No violation of principles of natural justice if assessee utilized short time-limit to file objection: HC

Case Details: Shanavas M. v. National Faceless Assessment Centre - [2022] 141 taxmann.com 74 (Kerala)

Judiciary and Counsel Details

• • Bechu Kurian Thomas, J.
  • O.D. Sivadas for the Appellant.

Facts of the Case

Assessee challenged order of assessment issued under section 147 by the National Faceless Assessment Centre. Assessee contended that sufficient opportunity was not granted to him to object to the proposed assessment, thereby violating the principles of natural justice.

Assessee submitted before the High Court that notice was uploaded only on 26-3-2022- a Saturday, granting time only till 28-3-2022, i.e., Monday, to file the objection. Thus, the assessee did not have sufficient opportunity to effectively controvert the contentions in the show cause notice. Accordingly, the assessment order was vitiated on account of violation of the principles of natural justice.

High Court Held

The Kerala High Court held that the assessee had utilized the opportunity granted to him and filed an objection to the show cause notice on 28-3-2022. He even uploaded the necessary documents along with the objection. Thus, the opportunity granted to the assessee to show cause was effectively utilized by him.

The jurisdiction of the High Court under article 226 of the Constitution of India does not warrant an appreciation of the merits of an order of assessment, for which an effective remedy is available before the Appellate Authority.

It has been noticed that a disturbing pattern is being followed by the Income-tax department by granting minimal time to assessee to explain or answer show cause notices. The principles of natural justice mandate reasonable time to be given to the assessees to reply to show cause or other notices issued under the statute.

The purpose of a show cause notice is to provide an opportunity to explain the allegations in the notice. Several steps precede the reply notice-collection of materials, verification of documents, appreciation of the allegations raised in the show cause notice, consultation with professionals, etc.

The aforesaid attributes that precede the preparation of response alone make an effective reply. When even minimal time to initiate the above-mentioned steps is denied to assessees, the High Court will be justified in exercising its extraordinary jurisdiction under article 226 of the Constitution of India to interfere with such orders violating principles of natural justice.

However, the adequacy of notice has to be determined based on facts in each case. In the instant case, the assessee cannot complain of the violation of the principles of natural justice because, though short, the assessee utilized the limited opportunity granted to him and filed an effective reply.