Un-necessary litigation causing brain drain and loss of human resources and public money – some cases in course of e-proceedings order passed before time fixed for compliance failure of system and officer both.

[DEV KUMAR KOTHARI]

Recent cases:

2021 (5) TMI 362 - MADRAS HIGH COURT - ANTONY ALPHONSE KEVIN ALPHONSE VERSUS THE INCOME TAX OFFICER, THE INCOME TAX OFFICER, NON-CORPORATE WARD-4 (1) , COIMBATORE

W.P.No. 8379 of 2021 And W.M.P.Nos. 8932 & 8934 of 2021  Dated: - 01 April 2021

2021 (5) TMI 461 - MADRAS HIGH COURT - EKAMBARAM SUKUMARAN VERSUS THE INCOME TAX OFFICER

W.P. No.10433 of 2021 & WMP Nos.11029 & 11032 of 2021

Dated: - 27 April 2021

Earlier judgement referred to and principally applied:

1971 (8) TMI 42 - MADRAS HIGH COURT  - S. VELU PALANDAR VERSUS DEPUTY COMMERCIAL TAX OFFICER, THANJAVUR II. Dated: - 03 August 1971

General discussion by the author:

Time fixed for compliance in e-proceedings and face less assessment:

Now-a-days’ time limit  for compliance is fixed as a particular date and time in hours and minutes. The assessee is required to make compliance by uploading submissions before that date. In some notices time is not fixed, and it is somewhere stated  in the notice that compliance must be made before a particular time – usually around 5 PM of the day fixed.

It may be that a date is chosen by the AO and time is fixed by the system considering other cases fixed.

Options of assessee:

Assessee usually make attempt to make compliances and it is not in the interest of assessee to default and seek time, if it is possible to make compliance on day fixed.

Assessee has option to make full compliance or partial compliance by uploading documents on or before the day and time fixed. In case of partial compliance, naturally further time is required and prayed for by the  assessee.

If it is not at all possible to make compliance, assessee can also seek adjournment. Many times due to very short time allowed for compliance and also due to intervening holidays and restricted working due to COVID problems, or other administrative problems,  assessee had to apply for further time. Further time should be allowed if the case is not becoming time barred within few days say within a week and when assessee has been complying with notices.

Assessing officer should wait for compliance:

To avoid highhanded ness, it is desirable that the AO should wait for compliance at list till the end of day on which compliance is fixed and also few more days. This is because there can be delay for many reasons in submissions and compliance by assessee. Therefore, unless time of limitation is lapsing within few days and considering the nature and size of assessment case, more time should be allowed by the AO, even if no request has been received. This is because many times concerned persons may miss to see the notice.

In simple words, considering last day of limitation and compliances made by assessee so far, in case of need further time should be allowed to assessee.

In any case the AO cannot make order before the compliance day and time fixed by AO himself.

System warning is desirable:

In fact in case the AO, by mistake or by any other intentions uploads order before the time fixed for compliance, the system should show error and warn the officer about time available to assessee for compliance.  

There should be internal guidelines in this regard to wait for few more days for compliance and in suitable cases to re-fix the case allowing further time to the assessee for compliance. This is to ensure that the assessee is allowed reasonable time for  compliance and there is no denial of natural justice.

Cases before High Court of Madras:

The Ld. AO passed order and uploaded before the time fixed for compliance. This it was wrong because assessee has time to upload submissions and he can also seek further time because there was sufficient days still available to the AO in view of last day fixed for passing the order. ( limitation has been further extended in view of COVID problems)

Without waiting for the time fixed for compliance, passing of order was not at all justified.

In these cases assessee had option to file an appeal before the CIT(A) and seek justice, however, it may be that huge demand was raised and assessee had felt chances of harassment by way of recovery measures, therefore assessee preferred Writ Petitions before the High court. Accordingly assessees filed Writ Petitions before the High Court

Analysis and summary  of facts and order of the High Court:  

2021 (5) TMI 362 - MADRAS HIGH COURT - ANTONY ALPHONSE KEVIN ALPHONSE VERSUS THE INCOME TAX OFFICER, THE INCOME TAX OFFICER, NON-CORPORATE WARD-4 (1) , COIMBATORE

Assessment order challenged  has been digitally signed by the AO  at about 16:22:33 ours on 15.03.2021.

The assessee was required to file a reply on or before the end of the day on 15.03.2021 by 23.59 hours.

Therefore, order has been passed signed and uploaded even before the time allowed to the assessee for making submissions in e-proceedings had lapsed.

The assessee /  petitioner had also sent a reply before the deadline for filing the reply had expired on 15.03.2021.

Assessee prayed that   the impugned order passed by the second respondent (AO)  was liable to be quashed.

Learned senior standing counsel for Income Tax Department submitted that the petitioner has an alternate remedy by way of an appeal before the Appellate Commissioner and therefore the writ petition is liable to be dismissed.

Learned judge observed and held on the following lines:

Considered arguments of both sides.  

The impugned order has been passed before the time prescribed for filing the reply.

It is evident that the impugned order has been passed with pre-set mind.

 In any event, the order has been passed without considering the reply received from the petitioner.

 Therefore, the Court granted  the relief sought for by the assessee/ petitioner as there is a manifest violation of ( business  of justice)*  while passing the impugned order.

The assessment order has been  quashed by the High Court  and the case has been  remitted back to the second respondent/ AO  to pass a speaking order on merits in accordance with law after considering the reply filed by the petitioner on 15.03.2021.

The Writ Petition was thus allowed  with  the above observations made by the honourable High Court but without  costs.

Per author:

( business  of justice)*  

With due respect and regard author feels that there seems a typing mistake it should be  like “principal of natural justice” or other suitable terminology.

2021 (5) TMI 461 - MADRAS HIGH COURT - EKAMBARAM SUKUMARAN VERSUS THE INCOME TAX OFFICER

A pre assessment notice was issued calling upon the assessee  to show cause why assessment should not be completed in line with the draft assessment order.

The assessee /  petitioner was called upon to submit his response by 23:59 hours of 23.03.2021.

Even prior to the elapse of time granted, the assessment  order was  passed on the same day, i.e., 23.03.2021  one assumes during the working hours that means before the time fixed for compliance.

 Hence, there is a violation of principles of natural justice.

One need hardly refer to the decision of the learned single Judge of this Court in the case of S. VELU PALANDAR VERSUS DEPUTY COMMERCIAL TAX OFFICER, THANJAVUR II. [1971 (8) TMI 42 - MADRAS HIGH COURT] wherein this Court has stated that it was incumbent upon an Officer to wait till the end of the working day when the matter had been posted to finalize proceedings.

This  was considered an even better case than in the matter of Velupalandar (supra), since the Assessing Officer had himself granted time till 23:59 hours on 23.03.2021.

This Writ Petition  was thus allowed with directions given.

However, no costs was allowed / granted.

Authors view:

Bothe above cases appears to be cases of high pitched assessments causing lot of difficulties and harassment and possibility of further harassment by tax authorities. Therefore, assessee chose to file WP.

In these cases there was serious mistakes caused by officers with a pre-set mind.

Assessee had to bear extra costs in terms of money besides lot of mental agony and pressures in difficult times of COVID related problems and restrictions.

Therefore, these were fit cases to grant costs in favour of assessee. It is requested to honorable judges that suitable costs should be imposed on the Government and concerned officers so that a check can be put on harassment   caused by high pitched or unreasonable orders and also to save valuable time of honorable Courts and Counsels preparing , filing and representing cases.

It is unfortunate that due to un-necessary litigation initiated by government officers and forcing public to indulge into litigation  to protect from unreasonable orders  there is lot of brain drain and wastage of public money which could be more productively used for public welfare.