Civil Law

In the case of Manas Vs. Income Tax Officer[1], the Hon’ble Madras High Court (“HC”) took serious objection to the taxpayer’s attempt at misleading the Court. The taxpayer had filed a writ petition seeking quashing of the reassessment proceedings and satisfaction order passed under Section 148A of Income Tax Act, 1961 (“IT Act”).

Oddly enough, the taxpayer’s argument was centered on the claim that the notice of the satisfaction order did not reach the intended recipient as it was incorrectly sent at “jvjsurana@yhoo.co.in”, and hence it was a violation of principles of natural justice. A perusal of the address revealed that “yahoo” was misspelt as “yhoo”,leading to non-delivery of the notice.  However, a subsequent dispatch of the satisfaction order at “jvgsurana@gmail.com”by the tax authorities  was duly received by the taxpayer.

In response to the taxpayer’s claims, the tax department filed screenshots of the concerned tax officer’s mail box, which evidenced that the notice was delivered to jvgsurana@gmail.com . It also submitted that the taxpayer has been using multiple email ids at different points of time and has been receiving emails from the tax authorities. In his profile on the income tax portal, his email id was shown as “jvgsurana@yahoo.com” whereas his return of income mentioned his email address as “jvgsurana@gmail.com”.

The HC took cognisance of the screenshots and held that the conduct of the taxpayer was not only “misconceived” but also “mischievous”. It imposed a fine of INR 1 Lakh to set a strong example that any attempt to mislead the Court would result in severe consequences.

It observed that tax notices are often sent to email ids that are no longer in use or to email ids of staff/accountants/chartered accountants who are no longer in the service of the taxpayer entity. It directed both the tax department and the taxpayers to devote attention to these aspects, as this leads to a denial of opportunity to file a timely response by the taxpayer. The Hon’ble Court also observed that it is the duty of the taxpayers to provide their proper credentials, including email ids and mobile numbers to the income tax authorities.  

Similar observations have been made by the Courts in the past as well. For example, the Hon’ble Allahabad HC in the case of Mohan Lal Santwani Vs. Union of India[2] had recommended that since a large number of writ petitions were filed disputing the date and time of issuance of notice under Section 148, the tax authorities should ensure that the date and time of triggering of such e-mail gets reflected in the taxpayer’s account on the income tax portal. It is worthwhile to highlight that in genuine cases, the Courts have quashed several reassessment proceedings when notices were not served on the proper email address of the taxpayers[3].

It is a cardinal principle that one should approach the Courts with clean hands. If false statements are made or misleading or incomplete facts are stated, the Courts have the powers not only to dismiss the petitions, but also to impose costs on the applicants. There have been instances in the past where the Courts have taken action against wrongdoers to discourage such unethical practices.

In a landmark ruling, the Hon’ble Supreme Court (“SC”), in the case of K.D. Sharma v. Steel Authority of India Ltd. & Ors[4],  has held that a litigant cannot play ‘hide and seek’ or ‘pick and choose’ the facts he wants to reveal while suppressing or withholding or failing to disclose other facts . Similarly, in Kishore Samrite v. State of U.P[5], the Hon’ble SC condemned the practice of suppression of relevant material facts from the Writ Court (i.e. HC) and laid out several principles that would govern a litigant’s responsibilities when seeking redress of any grievances as well as the consequences of abusing  the Court’s process. The Hon’ble SC observed that, while looking at applications / petitions made before any Court, it must be ensured that:

1. Litigants truthfully disclose all material facts before the Court;
2. Litigants have taken every effort to make full disclosures when approaching the Courts;
3. A litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands is not entitled to any relief, interim or final;
4. The Court’s process is not abused and any insistence to furnish security would be justified and in cases of serious abuse, the Court would be duty bound to impose heavy costs; and
5. It is not just the clean hands, but also clean mind, clean heart and clean objective that are the equi-fundamentals of judicious litigation.

It must also be noted that taxpayers have been casual in terms of opening and closing of their email accounts, which are done with impunity without any intimation to the other affected parties, including the tax authorities. The tax authorities are going to rely upon only the email id that was shared by the taxpayer either at the time of filing of tax returns or at the time of creating one’s profile on the income tax portal. However, if they are revised / amended at frequent intervals without intimating the tax authorities, the latter would not be in a position to communicate with the concerned taxpayer. This is an aspect that should be addressed carefully.

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[1] W.P No. 13473/2023

[2] [2022] 138 taxmann.com 292 (Allahabad) 

[3] Nita Roy Vs. Union of India & Ors [W.P.A. 12201 of 2021], Lok Developers vs. DCIT & Ors [W.P. No. 1983 of 2022], M/s Schneider Electric India Pvt. Ltd. Vs. ACIT [W.P.(C) 8586/2022] etc 

[4] (2008) 12 SCC 481

[5] (2013) 2 SCC 398

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