In a recent case, the Kerala High Court set aside the income tax order against Kerala Minerals and Metals as the department failed to give the opportunity of a hearing while passing the order.
Kerala Minerals and Metals Limited, the petitioner, is a wholly owned Government company engaged in the business of extraction of minerals and manufacture of titanium dioxide and other products. Petitioner is also an assessee under the Income Tax Act, 1961 (the Act). For the assessment years 2014-15, 2016-17, 2017-18 and 2018-19, the returns of the petitioner were selected for scrutiny and the assessments were completed after disallowing certain claims.
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Challenging the orders of assessment, petitioner filed separate appeals before the 3rd respondent. Pursuant to notices issued under Section 250 of the Act, petitioner filed its respective submissions, wherein a specific request for personal hearing was sought in each of the appeals. However, without granting an opportunity of hearing, the appeals were dismissed by orders. In one of the appeals relating to 201617 which is produced, the appeal was dismissed for the reason that the assessment order had not been produced along with the memorandum of appeal. Other appeals were dismissed on merits.
Aggrieved by the aforesaid orders of the Appellate Authority, petitioner has approached the Court under Article 226 of the Constitution of India mainly alleging violation of principle of natural justice.
The appeal as relating to the year 2016-17 dismissed as the Appellate Authority noticed that the assessment order was not produced along with the said appeal.However, it is not evident that, at the time of filing the appeal, any defect was noticed by the Appellate Authority regarding the absence of an assessment order.
In fact, if there was any omission to produce the assessment order along with the appeal, certainly, the Appellate Authority ought to have noticed the said defect and given an opportunity to the appellant to produce the copy. Having not done so, it has to be assumed that the appeal in respect of the assessment year 2016-17 was filed properly along with the copy of the assessment order. Therefore the finding of the Appellate Authority that the appeal was filed without an assessment order cannot be accepted at this belated stage.
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The order of the Appellate Authority as relating to 2016-17 has not considered the issue on merits. A Single bench of Justice Bechu Kurian Thomas viewed that the petitioner cannot be put to prejudice at such a belated stage pointing out the absence of the assessment order especially in the absence of an omission to notice it at the point of first instance.
A glance at the impugned orders reveal that there is no reference, as rightly pointed out by the Senior counsel for the petitioner, to any opportunity of hearing having been granted. Undoubtedly, submissions referred to in the impugned orders indicate only written submissions in contradistinction to actual hearing. In such circumstances, the court found that the impugned orders have been issued in violation of the principles of natural justice, entitling the petitioner to invoke the jurisdiction under Article 226 of the Constitution of India. The bench set aside the orders and the 3rd respondent Appellate Authority shall hear the matter afresh and pass appropriate orders in accordance with law, after granting an opportunity of hearing to the petitioner, as expeditiously as possible.
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