No Date for Hearing fixed after Service of SCN: Kerala HC quashes Penalty Proceedings under Income Tax Act [Read Order]

The Kerala High Court quashed the penalty proceedings under the Income Tax Act, 1961 as no date for hearing was fixed after service of the show cause notice (SCN).

The writ petition has been filed impugning order dated 8.6.2023 passed under Section 270A of the Income Tax Act, 1961 in respect of the assessment year 2021-22. The assessment with respect to the petitioner was finalised by adding Rs.8,37,97,401/- to the returned income of the petitioner for the assessment year under consideration. It was found that since the said amount was detected during the course of scrutiny assessment proceedings, penalty proceedings under Section 270A of the Income Tax Act were to be initiated for under-reporting of income in consequence of misreporting of income.

The petitioner has not challenged the assessment order and is only aggrieved by the penalty order passed under Section 270A of the Income Tax Act. The petitioner was issued show cause notice dated 9.12.2022, for filing its reply by 31.12.2022.

In response to the said notice, the petitioner filedits response on 30.12.2022 and requested for adjournment. Thereafter, another show cause notice was served on 6.4.2023 asking the petitioner as to why penalty under Section 270A of the Income Tax Act for under-reporting of income in consequence of misreporting should not be levied. In response to the said notice, the assessee filed its reply on 12.4.2023 by attaching some judgments passed by the Income Tax Appellate Tribunal.

A Single Judge Bench of Justice Dinesh Kumar Singh observed that “it is evident that no date for hearing was fixed, that after service of the show cause notice dated 6.4.2023 on the petitioner and filing of its reply dated 12.4.2023 to the said show cause notice, the impugned order came to be passed on 8.6.2023.”

“This Court is of the view that since the order impugned has been passed in violation of the principles of natural justice as no date of hearing was communicated to the petitioner after petitioner's reply dated 12.4.2023 to the show cause notice dated 6.4.2023, the impugned order dated 8.6.2023,is set aside and the matter is remanded back to the 4th respondent to communicate the date of hearing to the petitioner on the Portal of the Income Tax Department and also through the e-mail id given to the Income Tax Department.”

To Read the full text of the Order CLICK HERE

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