High Court of Kerala Dismisses Writ Petition Against Assessment Order and Demand

Case Name:

TDGSM Co-operative Society Ltd No.R.1112 (of Income Tax Rules, 1962) v. Commissioner of Income Tax and Others

Key Takeaways:

1. The petitioner failed to file returns for the assessment year 2016-2017 and did not respond to notices issued under the Income Tax Act.
2. The assessment of the petitioner’s case was reopened, and an ex parte best judgment assessment order was passed.
3. The court dismissed the writ petition, rejecting the petitioner’s contention of not receiving the notice.
4. The petitioner has the option to pursue the remedy of appeal or other available remedies.
5. If the petitioner chooses to appeal, the appellate authority should decide the appeal in accordance with the law expeditiously.

Case Synopsis:

In the High Court of Kerala at Ernakulam, with the Honorable Mr. Justice Dinesh Kumar Singh presiding, a judgment was delivered on December 5, 2023, in WP(C) No. 29487 of 2022. The case involved TDGSM Co-operative Society Ltd No.R.1112 (of Income Tax Rules, 1962) as the petitioner and the Commissioner of Income Tax and the Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer as the respondents.

The petitioner, TDGSM Co-operative Society Ltd No.R.1112 (of Income Tax Rules, 1962), represented by its Secretary Jainy Jacob, filed the writ petition challenging the assessment order and demand mentioned in Ext.P2.

The petitioner had not filed the returns for the assessment year 2016-2017. The petitioner’s case was selected for assessment based on the information received through Multi-layer NMS cases in the AIMS module of ITBA, which noticed a significant cash deposit during the financial years 2015-2016 and 2016-2017. The assessment of the petitioner’s case was reopened by issuing a notice under Section 148 (of Income Tax Act, 1961) of the Income Tax Act, 1961 (IT Act). In response to the notice, the petitioner filed a return of income for the assessment year 2016-2017 on April 29, 2021, declaring a total income of ‘Nil’ after claiming a deduction under Chapter VIA (80P) of Rs. 2,64,133/-.

Subsequently, the petitioner received notices under Section 142(1) (of Income Tax Act, 1961) of the IT Act on July 8, 2021, and November 18, 2021. However, the petitioner failed to respond to these notices. Finally, another opportunity was given to the petitioner on February 24, 2022, through a notice under Section 142(1) (of Income Tax Act, 1961). The petitioner did not avail of these opportunities to be heard and did not cooperate with the proceedings. Therefore, considering the time limit to complete the assessment, an ex parte best judgment assessment order was passed under Section 144 (of Income Tax Act, 1961) since the petitioner did not submit the return in response to the notice under Section 148 (of Income Tax Act, 1961).

The learned counsel for the petitioner contended that the petitioner did not receive the notice. However, the court did not accept this contention, considering the system in place for communication of notices and orders. Therefore, the court dismissed the writ petition, allowing the petitioner to avail the remedy of appeal or any other available remedies. If the petitioner approaches the appellate authority, the authority should proceed to decide the appeal in accordance with the law expeditiously.

FAQ:

Q1: What was the reason for the assessment of the petitioner’s case?

A1: The petitioner’s case was selected for assessment based on the information received regarding significant cash deposits during the financial years 2015-2016 and 2016-2017.

Q2: Did the petitioner file a return of income for the assessment year 2016-2017?

A2: Yes, the petitioner filed a return of income declaring a total income of ‘Nil’ after claiming a deduction under Chapter VIA (80P) of the Income Tax Act.

Q3: Did the petitioner respond to the notices issued under the Income Tax Act?

A3: No, the petitioner failed to respond to the notices, including a notice under Section 148 (of Income Tax Act, 1961).

Q4: What options does the petitioner have after the dismissal of the writ petition?

A4: The petitioner can pursue the remedy of appeal or explore other available remedies to challenge the assessment order and demand.

1.The present writ petition has been filed impugning Ext.P2 assessment order and demand.

2.The petitioner assessee did not file the returns of the assessment year 2016-2017. As per the information received through Multi-layer NMS cases in AIMS module of ITBA, the petitioner case was selected noticing the huge cash deposit during the financial year 2015-2016 and 2016-2017. The assessment of the petitioner case was reopened by issuance of notice under Section 148 (of Income Tax Act, 1961) of the Income Tax 1961 ( the ‘IT Act’ for short). In response to the said notice, the petitioner had filed return of income for the assessment year 2016-2017 on 29.04.2021, declaring total income at ‘Nil’ after claiming deduction under Chapter VIA (80P) of Rs.2,64,133/-. Subsequently, the petitioner was issued notices under Section 142(1) (of Income Tax Act, 1961) dated 08.07.2021 and 18.11.2021.

However, the petitioner failed to respond with the notices. Finally one more opportunity by the notice under Section 142(1) (of Income Tax Act, 1961) was given to the petitioner on 24.02.2022. The petitioner did not avail of the opportunities of being heard, and the petitioner did not cooperate with the proceedings. Therefore, keeping in view of the time limit to complete the assessment, the best judgment assessment order was passed under Section 144 (of Income Tax Act, 1961) exparte, the petitioner did not submit the return in response to the notice under Section under Section 148 (of Income Tax Act, 1961).

3.Learned counsel for the petitioner submits that the petitioner did not receive the notice. However, this contention cannot be accepted in view of the system which has been placed for communication of notices , orders etc., therefore I do not find any ground to entertain this writ petition against the impugned assessment order.

In the result, this writ petition is dismissed, leaving it open to the petitioner to avail remedy of appeal if any, or such other remedies are available. If the petitioner approached the appellate, the appellate authority should proceed to decide the appeal in accordance with law, expeditiously.

Sd/-

DINESH KUMAR SINGH

JUDGE