Wp(C)/10359/2024 Of Thomas John Muthoot v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THURSDAY, THE 14 DAY OF MARCH 2024 / 24TH PHALGUNA, 1945 WP(C) NO. 10359 OF 2024 PETITIONER/S: THOMAS JOHN MUTHOOT,AGED 60 YEARSS/O MATHEW M THOMAS, MUTHOOT HOUSE, KOZHENCHERRY, PATHANAMTHITTA, PIN - 689641 BY ADVS.G.HARIKUMAR (GOPINATHAN NAIR)AKHIL SURESH RESPONDENT/S: 1THE COMMISSIONER OF INCOME TAX, (APPEALS)- III POORNIMA, 28/243, NEAR MANORAMA JUNCTION, PANAMPILLY NAGAR, KOCHI, PIN - 682036 2DEPUTY COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE, AYAKAR BHAVAN, KOWDIAR P O, TRIVANDRUM, PIN - 695003 OTHER PRESENT: SUSIE B. VARGHESE-SR.SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON14.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T The petitioner has approached this Court challenging Ext.P12 order issued by the Commissioner ofIncome Tax (Appeals)-III dated 31.10.2023 on a shortground. According to the petitioner, the Commissioner ofIncome Tax (Appeals) had issued Ext.P10 notice requiringthe petitioner to produce before him bank accountstatements for the financial years 2013-14 to 2019-20before the next date of hearing. It is submitted thatExt.P10 notice will show that the date of notice is12.10.2023, and the next date of hearing was fixed as17.10.2023. It is submitted that since the detailsrequested were voluminous and required the collection ofdata from various bank accounts across the country, theauthorized representative of the petitioner filed Ext.P11request seeking two weeks’ time for compiling the bankstatements and for producing it before the Commissioner of Income Tax (Appeals). It is submitted that, withoutgiving any reply to Ext.P11 request (either accepting therequest or rejecting it), the Commissioner of Income Tax(Appeals) proceeded to pass Ext.P12 order on 31.10.2023.It is submitted that the documents were crucial for theadjudication of the issues, and the documents are nowreadily available with the petitioner. It is submitted thatthe petitioner may be permitted to produce thedocuments before the Commissioner of Income Tax(Appeals), and thereafter, fresh orders may be passed bythe Commissioner of Income Tax (Appeals) after affordingan opportunity of hearing to the petitioner or hisauthorized representative. 2.Sri.P.S.Raman, the learned senior counselappearing for the petitioner, on the instructions ofSri.G.Harikumar, would reiterate the contentions taken inthe writ petition and submit that since this is a casewhere the petitioner is alleging denial of natural justice,the petitioner is well within his rights to challenge Ext.P12 order under Article 226 of the Constitution ofIndia notwithstanding the availability of any alternateremedy. 3.Smt.Susy B Varghese, the learned seniorStanding Counsel appearing for the Income TaxDepartment, would vehemently oppose the grant of anyrelief to the petitioner. It is pointed out from Ext.P12order that several opportunities were extended to thepetitioner both at theappellate stage and in the remandproceedings referred to in Ext.P12 order. It is submittedthat the petitioner had purposefully failed to produce thenecessary documents. Therefore, the petitioner cannotnow contend that Ext.P12 order was issued withoutaffording proper opportunity to the petitioner to producethe documents before the Appellate Authority. Specificreference is made to the findings in paragraph 4.5 ofExt.P12 order to show that, despite all opportunities, thepetitioner had failed to produce the documents before theCommissioner of Income Tax (Appeals). It is submitted that if the petitioner is in any manner aggrieved byExt.P12 order, it is for the petitioner to avail statutoryremedies, and a writ petition under Article 226 of theConstitution of India is not maintainable before thisCourt. It is submitted that the matter involves asubstantial revenue impact. 4.Having heard the learned senior counselappearing for the petitioner and the learned seniorStanding Counsel appearing for the Income TaxDepartment, I am of the view that the petitioner isentitled to succeed. Paragraphs 4.3, 4.4 and 4.5 ofExt.P12 order read as follows; “4.3Since the assessment in this case is beingdone in the capacity of the assesse as “individual”,it is the responsibility of the appellant to furnish thedetails of bank accounts held by him in his personalcapacity and to furnish the details of credits in itwith satisfactory explanation. Further, in order toverify the availability of funds from advance ofproperty and sale of property from FY 2016-17onwards, verification of bank account balance isnecessary. The appellant was given one moreopportunity to reconcile the closing balances with the cash at bank, cash in hand deposits andinvestments in personal capacity, vide notice dated06.02.2023. 4.4 In response appellant furnished reply on09.02.2023, in which the bifurcation of Cash atbank, cash in hand, deposits and investments inpersonal capacity were furnished for FY 2019-20only, by which the availability of funds forintroduction of capital fund during the FY 2019-20is not verifiable. Another opportunity to furnish thebreak up of the same for all the AYs from 2015-16was granted to the appellant on 14.02.2023. Thesame was furnished on 17.02 2023. 4.5The appellant was also required to producethe bank account statements to prove that funds ofadvance for sale of property, sale proceeds anddividends were available from bank accounts fortransfer to current account. However, appellantsubmitted only the certificates from the banksshowing the closing balances for each year. Thus,by not submitting the account statements for therespective FYs showing that these funds weredeposited in these bank accounts, failed to provethat these funds were available for transfer to thecurrent account.” It is clear from a reading of the aforesaid paragraphs ofExt.P12 order that in response to a notice dated06.02.2023, the petitioner had furnished replies along with documents on 09.02.2023. In reply to a furthernotice issued on 14.02.2023, replies were furnished on17.02.2023. It is seen from Ext.P10 notice that thepetitioner was required to produce bank accountstatements in respect of all bank accounts maintained byhim from the financial year 2013-14 to the financial year2019-20 on or before 17.10.2023. It is not discerniblefrom Ext.P12 whether there was any earlier demand bythe authorities for the production of bank accountstatements for the period from 2013-14 to 2019-20.Moreover, from a reading of paragraphs 4.3 and 4.4 ofExt.P12 order, it appears that the petitioner had co-operated with the demands for the production ofdocuments. That apart, even if it assumed for a momentthat the petitioner had not availed opportunities given tohim at the appellate stage and in the remandproceedings, it must be noted that the AppellateAuthority had itself decided to grant a further opportunityto the petitioner to produce the bank account statements by issuing Ext.P10 notice on 12.10.2023. The petitionerhad sought for two weeks’ time to produce thosedocuments. However, without favouring the petitionerwith any reply, either rejecting or accepting the requestmade in Ext.P11, the Appellate Authority proceeded topass Ext.P12 order. This, in my view, is a violation ofprinciples of natural justice. by issuing Ext.P10 notice on 12.10.2023. The petitionerhad sought for two weeks’ time to produce thosedocuments. However, without favouring the petitionerwith any reply, either rejecting or accepting the requestmade in Ext.P11, the Appellate Authority proceeded topass Ext.P12 order. This, in my view, is a violation ofprinciples of natural justice. 5.However, taking into consideration thesubmission of the learned senior Standing Counselappearing for the Income Tax Department that therevenue impact is considerable and also taking intoaccount the fact that the proceedings have been pendingfor quite some time, I of the opinion that the petitionermust be required to produce all documents that he wishesto rely upon before the Appellate Authority within aspecified date. In the light of the aforesaid findings, this writpetition is allowed by setting aside Ext.P12 order anddirecting that the petitioner be given time till 26.03.2024 to produce all documents that he wishes to rely upon,including the documents specified in Ext.P10 noticebefore the Appellate Authority. Thereafter, the AppellateAuthority shall pass fresh orders after affording to thepetitioner an opportunity to be heard. I make it clear thatI have not expressed any opinion on the merits of thematter and that it will be open to the Appellate Authorityto pass fresh orders in accordance with the law afteraffording an opportunity of hearing to the petitioner, asaforesaid. The writ petition is ordered accordingly. rkj Sd/- GOPINATH P., JUDGE APPENDIX OF WP(C) 10359/2024