.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) NO. 12052 OF 2021 ..2..

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JUDGMENT

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The petitioner is a company, engaged in the

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manufacture of spices and spice extracts.

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For the assessment year 2018-19, the petitioner filed Ext.P2 return declaring net loss of Rs.16.72 crores. The return filed by the petitioner was taken up for scrutiny assessment by issuance of notice under Section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act' for short). However, the petitioner was later informed that the scrutiny assessment is being taken under the Faceless Assessment Scheme under Section 143(3A) before the 1^st respondent. According to the petitioner, the petitioner was issued with Ext.P4 show cause notice under Section 144B(xvi), asking the petitioner to show cause as to why the draft assessment therein shall not

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WP(C) NO. 12052 OF 2021 ..3..

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be finalised. 15 days time was granted to the petitioner to submit explanation to Ext.P4 show cause notice. The petitioner sought for additional 10 days time for submitting explanation vide Ext.P5 letter. However, without granting sufficient time as sought for in Ext.P5, the draft assessment in Ext.P4 was finalised by Ext.P7 assessment order. Ext.P7 was followed by Ext.P8 penalty under Section 274 of the Act. Exts.P7 and P8 orders are impugned in this writ petition. It is contended by the petitioner that Exts.P7 and P8 are issued in total violation of principles of natural justice.

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The learned Standing Counsel for the respondents submits that Ext.P8 is only a notice for penalty.

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Heard the learned senior counsel for the petitioner and Sri.Jose Joseph, the learned Standing Counsel for the Income Tax Department.

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WP(C) NO. 12052 OF 2021 ..4..

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It is true that the petitioner has got an alternate remedy by way of appeal under Section 246A of the Act. However, Ext.P7 order is evidently issued without giving reasonable opportunity to submit explanation to Ext.P4 show cause notice, in spite of the request for additional time sought for in Ext.P5. Since the petitioner was not granted adequate opportunity to submit explanation to the show cause notice, I find that there is violation of principles of natural justice in issuing Exts.P7 and P8 orders. Accordingly, Ext.P7 order is set aside and the 1^st respondent is directed to pass fresh orders of assessment after granting a reasonable opportunity of being heard after giving sufficient time to file objection to Ext.P4 show cause notice. The objections, if any to Ext.P4 show cause notice shall be filed by the petitioner within a period of

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WP(C) NO. 12052 OF 2021 ..5..

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15 days from the date on which the Department opens up the link for filing objections. Since Ext.P7 has been set aside, consequently, Ext.P8 notice for penalty will also stands set aside.

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The writ petition is allowed to the above extent.

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Sd/-

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MURALI PURUSHOTHAMAN JUDGE

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SB/11/01/2022

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WP(C) NO. 12052 OF 2021 ..6..

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APPENDIX OF WP(C) 12052/2021

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PETITIONER EXHIBITS

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Exhibit TRUE COPY OF THE ORDER DATED 28/05/2021 IN P1 WPC NO.11540/2021 PASSED BY THIS HONOURABLE COURT. Exhibit TRUE COPY OF THE RETURN ACKNOWLEDGMENT FOR P2 AY 2018-19 DATED 31/10/2018. Exhibit TRUE COPY OF NOTICE ISSUED UNDER SECION P3 142(1) DATED 24/12/2020. Exhibit TRUE COPY OF THE SHOW CAUSE NOTICE DATED P4 04/05/2021 ISSUED BY THE 1ST RESPONDENT. Exhibit TRUE COPY OF THE SCREENSHOT OF THE E- P5 PROCEEDINGS EVIDENCING SEEKING OF ENLARGEMENT OF TIME TO RESPOND TO SCN OBTAINED FROM THE INCOME TAX E-PROCEEDINGS PORTAL. Exhibit TRUE COPY OF THE SCREENSHOT OF THE E- P6 PROCEEDINGS EVIDENCING THE REASONS FOR SEEKING OF ENLARGEMENT OF TIME TO RESPOND TO SCN OBTAINED FROM THE INCOME TAX E- PROCEEDINGS PORTAL. Exhibit TRUE COPY OF THE ASSESSMENT ORDER DATED P7 27/05/2021 TOGETHER WITH COMPUTATION SHEET AND NOTICE OF DEMAND. Exhibit TRUE COPY OF THE PENALTY NOTICE UNDER P8 SECTION 274 OF THE ACT ISSUED BY THE 1ST RESPONDENT. Exhibit TRUE COPY OF THE JUDGMENT DATED 10/05/2021 P9 IN WPC NO.5234/2021 PASSED BY THE DELHI HIGH COURT AND REPORTED IN (2021) 127 TAXMANN.COM 194 (DELHI).

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WP(C) NO. 12052 OF 2021 ..7..

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Exhibit TRUE COPY OF THE JUDGMENT REPORTEDIN 1994 P10 KLJ TAX CASES 24 MS JEWELLERY VS. ASSISTANT COMMISSIONER (ASSESSMENT)

Intergrow Brands Private Limited, v. the Additional/Joint/Deputy/Assistant Commissioner of Income Tax

Case brief

What is this about?

What did the court decide?

Intergrow Brands Private Limited, v. the Additional/Joint/Deputy/Assistant Commissioner of Income Tax

Case brief

What is this about?

What did the court decide?

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