Reassessment Quashed as Non-Taxpayer Couldn’t Be Expected to View Portal After 8 Years Lapse | HC

Case Details: Punniakotti vs. Income-tax Officer - [2024] 168 taxmann.com 626 (Madras)

Judiciary and Counsel Details

• Krishnan Ramasamy, J.
• K. Rathinavel for the Petitioner.
• Dr. B. Ramaswamy, Sr. Standing Counsel for the Respondent.

Facts of the Case

The assessee along with his sister sold out a vacant land for a total consideration of Rs. 60,30,000. The sale proceeds were equally shared between the assessee and his sister. So far as the assessee’s amount is concerned, the same was utilised by the assessee for the purpose of the construction of a residential house within the prescribed limitation period under section 54.

The Assessing Officer (AO) issued a notice to the assessee to show cause as to why the sale consideration received on the sale of the immovable property should be assessed as income from short-term capital gain. As the assessee failed to respond in time, AO passed the order.

Later, AO initiated recovery proceedings against the assessee. The aggrieved-assessee filed the writ petition against such recovery before the Madras High Court.

High Court Held

The Madras High Court held that the assessee was illiterate, so he did not know the online filing of replies to the assessment. He relied on the Power of Attorney Agent to file suitable replies to the AO. But, for the reasons best known to him, the said Power of Attorney did not respond to the notices properly, culminating in the impugned orders being passed against the assessee.

Thus, it is clear that the assessee, being an unlettered and also a non-taxpayer, was ignorant of any of the notices/communications that were sent by the AO through an online Portal only when the recovery proceedings came to be initiated against the assessee. The assessee became aware of the impugned proceedings.

Though the Income-tax Dept. raised a strong objection to the plea taken by the assessee by stating that ”Ignorantia Juris Non-Excusat”, since the assessee is a common plebeian, there wouldn’t have been any occasion for him to open and view the online portal, then and there. The assessee was unaware of the proceedings being initiated by the AO. Apart from that, the sale was made in 2013-14, whereas impugned proceedings commenced in 2021.

Therefore, the assessee, being a non-taxpayer, cannot be expected to view the Portal after a lapse of 8 eight years. Thus, the reasons assigned by the assessee for not responding to the communications sent by the AO are genuine and reasonable. Accordingly, the writ petition was allowed, and the impugned reassessment order was set aside.