Wp(C)/11540/2021 Of Eastern Mattresses (P) Ltd v. The Additional/Joint/Deputy/Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 15 DAY OF MARCH 2022 / 24TH PHALGUNA, 1943WP(C) NO. 11540 OF 2021 PETITIONER: EASTERN MATTRESSES (P) LTD.III,33 AND 34, PUTHUPARIYARAM POST, THODUPUZHA 685 584 REP. BY ITS DIRECTOR, MS. SHEERAN NAVAS. BY ADVS.JOSEPH MARKOSE (SR.)V.ABRAHAM MARKOSABRAHAM JOSEPH MARKOSISAAC THOMASALEXANDER JOSEPH MARKOSSHARAD JOSEPH KODANTHARA RESPONDENTS: 1THE ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTRE, NEW DELHI 110 001 2THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAXNATIONAL E-ASSESSMENT CENTRE, NEW DELHI 110 001. 3INCOME TAX OFFICERCORPORATE WARD -1(2),KOCHI 682 018 4THE PRINCIPAL COMMISSIONER OF INCOME TAX KOCHI 682 018. BY ADV SRI. JOSE JOSEPH, STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON15.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: BECHU KURIAN THOMAS, J. =========================== W.P.(C) No.11540 of 2021 ============================ Dated this the 15[th] day of March, 2022 JUDGMENT Alleging that an assessment order, dated 24.04.2021, was issued against the petitioner, without complying with the principles of natural justice, petitioner has approached this Court,invoking the jurisdiction under Article 226 of the Constitution ofIndia. 2. For the assessment year 2018-19, petitioner had declared a net loss of Rs.6.20 crores through its return. The return of the petitioner was selected for scrutiny and later, therespondents informed the petitioner that the assessment will becompleted through the Faceless Assessment Scheme. 3.Petitioner was issued with notices calling for information which were all promptly responded to. Thereafter, petitioner was served with a show cause notice, dated 16.04.2021as per Section 144B (xvi) of the Income Tax Act, 1961, seeking itsobjection as to why an order of assessment should not becompleted, as per the draft assessment. The said notice grantedhim seven days time to respond-(by 11:59 p.m. on 23.04.2021) 4.Immediately, on receipt of the proposal for completingthe assessment based upon the draft assessment order, petitionersought for a breathing time to respond and requested for a furtherfour days time, as per communication dated 23.04.2021,evidenced by Ext.P7. Petitioner sought for an extended time tosubmit its response, specifying the reason as “gathering ofmaterial from multiple sources requires time.” According to thelearned Senior Counsel Shri.Joseph Markos, though petitionerexpected a communication from the respondents, either grantingtime or atleast rejecting it, contrary to its expectations, therespondents proceeded with and issued an order of assessment on24.04.2021, after observing that petitioner had not responded to the show cause notice. According to the petitioner, the opportunity contemplated under Section 144B(1)(vii) and Section144B(1)(xxii), of the Income Tax Act, 1961 was not granted and therefore, the impugned order of assessment is contrary to law. 5.Shri. Jose Joseph, learned counsel for the respondentssubmitted that sufficient time was granted and that even thoughthe petitioner had sought time, as per Ext.P7, the petitioner wasbound to appear on 24.04.2021 for hearing. According to thelearned counsel, without appearing for the hearing, the petitioneris not entitled to raise the contention on violation of theprinciples of natural justice. 6. The Faceless Assessment Scheme, though intends to lend transparency to the process of assessments and eliminatephysical interface between the assessee and the tax officer, itensures a reasonable opportunity to respond to notices. 7.Section 144B(1)(vii) and Section 144B(1)(xxii) arerelevant for the present and are extracted as below:- 5.Shri. Jose Joseph, learned counsel for the respondentssubmitted that sufficient time was granted and that even thoughthe petitioner had sought time, as per Ext.P7, the petitioner wasbound to appear on 24.04.2021 for hearing. According to thelearned counsel, without appearing for the hearing, the petitioneris not entitled to raise the contention on violation of theprinciples of natural justice. 6. The Faceless Assessment Scheme, though intends to lend transparency to the process of assessments and eliminatephysical interface between the assessee and the tax officer, itensures a reasonable opportunity to respond to notices. 7.Section 144B(1)(vii) and Section 144B(1)(xxii) arerelevant for the present and are extracted as below:- “144B(1)(vii) the assessee or any other person, as thecase may be, shall file his response to the noticereferred to in clause (vi) within the time specifiedtherein or such time as may be extended on the basisof an application in this regard to the NationalFaceless Assessment Centre” (xxii) the assessee may, in a case where show causenotice has been served upon him as per the procedurelaid down in sub-clause (b) of Clause (xvi) furnish hisresponse to the National Faceless Assessment Centre onor before the date and time specified in the notice orwith the extended time, if any; 8.The statute thus contemplates an application forextension of time and even the grant of extended time to furnisha response. Thus when the petitioner sought for a further fourdays time to respond, citing the reason to gather necessarymaterials from different sources, the assessing officer was bound to give a response, intimating either the rejection or itsacceptance of request for time. Such a response is part of thebasic requirements of the principles of natural justice. Whenthere was a lack of response, it is only probable that the petitioner would have expected his request for adjournment having been accepted. Therefore, the assessing officer ought notto have proceeded with the assessment on 24.04.2021, asoriginally mentioned. In view of the above, there is a clearevidence of violation of principles of natural justice and hence,Ext.P8 is liable to be set aside on this count alone. 9.Notwithstanding the setting aside of Ext.P8, therespondents must be granted an opportunity to pass fresh ordersof assessment and accordingly, there will be a direction to therespondents to accept objections to Ext.P6 show cause notice, ifany filed by the petitioner within a period of thirty days from thedate on which the respondents open up a link for filingobjections, since, presently, the Faceless Assessment regime is inplace. If such an objection is filed by the petitioner within thetime stipulated above, respondents shall, necessarily, consider thesame and pass appropriate orders, after granting an opportunity ofhearing to the petitioner, as expeditiously as possible, at any rate, ssa/ within a period of two months from the date of opening of the link to file the objections as mentioned. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE APPENDIX OF WP(C) 11540/2021 PETITIONER’S EXHIBITS Exhibit P1TRUE COPY OF THE RETURN ACKNOWLEGMENT FOR AY 2018-19 DATED 31.10.20182018-19 DATED 31.10.2018 Exhibit P2TRUE COPY OF THE NOTICE DATED 28.9.2019 ISSUED BY THE 1ST RESPONDENT TO THE PETITONERFOR AY 2018-19ISSUED BY THE 1ST RESPONDENT TO THE PETITONERFOR AY 2018-19 Exhibit P3TRUE COPY OF THE NOTICE DATED 3.2.2020 ISSUEDBY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19BY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19Exhibit P4TRUE COPY OF THE NOTICE DATED 6.5.2020 ISSUEDBY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19BY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19 link to file the objections as mentioned. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE APPENDIX OF WP(C) 11540/2021 PETITIONER’S EXHIBITS Exhibit P1TRUE COPY OF THE RETURN ACKNOWLEGMENT FOR AY 2018-19 DATED 31.10.20182018-19 DATED 31.10.2018 Exhibit P2TRUE COPY OF THE NOTICE DATED 28.9.2019 ISSUED BY THE 1ST RESPONDENT TO THE PETITONERFOR AY 2018-19ISSUED BY THE 1ST RESPONDENT TO THE PETITONERFOR AY 2018-19 Exhibit P3TRUE COPY OF THE NOTICE DATED 3.2.2020 ISSUEDBY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19BY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19Exhibit P4TRUE COPY OF THE NOTICE DATED 6.5.2020 ISSUEDBY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19BY THE 1ST RESPONDENT TO THE PETITONER FOR AY2018-19 Exhibit P5TRUE COPY OF THE RESPONSE ACKNOWLEGMENT DATED1.6.20201.6.2020Exhibit P6TRUE COPY OF THE SHOW CAUSE NOTICE DATED 16.4.2021 ISSUED BY THE 1ST RESPONDENT TO THEPETITIONER FOR AY 2018-1916.4.2021 ISSUED BY THE 1ST RESPONDENT TO THEPETITIONER FOR AY 2018-19 Exhibit P7TRUE COPY OF THE SCREEN SHOT OF THE E-PROCEEDINGS.PROCEEDINGS.Exhibit P8TRUE COPY OF THE ASSESSMENT ORDER DATED 24.4.2021 ISSUED BY THE 1ST RESPONDENT TO THEPETITIONER FOR AY 2018-19 ALONGWITH COMPUTATION SHEET AND NOTICE OF DEMAND.24.4.2021 ISSUED BY THE 1ST RESPONDENT TO THEPETITIONER FOR AY 2018-19 ALONGWITH COMPUTATION SHEET AND NOTICE OF DEMAND. Exhibit P9TRUE COPY OF THE JUDGMENT DATED 10.5.2021 IN W.P.(C) NO.5234 OF 2021 PASSED BY THE DELHI HIGH COURT AND REPORTED IN (2021) 127 TAXMANN.COM 194 (DELHI)W.P.(C) NO.5234 OF 2021 PASSED BY THE DELHI HIGH COURT AND REPORTED IN (2021) 127 TAXMANN.COM 194 (DELHI) Exhibit P10TRUE COPY OF THE JUDGMENT REPORTED IN 1994 KLJ TAX CASES 24-M S JEWELLERY VS. ASSISTANT COMMISSIONER (ASSESSMENT).KLJ TAX CASES 24-M S JEWELLERY VS. ASSISTANT COMMISSIONER (ASSESSMENT).