Wp(C)/24140/2021 Of Safferulla Ellyasu Kunju v. Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 5 DAY OF NOVEMBER 2021 / 14TH KARTHIKA, 1943 WP(C) NO. 24140 OF 2021 PETITIONER: SAFFERULLA ELLYASU KUNJU, KARUVATTUMADOM HOUSE, PULIYOORAVANCH NORTH, KOLLAM, KERALA-690 539. BY ADV.ANIL D. NAIRADV.TELMA RAJUADV.SANGEETH JOSEPH JACOBADV.CHRISTINA ANNA PAULADV.EDATHARA VINEETA KRISHNANADV.ARAVIND SREEKUMAR RESPONDENTS: 1INCOME TAX OFFICER,NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI-110 003. 2PRINCIPAL COMMISSIONER OF INCOME TAX, NATIONAL FACELESS ASSESSMENT CENTRE, NEW DELHI-110 003. ADV.CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FORADMISSION ON 05.11.2021, THE COURT ON THE SAME DAYDELIVERED THE FOLLOWING: BECHU KURIAN THOMAS, J.-------------------------------------- W.P.(C) No.24140 of 2021 -------------------------------------- Dated this the 5[th] day of November, 2021 JUDGMENT Petitioner is an assessee under the Income Tax Act, 1961 (for short 'the Act'). For the assessment year 2016-17, petitioner hadfiled his returns on 17.10.2016, and the assessment was completedby order dated 24.12.2018. However, the assessment order was setaside by the Commissioner of Income Tax in exercise of the powersunder section 263 of the Act. Subsequently, petitioner was servedwith a notice under section 142(1) of the Act on 14.09.2021 to whicha reply was given on 23.09.2021. Thereafter a show-cause noticewas issued on 27.09.2021 directing the petitioner to furnishexplanation if any by 23.59 hours on 28.09.2021. Though this Courthas been repeatedly noticing the short periods granted by theIncome Tax department to assessees to submit their replies, in theinstant case, petitioner by an exhaustive reply dated 28.09.2021,answered the show-cause notice. Having regard to the period oflimitation staring against the proceedings, the assessing officer by W.P.(C) No.24140/21 Ext.P7 order dated 29.09.2021 issued an assessment order. In short, within a period of three days, show-cause, reply and theassessment order were all issued and completed. 2. Petitioner complains against the assessment order on two grounds; (i) sufficient period of time was not granted to give a properreply for the show-cause notice and (ii) even though petitioner hadfiled a reply, the same was not considered, thereby violating theprinciples of natural justice. 3. I have heard Adv.Anil D Nair, learned counsel for thepetitioner as well as Adv.Christopher Abraham, learned StandingCounsel for the respondents. 4. Petitioner had replied to the show-cause notice issued on 27.09.2021, and that too, in an exhaustive manner, I am of the viewthat the contention raised by the petitioner regarding absence ofsufficient time with respect to the show-cause notice has no basis onthe facts of the case, since, even within the limited period, petitionerhad furnished his reply. 5. However, I find merit in the contention raised by thepetitioner regarding non-consideration of the explanation submitted.As mentioned earlier, an exhaustive reply was submitted by the W.P.(C) No.24140/21 -:4:- petitioner within the limited time available to him. The replysubmitted by the petitioner is produced as Ext.P5 which runs intoseveral pages. Unfortunately, while considering the reply, theassessing officer has discarded the explanation offered by thepetitioner in one sentence as follows:- 'On perusal of the same it was(sic) observed that assessee is not able to produce any documentaryevidence which may prove his claim beyond doubt to the satisfactionof the assessing officer”. 5. However, I find merit in the contention raised by thepetitioner regarding non-consideration of the explanation submitted.As mentioned earlier, an exhaustive reply was submitted by the W.P.(C) No.24140/21 -:4:- petitioner within the limited time available to him. The replysubmitted by the petitioner is produced as Ext.P5 which runs intoseveral pages. Unfortunately, while considering the reply, theassessing officer has discarded the explanation offered by thepetitioner in one sentence as follows:- 'On perusal of the same it was(sic) observed that assessee is not able to produce any documentaryevidence which may prove his claim beyond doubt to the satisfactionof the assessing officer”. 6. There is a clear indication of non-application of mind in theabove quoted observation. An opportunity for filing an explanation tothe show cause through a notice has a purpose. The contentionsraised by the assessee will have to be considered by the assessingofficer and either accepted or rejected the same with reasons.Reasons being the soul of every decision, absence of reasonsindicates clear non-application of mind thereby rendering the ordersusceptible for challenge on grounds of violation of natural justice.The necessity to consider the objections raised by the assessees isall the more significant at the stage of assessment, since it is one ofthe edifices on which the right or obligation of an assesseecommences. W.P.(C) No.24140/21 7. On a consideration of the assessment order Ext.P7, I find that the same is vitiated on account of violation of the principles ofnatural justice due to clear non-application of mind. Accordingly thesame is set aside. The assessing officer is directed to consider theexplanation offered by the petitioner and pass fresh orders ofassessment, within a period of three months from the date of receiptof a copy of this judgment, after issuing notice of hearing to thepetitioner. 8. Since the assessment order is set aside, consequentlyExt.P8 and Ext.P9 notices for penalty shall also stand set aside. The writ petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE vps -:6:- APPENDIX OF WP(C) 24140/2021 PETITIONER'S/S' EXHIBITS EXHIBIT P1TRUE COPY OF THE ASSESSMENT ORDER DATED24.12.2019 ALONG WITH THE COMPUTATIONSHEET.24.12.2019 ALONG WITH THE COMPUTATIONSHEET. EXHIBIT P2 TRUE COPY OF THE NOTICE DATED14.09.2021.14.09.2021. EXHIBIT P3TRUE COPY OF THE REPLY DATED 23.09.2021ALONG WITH ANNEXURES.ALONG WITH ANNEXURES. EXHIBIT P4 TRUE COPY OF THE SHOW CAUSE NOTICE DATED27.09.2021.27.09.2021. EXHIBIT P5 TRUE COPY OF THE LETTER DATED 28.09.2021ALONG WITH ANNEURES. ALONG WITH ANNEURES. EXHIBIT P6 ACKNOWLEDGEMENT OF HAVING FILED LETTERDATED 28.09.2021.DATED 28.09.2021. EXHIBIT P7 TRUE COPY OF THE ORDER DATED 29.09.2021. EXHIBIT P8 TRUE COPY OF NOTICE OF PENALTY UNDERSECTION 274 READ WITH SECTION 271(1)(C).SECTION 274 READ WITH SECTION 271(1)(C). EXHIBIT P9 TRUE COPY OF NOTICE FOR PENALTY UNDERSECTION 274 READ WITH SECTION 271D. EXHIBIT P10 TRUE COPY OF REPLY FILED TO NOTICE FORPENALTY UNDER SECTION 274 READ WITHSECTION 271(1)(C) ON 21.10.2021.PENALTY UNDER SECTION 274 READ WITHSECTION 271(1)(C) ON 21.10.2021. EXHIBIT P11 TRUE COPY OF REPLY FILED TO NOTICE FORPENALTY UNDER SECTION 274 READ WITHSECTION 271(1)D ON 21.10.2021.PENALTY UNDER SECTION 274 READ WITHSECTION 271(1)D ON 21.10.2021.