The Kerala High Court quashed the order rejecting Tee Cee Trading Company’s claim in view of not being substantiated with proper evidence and due to lack of time.
The petitioner, IY Tee Cee Trading Company is a partnership firm, had applied for, and was issued a PAN, which reflected its status as a company. The petitioner being a firm could not have been issued with the PAN showing its status as a company. But the petitioner firm did not notice this discrepancy till much later, in the year 2005. Immediately thereafter, it applied for and was issued a fresh PAN showing its status as a firm.
The basic issue that comes up for consideration is as to whether the petitioner firm had correctly accounted for the deposits made in its account.
The order of the assessing officer stated that the claims made by the petitioner could not be accepted in view of the same not being substantiated with proper evidence and due to paucity of time. While it may be a fact that the assessing authority was limited by time constraints, in view of the statutory provisions mandating the completion of assessments within a particular time.
However, the High court said that the reasons such as lack of proper evidence or due to paucity of time cannot be cited as a reason for abdicating his role as an adjudicating authority in tax assessment.
The Single judge bench of Justice A.K. Jayshankaran Nambiar held that the assessee cannot be prejudiced on account of the delay occasioned by the department in passing assessment orders, and the hasty manner in which an assessment order is passed without considering the material produced by an assessee, cannot be justified on the ground that the time limit for finalising assessment was nearing expiry.
Therefore, the court directed the respondent authority to redo the assessment in relation to the petitioner by considering the materials produced by the petitioner to justify his contentions on merit, and referring to the said material while passing final orders of assessment for the assessment year in question. The respondent authority shall finalise the assessment of the petitioner for the assessment year in question within 4 months.
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