Kerala HC sets aside Assessment Order passed against Principles of Natural Justice [Read Order]

In a significant case the Kerala High Court set aside the Assessment order passed without following the  Principles of Natural Justice. The decision was rendered by the division bench of Dr. A.K. Jayasankaran Nambiar and Dr. Kauser Edappagath .

The Appellant, Wadakkanchery Service Co-Operative Bank Ltd is a Co-operative Society providing credit facilities to its members and is an assessee to income tax.

In this case the appellant filed income tax return with respect to the assessment year 2020-21 relevant to the financial year 2019- 2020. The appellant’s case was selected for scrutiny. Accordingly a show cause notice was issued directing him to file an objection before 9/9/2022.

According to the appellant, its office resumed functioning only on 12/9/2022, and by that time, the online functionality to file replies in the income tax portal had already closed. Therefore, the appellant filed a reply to the 1st respondent/jurisdictional assessing authority.

However, the Income Tax Officer 2nd respondent completed the assessment and passed the assessment order, creating a demand for `60,68,335/-.

Aggrieved by the assessment order the appellant filed appeal before the single bench. Although he dismissed the appeal. 

During the appeal proceedings the Division bench observed that the appellant filed a reply to the show cause notice appellant had not only pointed out its objections to the facts stated in show cause notice but also requested an opportunity for a personal hearing through video conferencing.

In the reply notice the appellant has given a detailed bifurcation of the miscellaneous income of Rs. 1,30,67,114/- and claimed for deduction under Section 80P of the Income Tax Act.

Even though the appellant could not file a reply to SCN through online mode. But the fact remains that he gave a reply directly to the 1st respondent on 14/9/2022. Thereafter he passed the assessment order on 23/9/2022. Further it was observed that the respondent received the reply notice well in advance, he did not consider the same at all while passing the assessment order.

Accordingly the bench noted that there is a clear violation of principles of natural justice.

Hence, the bench quashed the assessment order.

Harisankar V. Menon, Counsel appeared for Appellant  and Jose Joseph appeared for the respondent.

To Read the full text of the Order CLICK HERE

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