5 March 2022 9:43 AM GMT
The Kerala High Court has quashed the income tax assessment order on the grounds that no opportunity of hearing was given to the Managing Director who was imprisoned in UAE.The single bench of Justice Bechu Kurian Thomas has ruled that the principle of natural justice has twin ingredients, firstly opportunity to show cause and of being heard should be given, it must be a real...
The Kerala High Court has quashed the income tax assessment order on the grounds that no opportunity of hearing was given to the Managing Director who was imprisoned in UAE.
The single bench of Justice Bechu Kurian Thomas has ruled that the principle of natural justice has twin ingredients, firstly opportunity to show cause and of being heard should be given, it must be a real opportunity and not an unreal one, the right to a fair hearing is essential and secondly, the orders passed by the authorities should give reasons for arriving at any conclusion showing a proper application of mind.
The Petitioner/assessee, a private limited company had three Directors, of which the Managing Director was the person in charge, along with his wife. The Managing Director of the company was sentenced to imprisonment in the United Arab Emirates.
Counsel for the petitioner contended that the wife of the Managing Director was also residing in Dubai and that she could not move out of UAE and come to India.
The petitioner has claimed that pursuant to the arrest of its Managing Director, its business activities in Kerala was destroyed, shops were closed and workers left the company. There was none to attend to the notices issued by various Officers and the Bank took possession of his buildings and showrooms. The South Indian Bank is alleged to have taken custody of the entire stock and machinery, including computers containing the books of account and other details.
One of the Directors of the petitioner, who is the wife of the Managing Director of the company, had filed an objection stating that they were ready to produce documents to prove export sales, purchase bills of capital goods and local purchase bills to prove the input claim.
It was also specifically mentioned that the petitioner was unable to extricate the computers in the showroom in which the accounts are kept, and also that they are contacting the bank authorities to release the computers to enable access to the books of accounts.
Rule 38 of the Kerala Value added Tax Rules, 2005 provides a reasonable opportunity of being heard before completing the best judgement assessment. A ritualistic opportunity of hearing as an empty formality is not what advances the cause of justice. The object of granting an opportunity for hearing is irrefutably to advance the cause of justice.
The Court opined that a reasonable opportunity of hearing was not accorded to the petitioner.
The court remarked that the assessing officer had merely proceeded on the basis of non-reply by the assessee, without independently applying his mind to the case. The only reason stated to reassess the petitioner is 'in order to safeguard the state revenue the assessment for the year ... is completed as proposed with slight modification...'
The court while setting aside the orders directed the petitioner to appear before the respondent and file necessary objections if any, on the same day, without fail.
"No further adjournment for filing objections shall be sought for by the petitioner," the court added.
Case Title: Atlas Jewellery [P] Ltd Versus Deputy Commissioner
Citation: WP(C) NO. 21798 OF 2021
Counsel For Appellant: Advocate Aji V.Dev
Counsel For Respondent: Advocate Tushara James
Citation: 2022 LiveLaw (Ker) 113
Click Here To Read/Download Order