Petitioner could not attend video conferencing due to Technical glitch: HC sets aside Income Tax order passed violating principles of natural justice

[Kerala High Court in the matter of Leric Reeches vs Income Tax Officer; WP(C) NO. 14409 OF 2024; 11th April 2024]

The petitioner, an assessee under the provisions of the Act, did not file a return of his income for the assessment year 2016-17 under Section 139 of the Act.

The information available with the Department would suggest that the petitioner has sold an immovable property to M/s. Greenleaf Resorts Private Limited during the financial year 2015-16 relevant to the assessment year 2016-17. The Department was of the view that the capital gains earned by the petitioner in this transaction has escaped assessment for income tax under the provisions of the Act. Therefore, Show Cause Notice was issued to the petitioner and after fixing the hearing on 13.03.2023 and 24.03.2023, the petitioner filed reply to the Show Cause Notice and, thereafter order under Section 148A(d) of the Act was passed on 29.03.2023 for issuing notice under Section 148 of the Act. In response to the said notice, the petitioner filed return of his income for the assessment year in question. In the while, petitioner filed reply to the Show Cause Notice dated December 22, 2023 and opted for personal hearing through video conferencing. The petitioner was provided the link, however, the petitioner could not join the link for technical failure on the part of the Department. To that effect, the petitioner had taken the screenshot which has been placed on record and also addressed e-mail regarding the issue that the petitioner could not log in to address the argument. However, despite this e-mail addressed to the Department, no further opportunity was given to the petitioner and the impugned order has been passed.

Submission of Petitioner with High Court:

It is submitted by the learned Senior Counsel for the petitioner that the opportunity of hearing means ‘effective opportunity of hearing’ and that the petitioner could not log in to address the argument because of the technical failure in the website itself, there was no hearing at all. It is submitted that since there has been failure of compliance of the statutory provision of hearing as well as principles of natural justice as enshrined under Article 14 of the Constitution of India, the order suffers from inherent illegality and, therefore, it may be set aside.

Mr. Christopher Abraham, learned Senior Standing Counsel for the Revenue is not in a position to dispute the screenshot and the e-mail placed on record by the petitioner.

High Court sets aside Order:

After looking at the above arguments and the fact that the petitioner was not given a fair hearing and the contested assessment order was made without one, the court decided that the order violated the principles of natural justice and overturned it.