Ajit Kumar Chordia v. The Commissioner Of Income Tax, Chennai-Ix

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 31.07.2017 CORAM THE HONOURABLE Mr.JUSTICE T.S.SIVAGNANAM WP.Nos.18471 to 18477 of 2003 and WPMP.Nos.23079, 23081, 23083, 23085, 23087, 23089 & 23091of 2003 W.P.No.18471 of 2003 Ajit Kumar Chordia .. Petitioner in all the Writ petitionsVs 1.The Commissioner of Income Tax,Chennai-IX,No.611, Anna Salai, II Floor,Kannammai Building,Chennai-6. 2.The Asst. Commissioner of Income Tax,Range X,No.611, Anna Salai, II Floor,Kannammai Building,Chennai-6. .. Respondentsin all the Writ petitions Common Pryaer: Writ petition filed under Article 226 of theConstitution of India praying for issuance of Writ ofCertiorari to call for the order under reference No.C.No.9/13[18 to 24] 2002-2003 dated 31.03.2003 for the assessment year1980-81, 1981-82, 1982-83, 1983-84, 1984-85, 1985-86, 1986-87on the file of the 1[st] respondent and quash the same. For Petitioner : Mr.M.P.Senthil Kumar in all W.P.s For Respondents : Mrs.Hema Muralikrishnan Standing Counsel in all W.P.s The petitioner is before this Court challenging theorder dated 31.03.2003 passed by the 1[st] respondent underSection 264 of the Income Tax Act, 1961 [hereinafter referredto as “the Act”] for the Assessment Years 1980-1981 to1986-1987. The dispute which arises for consideration inthese cases, lies in a very narrow campus. The petitioner andhis grandmother Bhawari Kaur Chordia were co-owners of animmovable property at Door No.6 and 7, Thambu Chetty Street,Chennai. The property was sold, pursuant to an agreementdated 02.01.1980 and possession was handed over and the saleconsideration for the property was to be received ininstalments. For the unpaid balance of the sale proceeds, theco-owners were entitled to receive interest and for suchinterest for the period 1980-81 and 1981-82, Rs.3.75lakhs eachi.e., for the petitioner and his grandmother. 2. The co-owners namely, the petitioner and hisgrandmother had shown Rs.3.75lakhs as income from property andalso claimed permissible deduction in respect of that claim.In the meantime, the assessment in respect of the petitioner'sgrandmother was completed and ultimately, it was challenged bythe grandmother by filing an appeal before the Income TaxAppellate Tribunal by which judgment dated 19.12.1986,accepted the case of the petitioner's grandmother as to howthe income has to be assessed. 3. Roughly about the same time, the petitioner isstated to have voluntarily gone before the Assessing Officerand requested to issue notice under Section 148 of the Act andassess the income, as in the case of his grandmother. Thislead to the order of assessment dated 31.03.1981 under section143[3] of the Act by revising the assessment, in confirmationwith the order passed by the Income Tax Appellate Tribunaldated 19.12.1986. Since at that point of time, the assessmenthas to be in line with the petitioner's grandmother as both ofthem were co-owners, the petitioner appears to have beensatisfied with the same and took no further steps to challengethe assessment. 4. However, in the case of petitioner's grandmother,the Department filed tax cases in TC.Nos.460 and 461 of 1991.The Hon'ble Division Bench by judgment dated 21.02.2001 heldas follows : “9. The Tribunal, therefore, was in error inholding that the interest on the unpaid purchaseprice could not be taxed in the hands of the vendorsolely on the ground that the vendor had not shownthat amount under the head income from othersources. That conduct of the vendor cannot serve ashttps://hcservices.ecourts.gov.in/hcservices/ a bar to the amount of real income being taxed underthe proper head. The powers of the Commissionerextend to requiring the assessing officer todetermine the true income under the proper head andbring proper amounts assessable to tax, to tax. 4. However, in the case of petitioner's grandmother,the Department filed tax cases in TC.Nos.460 and 461 of 1991.The Hon'ble Division Bench by judgment dated 21.02.2001 heldas follows : “9. The Tribunal, therefore, was in error inholding that the interest on the unpaid purchaseprice could not be taxed in the hands of the vendorsolely on the ground that the vendor had not shownthat amount under the head income from othersources. That conduct of the vendor cannot serve ashttps://hcservices.ecourts.gov.in/hcservices/ a bar to the amount of real income being taxed underthe proper head. The powers of the Commissionerextend to requiring the assessing officer todetermine the true income under the proper head andbring proper amounts assessable to tax, to tax. 10. The amount that could be taxed wasrequired to be taxed under the proper head, havingregard to the nature of the income. The amountswhich could not be taxed in the hands of theassessee, having regard to the admitted factual andlegal position, could not have been taxed in thehands of the assessee. 11. As the computation of income of theassessee for those years is required to be redone onthe basis of this order, we remand the matter tothe Income Tax officer to redo the assessment inaccordance with law and in the light of what hasbeen said in the course of this order. The questionreferred to us at the instance of the Revenue isanswered by holding that while the interest receivedon unpaid purchase price was taxable under the headincome from other sources in the hands of theassessee vendor, the rental income from the propertywas not taxable in the hands of the assesseevendor.” 5. In terms of the above direction, the computation ofincome tax of the petitioner's grandmother for the relevantyears was directed to be re-done on the basis of the order andthe question which was referred to the Division Bench at theinstance of the Revenue was answered by holding that while theinterest received on unpaid purchase price was taxable underthe head “income from other source” in the hands of theassessee/vendor from the rental income of the property was nottaxable in the hands of the assessees. 6. After the judgment in T.C.Nos.460 and 461 of 1991dated 21.02.2001, the petitioner filed an application underSection 264 of the Act requesting that the petitioner's incomein respect of the aforesaid transaction pertaining to the saidproperty, be determined in accordance with the decision of theHigh Court in the petitioner's grandmother's case. Thepetitioner also stated that he was very young at the relevantpoint of time and therefore, pleaded that the delay may becondoned and the petition may be considered and orders to bepassed. The respondent has rejected the same by the impugnedorder dated 31.03.2003. 7. I have heard Mr.M.P.Senthil Kumar, learned counselappearing for the petitioner and Mrs.Hema Muralikrishnan,learned Standing Counsel appearing for the respondents andcarefully perused the materials available on record. https://hcservices.ecourts.gov.in/hcservices/ 8. The petition filed by the petitioner under Section264 of the Act has been rejected on two grounds. Firstly, onthe ground that the petitioner's case is that he was subjectedto double taxation, for the simple reason that he had fileddeclaration under the Voluntary Disclosure Scheme of 1986 andoffered additional income. Secondly, it is stated that thepetition is grossly delayed and the power of the Commissionercannot be stretched to do something which cannot be done undernormal provisions of the Act. After carefully perusing thematerials placed on record, it is seen that what is referredto as Voluntary Disclosure Scheme is not in fact anapplication in any Voluntary Disclosure Scheme. https://hcservices.ecourts.gov.in/hcservices/ 8. The petition filed by the petitioner under Section264 of the Act has been rejected on two grounds. Firstly, onthe ground that the petitioner's case is that he was subjectedto double taxation, for the simple reason that he had fileddeclaration under the Voluntary Disclosure Scheme of 1986 andoffered additional income. Secondly, it is stated that thepetition is grossly delayed and the power of the Commissionercannot be stretched to do something which cannot be done undernormal provisions of the Act. After carefully perusing thematerials placed on record, it is seen that what is referredto as Voluntary Disclosure Scheme is not in fact anapplication in any Voluntary Disclosure Scheme. 9. But on the voluntary request made to the AssessingOfficer to issue notice under Section 148 of the Act is soughtto be misinterpreted as if it is a Voluntary DisclosureScheme. Thus, merely because the petitioner went before theAssessing Officer under Section 148 of the Act and completionof the assessment cannot be an estoppel for the petitioner tomaintain a petition under Section 264 of the Act. With regardto the delay, the 1[st] respondent has rejected the petition byreckoning the period of limitation from the date on which theassessment was completed, namely on 31.03.1981. 10. In my considered view, this interpretation isincorrect, for the simple reason that the assessment wascompleted under Section 143[3] of the Act vide assessmentorder dated 31.03.1981, based on the order passed by theIncome Tax Appellate Tribunal dated 19.12.1986 rendered in thepetitioner's grandmother's case, who was a co-owner in respectof the same property. The petitioner's grandmother did notprefer any appeal against the said order and appears to havebeen satisfied with the decision. Therefore, the petitionerhad no cause of action to question the assessment order dated31.03.1981, until a direction was issued in the tax casesfiled by the Department, which were disposed of by judgmentdated 21.02.2001, issuing a specific direction to theAssessing Officer to re-do the assessment, based on theobservations/ directions contained in the judgment. 11. Thus, when the petitioner's assessment wascompleted on 31.03.1981 based on the decision rendered by theTribunal in the petitioner's grandmother's case, therespondents themselves should have revised the petitioner'sassessment in tune with the said order. Having not done so,the Department cannot reject the petition filed by thepetitioner under Section 264 of the Act. Thus, for all thepractical purposes, the limitation in filing the petition hadto be reckoned only after the judgment in the Tax Cases. TheAssessing Officer had given effect to the order passed by theDivision Bench dated 21.02.2001 and if that date is reckoned,there is no inordinate delay for the 1[st] respondent to rejecthttps://hcservices.ecourts.gov.in/hcservices/the petition filed by the petitioner under Section 264 of the Act. 12. At this stage, it would be beneficial to refer tothe decision of the Hon'ble Division Bench in the case ofCommissioner of Income Tax Vs S.Muthukarupan [2007]290 ITR0154, wherein, the Court held that if during the sameassessment year the same quantity of wealth in possession ofone co-sharer is subjected to a lower rate of taxation, itwould be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on thepart of the assessing authorities is sanctioned, it wouldmilitate against the principle of equality of laws enshrinedin Article 14 of the Constitution of India. Similar view wastaken in the case of Commissioner of Income Tax Vs KumararaniSmt.Meenakshi Achi [2007]292 ITR 0624, following the decisionin the case of Muthukarupan. 13. One more reason which was pointed out in theimpugned order as well as in the counter affidavit is, as ifthe petitioner has stated that he has been taxed twice or inother words, it is a case of double taxation, I have gonethrough the petition filed under Section 264 of the Act dated29.01.2002 and nowhere, I find that the petitioner has pleadeda case of double taxation. Thus, to that extent, theobservation made in the impugned order is not tenable. 14. For all the above reasons, the impugned ordercalls for interference and these Writ Petitions are allowedand the impugned order is set aside and the matter is remandedto the Assessing Officer to re-do the assesment on the linesas directed by the Division Bench in T.C.Nos.460 and 461 of1991 dated 21.02.2001 in the case of petitioner's grandmotherSmt.Bhawari Kaur Chordia. This direction be complied withwithin four weeks from the date of receipt of this order. Nocosts. Consequently, connected Miscellaneous Petitions areclosed. Assistant Registrar(CCC) gyaTo 1.The Commissioner of Income Tax, Chennai-IX, No.611, Anna Salai, II Floor, Kannammai Building, Chennai-6. https://hcservices.ecourts.gov.in/hcservices/ 2.The Asst. Commissioner of Income Tax, Range X, Range X, No.611, Anna Salai, II Floor, Kannammai Building, Chennai-6. Kannammai Building, Chennai-6. +1 Cc to Mrs. Mallika Srinivasan, Advocate sr 54532 +1 CC to Mrs. Hema Muralikrishnan, advocate sr 54680 WP.Nos.18471 to 18477 of 2003and WPMP.Nos.23079, 23081, 23083,23085, 23087, 23089 & 23091 of 2003 VGI(CO)sp(31/08/2017)