Wp(C)/11960/2021 Of Anavilasam Service Co-Operative Bank Limited v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 1 DAY OF OCTOBER 2021 / 9TH ASWINA, 1943WP(C) NO. 11960 OF 2021 PETITIONER: ANAVILASAM SERVICE CO-OPERATIVE BANK LIMITEDNO.1182, ANAVILASAM SCB BUILDING, ANAVILASAM P.O., MURICKADY, KUMILY, KERALA-685 535, REPRESENTED BY ITS SECRETARY, INDIRA. BY ADVS.ANIL D. NAIRR.SREEJITHTELMA RAJUSANGEETH JOSEPH JACOBCHRISTINA ANNA PAUL RESPONDENT: THE ASSISTANT COMMISSIONER OF INCOME TAXNATIONAL E-ASSESSMENT CENTRE, DELHI-110 003. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON01.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: BECHU KURIAN THOMAS, J. ---------------------------------------- W.P.(C)No. 11960 of 2021 ---------------------------------------- Dated this the 1[st] day of October, 2021 JUDGMENT Petitioner is a primary agricultural credit society. As anassessee, petitioner had filed its return for the assessmentyear 2018-19 and claimed deduction under section 80P of theIncome Tax Act, 1961 (for short ‘the Act’). Though petitionerwas served with notices under section 142(1) of the Act andappropriate replies were filed to such notices, it is nowcomplained that the reply filed by the petitioner was not evenreferred to, while passing the order of assessment. Petitionerfurther contends that though an appeal is available undersection 246A of the Act, failure to consider the replysubmitted by the petitioner amounts to violation of theprinciples of natural justice. It is also contended that had thereply of the petitioner been considered, the nature of theassessment order could have been different. 2. A statement has been filed on behalf of the respondent stating that the assessment proceedings wereinitiated by issue of Ext.P1 notice under section 143(2) of theAct, which was followed by a notice under section 142(1),which is produced as Ext.P3, in which several queries wereraised and clarifications sought for, to which the assesseeoffered clarifications by Ext.P4. Another notice under section142(1) of the Act was issued to the petitioner, which wasresponded to by Ext.P6 letter which was yet again followed byExt.P7 notice under section 142(1) seeking furtherexplanation on the deduction claimed under section 80P(2)(d)of the Act. Respondent has also mentioned in the statementthat the assessee had responded to the aforesaid notice byExt.P8 letter and attempted to justify the claim of deductionby producing a copy of the certificate from the Registrar ofCo-operative Societies. According to the respondent, it isthereafter that the draft assessment order was issued wherethe disallowance of the claim under section 80P(2)(d) of theAct was proposed as per Ext.P9 to which Ext.P10 objectionwas filed by the assessee. It was after all these procedures that the assessing officer finalised the assessment order byissuing Ext.P11 wherein the claim under section 80P(2)(d) ofthe Act was disallowed. 3. I have heard the arguments of Adv.Anil D. Nair, the learned counsel for the petitioner as well as Adv. ChristopherAbraham, the learned Standing Counsel for the respondent. 4. As rightly argued by the learned Standing Counsel forthe respondent, this Court will not interfere normally underArticle 226 of the Constitution of India on orders ofassessment issued by the assessing authorities. It is equallysettled that when there is a violation of the principles ofnatural justice, this Court can step in, even againstassessment orders, to avoid the unnecessary travails of anassessee, in pursuing the statutory remedies. 5. In the instant case, Ext.P9 show cause notice was 3. I have heard the arguments of Adv.Anil D. Nair, the learned counsel for the petitioner as well as Adv. ChristopherAbraham, the learned Standing Counsel for the respondent. 4. As rightly argued by the learned Standing Counsel forthe respondent, this Court will not interfere normally underArticle 226 of the Constitution of India on orders ofassessment issued by the assessing authorities. It is equallysettled that when there is a violation of the principles ofnatural justice, this Court can step in, even againstassessment orders, to avoid the unnecessary travails of anassessee, in pursuing the statutory remedies. 5. In the instant case, Ext.P9 show cause notice was issued on 22.03.2021 directing the petitioner to show causeas to why the assessment should not be completed as per thedraft assessment order. The response of the petitioner wasalso sought for in the said show-cause notice. Petitioner’s response to Ext.P9 is produced as Ext.P10, wherein it hasraised an objection of some substance, however brief it maybe. Certain documents were also produced along withExt.P10. However, while issuing the order of assessment, it isseen that there is no reference at all to the responsesubmitted by the petitioner nor is there any consideration ofthe document produced along with Ext.P10. Whether thecontentions raised by the petitioner in Ext.P10 or whether thedocument produced along with Ext.P10 may have a bearingupon the case is not a matter which this Court can go into atthis stage. An order of assessment is the foundation onwhich the rights of the assessee depend upon. It isnecessary that the assessing authority considers theobjections filed by the petitioner especially when a show-cause notice in the form of Ext.P9 had been issued, elicitingthe response of the petitioner. Failure to consider the saidresponse offered by the petitioner in the facts of the case is anegation of the rights of natural justice. In the said view ofthe matter, I find that the order of assessment suffers from the infirmity of violation of the principles of natural justiceand is liable to be set aside. Accordingly, I set aside Ext.P11 assessment order dated 19-04-2021 issued by the respondent and direct therespondent to consider and pass fresh orders for theassessment year 2018-19, relating to the petitioner, afteraffording an opportunity of hearing to the petitioner, asexpeditiously as possible, and untrammelled by any of theobservations of this Court in this judgment. The decision asaforesaid shall be taken within an outer time limit of 60 daysfrom today. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMASJUDGE APPENDIX OF WP(C) 11960/2021 PETITIONER EXHIBITS Exhibit P1Exhibit P2 TRUE COPY OF NOTICE DATED 22.09.2019.TRUE COPY OF THE REPLY TO THE NOTICE DATED 07.10.2019. Exhibit P3Exhibit P4Exhibit P5Exhibit P6Exhibit P7Exhibit P8Exhibit P9Exhibit P10Exhibit P11Exhibit P12 TRUE COPY OF NOTICE DATED 01.12.2020.TRUE COPY OF THE REPLY TO THE NOTICE DATED 15.12.2020. TRUE COPY OF NOTICE DATED 16.02.2021.TRUE COPY OF THE REPLY TO THE NOTICE DATED 01.03.2021. TRUE COPY OF NOTICE DATED 08.03.2021.TRUE COPY OF THE REPLY TO THE NOTICE DATED 13.03.2021 ALONG WITH THE CERTIFICATES. TRUE COPY OF NOTICE DATED 22.03.2021. TRUE COPY OF THE REPLY TO THE NOTICE 26.03.2021. TRUE COPY OF THE ORDER DATED 19.04.2021. TRUE COPY OF THE JUDGMENT OF THE HON'BLE SUPREME COURT DATED 12.01.2021.