Karti P.chidambaram v. The Principal Director Of Income Tax (Investigation) Income Tax Investigation Wing Building

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.07.2021 CORAM THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM W.P.Nos.16686, 16758, 16689, 16692, 16693, 16695, 16698, 16710,16716, 16719, 16760 and 16764 of 2020andW.M.P.Nos.20690, 20691, 20730, 20733, 20774, 20775, 20701,20703, 20713, 20721, 20728, 20693, 20685, 20694, 20695, 20737,20768, 20770, 20771, 20772, 20687, 20696, 20698 & 20699 of 2020 1 Karti P.Chidambaram ..Petitioner in WP. 16686/2020 1 Karti P.Chidambaram S/o. P. Chidambaram No. 16, Pycrofts Garden Road, Nungambakkam, Chennai 600 006.... Petitioner in WP. 16689, 16692, 16693, 16695, 16698 of 2020 1 Srinidhi Karti Chidambaram W/o.Karti P Chidambaram No.16, Pycrofts, Garden Road, Chennai-600 006...Petitioner in WP. 16758, 16710, 16716, 16719, 16760, 16764 of 2020Vs 1.The Principal Director of Income Tax (Investigation) Income Tax Investigation Wing Building, No.108, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034. 2.The Deputy Director of Income Tax, (Investigation) Unit 3(2), Chennai, Income Tax Investigation Wing Building, No.108, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034. 3.The Deputy Commissioner of Income Tax, Central Circle, 2(1), New Income Tax Building, No.46, (Old No.108), Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034. ..Respondents in All WPs Prayer in Wp.16686 of 2020: Writ Petition filed under Article226 of the Constitution of India praying to issue a Writ ofCertiorari, Calling for the records of the 3[rd] Respondentpertaining to the notice dated 16.12.2019 having Ref Notice No.ITBA/AST/S/153C/2019-20/1022454092 (1) issued under Section 153Cr/w 153A of the Income Tax Act 1961 for the Assessment Year2014-15 to the petitioner and the consequential show CauseNotice dated 21.10.2020 having reference No.DIN and Notice No.ITBA/AST/F/153C(SCN)/2020-21/1028361585(1) for the AssessmentYears 2014-15 and 2015-16 issued by the 3[rd] Respondent to thepetitioner and quash the same as illegal, without jurisdiction,arbitrary, ab initio void and violative of Article 14 of theConstitution of India. WP No.16758, 16689, 16692, 16693, 16695, 16698, 16716 of 2020:These Writ Petitions are filed under Article 226 of theConstitution of India, praying to issue Writs of CertiorariCalling for the records of the 3rd Respondent pertaining to thenotice dated 16.12.2019 having Ref Notice No. ITBA / AST / S /153C / 2019-20 / 1022454524 (1), 1022454066 (1), 1022453937(1), 1022454011 (1), 1022454032 (1), 1022454049 (1), 1022454513(1) issued under Section 153C r/w 153A of the Income Tax Act,1961 for the Assessment Year 2016-17, 2013-14, 2015-16, 2016-17,2017-18, 2018-19, 2014-15, to the petitioners and quash thesame as illegal without jurisdiction arbitrary ab initio voidand violative of Article 14 of the Constitution of India WP No.16710 of 2020 : Writ Petition is filed calling for therecords of the 3rd Respondent pertaining to the notice dated16.12.2019 having Ref.Notice No. ITBA/AST/S/153C/2019-20/1022454522 (1) issued under Section 153C r/w 153A of the IncomeTax Act, 1961 for the Assessment Year 2015 -16 to the Petitionerand the consequential Show Cause Notice dated 21.10.2020 havingreference No. DIN and Notice No. ITBA/AST/F/153C(SCN) / 2020 -21/ 1028361780(1) issued by the 3rd Respondent to the Petitionerand quash the same as illegal, without jurisdiction, arbitrary,ab initio void and violative of Article 14 of the Constitutionof India. WP No.16710 of 2020 : Writ Petition is filed calling for therecords of the 3rd Respondent pertaining to the notice dated16.12.2019 having Ref.Notice No. ITBA/AST/S/153C/2019-20/1022454522 (1) issued under Section 153C r/w 153A of the IncomeTax Act, 1961 for the Assessment Year 2015 -16 to the Petitionerand the consequential Show Cause Notice dated 21.10.2020 havingreference No. DIN and Notice No. ITBA/AST/F/153C(SCN) / 2020 -21/ 1028361780(1) issued by the 3rd Respondent to the Petitionerand quash the same as illegal, without jurisdiction, arbitrary,ab initio void and violative of Article 14 of the Constitutionof India. WP No.16719 of 2020 : Writ Petition is filed calling for therecords of the 3rd Respondent pertaining to the notice dated16.12.2019 having Ref. Notice No. ITBA/AST/S/153C/2019-20/1022454500 (1) issued under Section 153C r/w 153A of theIncome Tax Act 1961 for the Assessment Year 2013 - 14 to thePetitioner and quash the same as illegal without jurisdiction,arbitrary, ab initio void and violative of Article 14 of theConstitution of India. WP No.16760 of 2020 : Writ Petition is filed calling for therecords of the 3rd respondent pertaining to the notice dated16.12.2019 having REf. Notice No. ITBA/ AST/ S/ 153C/ 2019- 20/1022454540 (1) issued under Section 153C r/w 153A of the IncomeTax Act, 1961 for the Assessment Year 2017- 18 to the petitionerand quash the same as illegal, without jurisdiction, arbitrary,ab initio void and violative of Article 14 of the constitutionof India WP No.16764 of 2020: Writ Petition is filed calling for therecords of the 3rd respondent pertaining to the notice dated16.12.2019 having REf. Notice No. ITBA/ AST/ S/ 153C/ 2019- 20/1022454499 (1) issued under Section 153C r/w 153A of the IncomeTax Act, 1961 for the Assessment Year 2018- 19 to the petitionerand quash the same as illegal, without jurisdiction, arbitrary,ab initio void and violative of Article 14 of the constitutionof India. W.P.Nos.16693, 16695:Mr.N.R.R.Arun Natarajan and 16698 of 2021W.P.Nos.16710, 16716,:Mr.AR.L.Sundaresan16719, 16758, 16760Senior Counseland 16764 of 2020Assisted by M/s.C.Uma FOR RESPONDENTS IN ALL WRIT PETITIONS For Respondents:Mr.R.SankaranayananAdditional Solicitor General of IndiaAssisted byMr.A.P.Srinivas andMr.A.N.R.Jayaprathap COMMON ORDER THE FACTS IN BRIEF SUBMITTED BY THE PETITIONER The facts in detail presented by the petitioners are thatthe petitioner / assessee filed his return of income for theAssessment Year [hereinafter referred to as 'AY'] 2014-15,disclosing fully and truly his income including the “capitalgains” arising out of a sale of land in the Financial Year 2013-14. The capital gains could be assessed only in AY 2014-15 byvirtue of Section 45 of the Income Tax Act, 1961 [hereinafterreferred to as 'Act']. The return was taken up for scrutinyassessment under Section 143 of the Act and the AssessingOfficer completed the assessment under Section 143(3).Accordingly, the return of income was accepted in toto by theAssessing Officer, including the disclosed capital gains. COMMON ORDER THE FACTS IN BRIEF SUBMITTED BY THE PETITIONER The facts in detail presented by the petitioners are thatthe petitioner / assessee filed his return of income for theAssessment Year [hereinafter referred to as 'AY'] 2014-15,disclosing fully and truly his income including the “capitalgains” arising out of a sale of land in the Financial Year 2013-14. The capital gains could be assessed only in AY 2014-15 byvirtue of Section 45 of the Income Tax Act, 1961 [hereinafterreferred to as 'Act']. The return was taken up for scrutinyassessment under Section 143 of the Act and the AssessingOfficer completed the assessment under Section 143(3).Accordingly, the return of income was accepted in toto by theAssessing Officer, including the disclosed capital gains. 2. On 31.01.2014, 27.03.2014 and 27.03.2014 in FinancialYear 2013-14 pertaining to AY 2014-15, the petitioner sold hisland measuring 5.11 acres by three sale deeds to M/s.AgniEstates and Foundations Private Limited at the rate of Rupeesthree Crore per acre and received the entire consideration ofRs.15.33 crore by cheque, registered the sale deeds anddelivered possession of the land to the buyer. The transactionwas completed. The petitioner states that there were manyencroachments on the lands sold in favour of M/s.Agni Estates bylocal fishermen of that locality and thus, the price wasnegotiated and the buyer undertook the responsibility ofsettling with the fishermen for further development of theproperty. The guideline value of the property was Rupees ThreeCrore per acre and the buyer had not agreed to pay a higherprice in view of the encroachments. 3. On 05.07.2018 and 09.07.2018, Search was conducted bythe Deputy Director of Income Tax (investigation) [hereinafterreferred to as “DDIT (Inv)”] / the second respondent, at thepremises of the buyer M/s.Agni Estates. It is stated that “smallnote books” were seized and statements were recorded fromR.N.Jayaprakash, K.Narayanan and Dhileep Kumar. On 10.08.2018,the Assessing Officer of the petitioner received informationsfrom DDIT (Inv) about the search and seizure operation conductedunder Section 132 of the Income Tax Act on 05.07.2018 in thecase of M/s.Agni Estates and Foundations Private Limited.Consequently, on 20.08.2018, the Assessing Officer initiatedproceedings against the petitioner under Section 148 of the Actand re-opened the assessment for AY 2014-15, with an allegationthat a sum of Rs.6,38,75,000/- (Rupees Six Crore Thirty EightLakh and Seventy Five Thousand only) had escaped assessment inAY 2014-15. In response, the petitioner filed a fresh return,reiterating the original return filed by him. Even before the time allowed for filing a fresh return had expired, the DDIT(Inv) filed a compliant on 12.09.2018 in EOC.No.266 of 2018,renumbered as CC No.15 of 2019 before the Special Court,alleging that the petitioner had contravened Section 271C andSection 277 of the Act. The petitioner states that thelimitation for passing an order, re-opening the assessment underSection 148 was 31.12.2019. On 12.10.2018, the Assessing Officerfurnished the “reasons” for re-opening the assessment for AY2014-15 recorded by him on 14.08.2018 and the “Satisfactionnote” recorded by the Additional Commissioner on 20.08.2018. The“reasons” referred to the statements recorded and the evidencesthat were found during the search and also specified the allegedamount that was undisclosed income of a sum of Rs.6,38,75,000/-. 4. The petitioner filed an application on 26.11.2019 inCrl.M.P.No.25634 of 2019 under Section 245 of Cr.P.C. before theSpecial Court and sought for discharge of the petitioner from CCNo.15 of 2019. Under these circumstances, the Assessing Officeron 16.12.2019, issued the impugned notice under Section 153C tothe petitioner and directed the petitioner to file returns for ablock of six assessment years AY 2013-14 to AY 2018-19. 5. The petitioner states that he sought for informationfrom the Assessing Officer on 27.12.2019 and the said letter wasnot responded. It is contended that on 31.12.2019, proceedingsunder Section 148 lapsed due to expiry of the time allowedwithout any order of re-assessment. On 06.01.2020, the AssessingOfficer furnished the reasons for initiating proceedings underSection 153C recorded by him. The reasons referred to the“Satisfaction note”. He also stated that he was furnishing thecopies of the “Sworn statements” and the seized materials. On07.01.2020,theSpecialCourtdismissedtheCrl.M.P.No.25634/2019 filed by the petitioner for discharge.However, on 09.01.2020, the Chartered Accountant of thepetitioner reiterated his request for information and the samehad not been provided. On 14.01.2020, without prejudice, thepetitioner filed his returns for six Assessment Years, returningthe same income for each year as in the original returns filedby the petitioner. The subsequent letter dated 17.01.2020 by thepetitioner's Chartered Accountant, seeking information was alsonot responded. On 31.01.2020, the Assessing Officer issued sixnotices under Section 143(2), seeking further information inconnection with the six returns for the Assessment Years AY2013-14 to AY 2018-19 and directed the petitioner to attend hisoffice on 11.02.2020. On 03.02.2020 and 11.02.2020, theChartered Accountant of the petitioner reiterated the requestfor information that had been sought earlier, but not providedby the Assessing Officer. Challenging the order dated07.01.2020, passed in Crl.M.P.No.25634 of 2019, the petitionerfiled Cr.R.C.No.510 of 2020 before the High Court of Madras on 18.05.2020. The petitioner states that without responding to therequests for information or without holding an enquiry, theAssessing Officer issued the impugned Show Cause Notice dated21.10.2020, directing the petitioner to show cause why a sum ofRs.6,38,75,000/- should not be brought to the tax in AY 2014-15and AY 2015-16. 6. On 03.11.2020, the petitioner filed the present writpetitions, praying for various reliefs including the prayers toquash the Impugned First Notices dated 16.12.2019 and theImpugned Show Cause Notice dated 21.10.2020 for the AssessmentYears AY 2014-15 and AY 2015-16. 7. This Court passed an interim order on 07.12.2020,directing the respondents to file their counter affidavits. ThisCourt directed the petitioner to file reply to the Show CauseNotice without prejudice to the contentions in these writpetitions and an order of Status quo as existing on that day wasalso granted. On 11.02.2020, the High Court allowed theCrl.R.C.No.510 of 2020 and held that the complaint filed by DDIT(Inv) was premature. 8. The petitioner filed his reply to the Show Cause Noticedated 21.10.2020 on 17.12.2020. On the same day, the AssessingOfficer permitted the Chartered Accountant of the petitioner toinspect the files. After inspection, the Chartered Accountantwrote to the Assessing Officer and recorded that the material inthe file to initiate proceedings under Section 148 was the sameas the material in the file to initiate proceedings underSection 153C. However, during the pendency of the present writpetitions, on 18.03.2021, the Assessing Officer referring to theproceedings under Section 153C, issued another Show CauseNotice, reiterating the proposal to tax Rs.6,38,75,000/- in AY2014-15 and proposing to tax 8. The petitioner filed his reply to the Show Cause Noticedated 21.10.2020 on 17.12.2020. On the same day, the AssessingOfficer permitted the Chartered Accountant of the petitioner toinspect the files. After inspection, the Chartered Accountantwrote to the Assessing Officer and recorded that the material inthe file to initiate proceedings under Section 148 was the sameas the material in the file to initiate proceedings underSection 153C. However, during the pendency of the present writpetitions, on 18.03.2021, the Assessing Officer referring to theproceedings under Section 153C, issued another Show CauseNotice, reiterating the proposal to tax Rs.6,38,75,000/- in AY2014-15 and proposing to tax Rs.2,00,00,000 in AY 2015-16, Rs.35,00,000 in AY 2017-18, Rs.64,00,000 in AY 2018-19 and Rs.21,00,000 in AY 2019-20 Total Rs.3,20,00,000 9. On 20.03.2021, the petitioner through his CharteredAccountant, requested the Assessing Officer to await the outcomeof the pending writ petitions before this Court. THE FACTS IN BRIEF AS PER THE RESPONDENTS:10. The writ petitioner has sold three parcels of land(total extent of 5.11 acres) belonging to him through three saledeeds dated 31.01.2014, 27.03.2014 and 27.03.2014 to M/s.AgniEstates and Foundation Private Limited at the price of RupeesThree Crore per acre. However, in respect of the contiguous piece of land owned by Smt.Nalini Chidambaram, the land was soldat Rs.4.25 Crores per acre. The writ petitioner had filed hisreturn of income for the AY 2014-15 on 29.07.2014, declaring atotal income of Rs.45,18,430/- The case was selected forscrutiny under CASS and an order under Section 143(3) was passedon 30.12.2016. The Assessing Officer, ACIT, Non-CorporateCircle-3, Chennai, assessing an income of Rs.70,36,366/- onaccount of income from the sale of coffee and pepper. An appealwas preferred against CIT (A)-4 and the said appeal was allowedvide order dated 26.09.2017. The said order was accepted by theDepartment, in view of the low tax effect. Subsequently, asearch was conducted in the premises of M/s.Advantage Strategicon 01.12.2015 and in the premises of M/s.Agni Estates andFoundation Private Limited from 05.07.2018 till 09.07.2018.Certain evidences were procured in the form on small note booksnumbered from 1 to 175 seized vide Annexure ANN/ARS/AP/B&D/S-1during the search conducted under Section 132 in the premises ofM/s.Agni Estates and Foundations Private Limited. Pursuant tothe search, the second respondent communicated informationrelating to the search to the third respondent. It was intimatedthat the writ petitioner had arranged for cash payments inaddition to the sale consideration in respect of the aforesaidthree sale deeds. 11. The second respondent, who was the officer, whoconducted the search, vide two communications on 10.08.2018 and20.08.2018, intimated the aforesaid communication to the thirdrespondent. The third respondent had, based on the informationso received, issued a notice dated 20.08.2018 under Section 148of the Act, stating that he has “reasons to believe” that incomehad escaped assessment within the meaning of Section 147.Subsequently, the seized materials were received by the thirdrespondent i.e., the Assessing Officer having jurisdiction overthe searched person i.e., M/s.Agni Estates and FoundationsPrivate Limited on 22.08.2019. On 28.11.2019, satisfaction wasrecorded in the case of the petitioners and show cause noticewas issued on 16.12.2019 in the case of the petitioner forassessment under Section 153C. The proceedings initiated wasreassessment proceedings under Section 147/148 of the Act for AY2014-15 and the proceedings for Search assessment under Section153C for AY 2013-14 to AY 2018-19. 12. The issues mainly raised by the writ petitioners arethat: 12. The issues mainly raised by the writ petitioners arethat: (a) The Assessing Officer, on receipt of informations andmaterials, elected to initiate proceedings under Section 148 ofthe Act. Thus, he has no jurisdiction to allow the saidproceedings to lapse and initiate further proceedings underSection 153C of the Act. Thus, the action lacks jurisdiction andamounts to legal malice. (b)Theallegedmaterialsseizedpertains toRs.6,38,75,000/- received allegedly as 'on money' in respect ofthe lands sold in Financial Year 2013-14. The amount is to betaxed as 'capital gains'. Under Section 45 of the Act, capitalgains can be taxed only in the relevant Assessment Year, which,in this case, is admittedly AY 2014-15. The materials seized hasno “bearing on the total income” in respect of any otherAssessment Year. Thus, the Assessing Officer has no jurisdictionto re-open the assessment in respect of any other AssessmentYear and consequently, the impugned notices issued under Section153C of the Act is beyond the scope of re-opening proceedings.(c) The proceedings under Section 148 of the Act admittedlylapsed on 31.12.2019. On such lapsing, in the absence of anorder of re-assessment, the original return of income for AY2014-15 is deemed to have been accepted and no further tax canbe demanded for the said Assessment Year. (d) Allowing the proceedings under Section 148 to lapse on31.12.2019 and initiation of proceedings under Section 153C on16.12.2019 (barely 15 days before limitation set in) was acolourable exercise of power. The Assessing Officer did not takeany steps for nearly 16 months after the notice under Section148 was issued on 20.08.2018. Realizing that he could not hold aproper enquiry and pass a reasoned order in 15 days (before31.12.2019), the Assessing Officer, in a hurried manner, issuedthe show cause notice dated 16.12.2019 under Section 153C. Theoblique purpose was to extend the limitation because underSection 153C read with Section 153B, the time limit was30.09.2020 (at that time) which has been subsequently extendedowing to the pandemic until 30.06.2021. (e) The same materials allegedly seized during the searchof the buyer's premises, the Assessing Officer has threemutually contradictory cases:(i) that the alleged 'on money' of Rs.6,38,75,000/- shouldbe taxed in AY 2014-15; (ii) that the alleged 'on money' of Rs.6,38,75,000/- shouldbe taxed in two Assessment Years, AY 2014-15 and AY 2015-16; (iii) that the alleged 'on money' of Rs.6,38,75,000/-should be taxed in AY 2014-15 and further, a total sum ofRs.3,20,00,000/- (part of Rs.6,38,75,000/-) should be taxed infour Assessment Years, namely, AY 2015-16, AY 2017-18, AY 2018-19, and AY 2019-20. An Assessing Officer has no jurisdiction to issue multiplenotices containing contradictory cases and ask the noticee toanswer them. A notice to show cause cannot be vague or containcontradictory allegations. The assessee will not know what isthe allegation / case that he has to answer. Thus, theproceedings will be in violation of the Principles of NaturalJustice. ARGUMENTS ON BEHALF OF THE PETITIONERS 13. Raising these issues commonly in respect of the writpetitions, the respective learned Senior counsels appearing inrespective writ petitions elaborated their arguments. An Assessing Officer has no jurisdiction to issue multiplenotices containing contradictory cases and ask the noticee toanswer them. A notice to show cause cannot be vague or containcontradictory allegations. The assessee will not know what isthe allegation / case that he has to answer. Thus, theproceedings will be in violation of the Principles of NaturalJustice. ARGUMENTS ON BEHALF OF THE PETITIONERS 13. Raising these issues commonly in respect of the writpetitions, the respective learned Senior counsels appearing inrespective writ petitions elaborated their arguments. 14. With reference to W.P.No.16686 of 2020, the learnedSenior counsel Dr.Abhishek Singhvi, contended that the last datefor passing of reassessment order under Section 148 of the Actin the present case falls on 31.12.2019. Perusal of thematerials relied on by the Assessing Officer for initiation ofproceedings under Section 148 of the Act and the impugned ShowCause Notice issued under Section 153C of the Act are one andthe same and the materials are relating to the alleged paymentof on cash by the buyer to the petitioner amounting to a sum ofRs.6,38,75,000/-. When the materials and informations relied onfor the purpose of initiation of re-opening proceedings underSection 147 and notice under Section 148 and the impugned ShowCause Notice under Section 153C of the Act are same and suchmaterials were within the knowledge of the Assessing Officereven at the time of initiation of re-opening proceedings underSection 148 of the Act. Thereafter, the Assessing Officer cannotreprobate and initiate further proceedings under Section 153C ofthe Act. It is contended that the limitation lapses on31.12.2019 and knowing the fact that after the expiry oflimitation, the return of income scrutinized and the assessmentorder deemed to became final, the Assessing Officer issued theimpugned Show Cause Notice with an intention to extend theperiod of limitation and thus, the actions are nothing, butlegal malice and amounts to tax terrorism. 15. The learned Senior counsel elaborated the scope ofimplications of Section 153A and 153C of the Act. Section 153Aof the Act applies to the searched person himself. However,Section 153C applies to the other persons, having any bearing inrespect of the transactions identified consequent to the searchconducted under Section 132 of the Act. 16. The learned Senior counsel solicited the attention ofthis Court with reference to the contradictions in initiation ofproceedings both under Section 148 and in the impugned Noticesunder Section 153C of the Act. 17. Admittedly, the return of income filed for the AY 2014-15 on 29.07.2014 and the final assessment order under Section143(3) was passed on 30.12.2016. The learned Senior counselreiterated that the search and seizer materials were very wellwithin the knowledge of the Assessing Officer. Based on the saidmaterials and informations, notice under Section 148 of the Actwas issued, stating that the Assessing Officer has “reason tobelieve” that the income chargeable to tax for the AY 2014-15 16. The learned Senior counsel solicited the attention ofthis Court with reference to the contradictions in initiation ofproceedings both under Section 148 and in the impugned Noticesunder Section 153C of the Act. 17. Admittedly, the return of income filed for the AY 2014-15 on 29.07.2014 and the final assessment order under Section143(3) was passed on 30.12.2016. The learned Senior counselreiterated that the search and seizer materials were very wellwithin the knowledge of the Assessing Officer. Based on the saidmaterials and informations, notice under Section 148 of the Actwas issued, stating that the Assessing Officer has “reason tobelieve” that the income chargeable to tax for the AY 2014-15 has escaped assessment. The reasons for re-opening of assessmentwas furnished on 12.10.2018 and the attention of this Court isdrawn with reference to the remarks of the AdditionalCommissioner of Income tax on the reasons recorded by theAssessing Officer is relied upon, wherein it is stated that itis a fit case for issue of notice under Section 148 on thereason that “information in the possession of the “AO” revealsthat the assessee had received 'on money' payment in cash overand above the registered value, which was not disclosed in the“ROI” filed or during the course of 143(3) proceedings. It is afailure on the part of the assessee in not disclosing fully andtruly all material facts which has a bearing on the taxableincome of the assessee. Hence, it is a fit case for re-openingunder Section 148. Therefore, on the date of re-opening i.e.,Section 148 notice dated 20.08.2018, the Assessing Officer hadthe knowledge about the 'on money' payment in cash allegedlyreceived by the petitioner with reference to the sale of land infavour of the buyer M/s.Agni Estates. 18. The learned Senior counsel pointed out the reasonsfound in 'Annexure to the reasons' for re-opening of assessmentunder Section 147 of the Act in the case of the petitioner forthe AY 2014-15. The said reasons unambiguously establishes thatthe informations received from the DDIT (Inv) letter vide orderdated 10.08.2018, revealed that a search and seizure operationwas conducted under Section 132 of the Act on 05.07.2018 in thecase of M/s.Agni Estates and Foundation Private Limited. Thus,the Assessing Officer was aware of the search and seizureoperations in the premises of the buyer M/s.Agni Estates on05.07.2018. Further, the informations were also received fromDDIT (Inv) on 10.08.2018, the sale price and the alleged on cashtransactions were also within the knowledge of the AssessingOfficer.Thisapart,thestatementsrecordedfromMr.R.N.Jayaprakash (Director of M/s.Agni Estate and FoundationPrivate Limited) and the note book as referred and all othermaterials in connection with the search and seizure operationswere available and within the knowledge of the Assessing Officerand based on the materials, the Assessing Officer formed anopinion that he has “reason to believe” that the tax chargeableescaped assessment and accordingly, issued Notice under Section148 of the Act. Even the statements of the Director of M/s.AgniEstates namely Mr.R.N.Jayaprakash was extracted in the orderdated 12.10.2018, furnishing reasons for re-opening. Thus, theAssessing Officer ought to have proceeded with 148 proceedingsand complete within the period of limitation prescribed underthe Act. Contrarily, he slept over the matter for a considerablelength of time without any action and woke up one fine morningand issued the impugned Notices under Section 153C of the Act,knowing the fact that the last date for completion of 148proceedings was 31.12.2019. Such an action is not only legal malice, but without jurisdiction. Once a re-opening proceedingsunder Section 148 of the Income Tax Act is initiated on receiptof certain informations and materials from the InvestigationWing of the Income Tax Department, relying on the saidmaterials, further actions were taken, forwarded for completionof proceedings under Section 147 of the Act, but suddenly, theAssessing Officer cannot turn around and switch over to Section153C for continuation of the reassessment proceedings beyond theexpiry date i.e., 31.12.2019. The action results in clutching ofjurisdiction and is impermissible. 19. The very intention and the manner in which the impugnednotices issued are self-evident that the action was withoutjurisdiction and is a classic case of legal malice. 20. The learned Senior counsel for the petitionersreiterated that the impugned notices are issued to extend theperiod of limitation, more specifically, in the absence of anytangible materials. The materials relied upon for initiation of148 proceedings and the materials from which, the “SatisfactionNote” is prepared with the Assessing Officer for issuing theimpugned notices under Section 153C of the Act are one and thesame and thus, the Assessing Officer to cover up his misdeedsconverted the proceedings, which amounts to legal malice. Thus,the impugned notices are issued beyond the scope of jurisdictionunder the Act. The mandatory requirements as contemplated underthe procedures were not followed and the materials andinformations relied on for the purpose of initiation of 148proceedings as it cannot be relied upon for the purpose ofissuing the Show Cause Notice under Section 153C of the Act andin such an event, the very purpose of Section 153C would bedefeated. Once 147 proceedings are initiated, the AssessingOfficer is bound to conclude the same by following theprocedures. In between, he cannot change his mind and convertthe proceedings to 153C and the very action indicates that theauthorities have done it with a motive and amounts to legalmalice. 21. The learned Senior counsel regarding the abatementClause contemplated under Section 153-A said that, the abatementis an inapplicable concept as far as the facts of the case onhand is concerned. The Doctrine of abatement in the present caseis alien, in view of the fact that the materials relied upon forre-opening of assessment under Section 148 forms the same basisfor issuance of impugned Show Cause Notices under Section 153Cof the Act. Thus, the abatement clause has no application. 22. The learned Senior counsel relied on the judgment ofthe Constitution Bench of the Hon'ble Supreme Court of India inthe case of Calcutta Discount Company Limited Vs. Income Tax Officer, reported in AIR 1961 SC 372 and the relevant paragraphsare extracted hereunder: “27. Mr Sastri mentioned more than once the factthat the Company would have sufficient opportunity toraise this question viz. whether the Income Tax Officerhad reason to believe that underassessment had resultedfrom non-disclosure of material facts, before theIncome Tax Officer himself in the assessmentproceedings and if unsuccessful there before theappellate officer or the Appellate Tribunal or in theHigh Court under Section 66(2) of the Indian Income TaxAct. The existence of such alternative remedy is nothowever always a sufficient reason for refusing a partyquick relief by a writ or order prohibiting anauthority acting without jurisdiction from continuingsuch action. Officer, reported in AIR 1961 SC 372 and the relevant paragraphsare extracted hereunder: “27. Mr Sastri mentioned more than once the factthat the Company would have sufficient opportunity toraise this question viz. whether the Income Tax Officerhad reason to believe that underassessment had resultedfrom non-disclosure of material facts, before theIncome Tax Officer himself in the assessmentproceedings and if unsuccessful there before theappellate officer or the Appellate Tribunal or in theHigh Court under Section 66(2) of the Indian Income TaxAct. The existence of such alternative remedy is nothowever always a sufficient reason for refusing a partyquick relief by a writ or order prohibiting anauthority acting without jurisdiction from continuingsuch action. 28. In the present case the Company contends thatthe conditions precedent for the assumption ofjurisdiction under Section 34 were not satisfied andcome to the court at the earliest opportunity. There isnothing in its conduct which would justify the refusalof proper relief under Article 226. When theConstitution confers on the High Courts the power togive relief it becomes the duty of the courts to givesuch relief in fit cases and the courts would befailing to perform their duty if relief is refusedwithout adequate reasons. In the present case we canfind no reason for which relief should be refused. 29. We have therefore come to the conclusion thatthe Company was entitled to an order directing theIncome Tax Officer not to take any action on the basisof the three impugned notices. 30. We are informed that assessment orders were infact made on March 25, 1952, by the Income Tax Officerin the proceedings started on the basis of theseimpugned notices. This was done with the permission ofthe learned Judge before whom the petition underArticle 226 was pending, on the distinct understandingthat these orders would be without prejudice to thecontentions of the parties on the several questionsraised in the petition and without prejudice to theorders that may ultimately be passed by the Court. Thefact that the assessment orders have already been madedoes not therefore affect the Company's right to obtainrelief under Article 226. In view however of the factthat the assessment orders have already been made wethink it proper that in addition to an order directingthe Income Tax Officer not to take any action on thebasis of the impugned notices a further order quashingthe assessment made be also issued.” 23. Relying on the said judgment, the learned Seniorcounsel for the petitioner asserted the maintainability of thewrit petition, and emphasized that the existence of analternative remedy is not however sufficient reason for refusinga litigant quick relief by a writ or order prohibiting anauthority acting without jurisdiction from continuing suchaction. The Constitution Bench made an observation that when theConstitution confers on the High Courts the power to give reliefit becomes the duty of the courts to give such relief in fitcases and the courts would be failing to perform their duty ifrelief is refused without adequate reasons. 24. Relying on the said observations, the learned Seniorcounsel made a submission that the point of maintainabilityraised by the respondents deserves no merit consideration as itis a classic case of legal malice and without jurisdiction andapplying the principles of Constitution Bench cited, the writpetition is maintainable. 25. The Constitution Bench judgment of the Hon'ble SupremeCourt of India is followed in the case of Whirlpool CorporationVs. Registrar of Trade Marks, Mumbai and others, reported in(1998) 8 SCC 1 and the relevant paragraphs are extractedhereunder: 24. Relying on the said observations, the learned Seniorcounsel made a submission that the point of maintainabilityraised by the respondents deserves no merit consideration as itis a classic case of legal malice and without jurisdiction andapplying the principles of Constitution Bench cited, the writpetition is maintainable. 25. The Constitution Bench judgment of the Hon'ble SupremeCourt of India is followed in the case of Whirlpool CorporationVs. Registrar of Trade Marks, Mumbai and others, reported in(1998) 8 SCC 1 and the relevant paragraphs are extractedhereunder: “14. The power to issue prerogative writs underArticle 226 of the Constitution is plenary in natureand is not limited by any other provision of theConstitution. This power can be exercised by the HighCourt not only for issuing writs in the nature ofhabeas corpus, mandamus, prohibition, quo warranto andcertiorari for the enforcement of any of theFundamental Rights contained in Part III of theConstitution but also for “any other purpose”. 15. Under Article 226 of the Constitution, theHigh Court, having regard to the facts of the case, hasa discretion to entertain or not to entertain a writpetition. But the High Court has imposed upon itselfcertain restrictions one of which is that if aneffective and efficacious remedy is available, the HighCourt would not normally exercise its jurisdiction. Butthe alternative remedy has been consistently held bythis Court not to operate as a bar in at least threecontingencies, namely, where the writ petition has beenfiled for the enforcement of any of the FundamentalRights or where there has been a violation of theprinciple of natural justice or where the order orproceedings are wholly without jurisdiction or thevires of an Act is challenged. There is a plethora ofcase-law on this point but to cut down this circle offorensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law asthey still hold the field. 19. AnotherConstitutionBenchdecisionin Calcutta Discount Co. Ltd. v. ITO, Companies Distt.I [AIR 1961 SC 372 : (1961) 41 ITR 191] laid down: “Though the writ of prohibition or certiorari willnot issue against an executive authority, the HighCourts have power to issue in a fit case an orderprohibiting an executive authority from acting withoutjurisdiction. Where such action of an executiveauthority acting without jurisdiction subjects or islikely to subject a person to lengthy proceedings andunnecessary harassment, the High Courts will issueappropriate orders or directions to prevent suchconsequences. Writ of certiorari and prohibition canissue against the Income Tax Officer acting withoutjurisdiction under Section 34, Income Tax Act.” 20. Much water has since flown under the bridge,but there has been no corrosive effect on thesedecisions which, though old, continue to hold the fieldwith the result that law as to the jurisdiction of theHigh Court in entertaining a writ petition underArticle 226 of the Constitution, in spite of thealternative statutory remedies, is not affected,specially in a case where the authority against whomthe writ is filed is shown to have had no jurisdictionor had purported to usurp jurisdiction without anylegal foundation.” 20. Much water has since flown under the bridge,but there has been no corrosive effect on thesedecisions which, though old, continue to hold the fieldwith the result that law as to the jurisdiction of theHigh Court in entertaining a writ petition underArticle 226 of the Constitution, in spite of thealternative statutory remedies, is not affected,specially in a case where the authority against whomthe writ is filed is shown to have had no jurisdictionor had purported to usurp jurisdiction without anylegal foundation.” 26. The Hon'ble Supreme Court of India in the said caseobserved that the power to issue prerogative writs under Article226 of the Constitution is plenary in nature and is not limitedby any other provision of the Constitution. The observations inparagraph 15 reiterates that the alternative remedy cannot be abar in at least three contingencies, namely, where the writpetition has been filed for the enforcement of any of theFundamental Rights or where there has been a violation of theprinciple of natural justice or where the order or proceedingsare wholly without jurisdiction or the vires of an Act ischallenged. 27. Relying on the above principles, the learned Seniorcounsel is of an opinion that the case on hand is a classic caseof no jurisdiction, legal malice and violation of the provisionsof the Income Tax Act and therefore, the writ petition ismaintainable and the impugned orders are to be set aside. 28. In the case of Commissioner of Bhopal Vs. ShellyProducts and another, reported in (2003) 5 SCC 461, the Hon'ble https://hcservices.ecourts.gov.in/hcservices/ 27. Relying on the above principles, the learned Seniorcounsel is of an opinion that the case on hand is a classic caseof no jurisdiction, legal malice and violation of the provisionsof the Income Tax Act and therefore, the writ petition ismaintainable and the impugned orders are to be set aside. 28. In the case of Commissioner of Bhopal Vs. ShellyProducts and another, reported in (2003) 5 SCC 461, the Hon'ble https://hcservices.ecourts.gov.in/hcservices/ Supreme Court of India made significant observations inParagraphs 35 and 36 and the same are extracted hereunder:“35. What then is the effect of the failure tomake an order of assessment after the earlierassessment made is set aside or nullified inappropriate proceedings? If the Assessing Authoritycannot make a fresh assessment in accordance with theprovisions of the Act it amounts to deemed acceptanceof the return of income furnished by the assessee. Insuch a case the Assessing Authority is denuded of itsauthority to verify the correctness and completeness ofthe return, which authority it has while framing aregular assessment. It must accept the return asfurnished and shall not in any event raise a demand forpayment of further taxes. Accepting the income asdisclosed in the return of income furnished by theassessee, it must refund to the assessee any tax paidin excess of the liability incurred by him on the basisof income disclosed. Even if the tax paid is found tobe less than that payable, no further demand can bemade for recovery of the balance amount since a freshassessment is barred. In other words, the tax paid bythe assessee must be accepted as it is, and in theevent of the tax paid being in excess of the taxliability duly computed on the basis of returnfurnished and the rates applicable, the excess shall berefunded to the assessee, since its retention mayoffend Article 265 of the Constitution. 36. We cannot lose sight of the fact that thefailure or inability of the Revenue to frame a freshassessment should not place the assessee in a moredisadvantageous position than in what he would havebeen if a fresh assessment was made. In a case where anassessee chooses to deposit by way of abundant cautionadvance tax or self-assessment tax which is in excessof his liability on the basis of return furnished orthere is any arithmetical error or inaccuracy, it isopen to him to claim refund of the excess tax paid inthe course of assessment proceeding. He can certainlymake such a claim also before the authority concernedcalculating the refund. Similarly, if he has by mistakeor inadvertence or on account of ignorance, included inhis income any amount which is exempted from payment ofincome tax, or is not income within the contemplationof law, he may likewise bring this to the notice of theAssessing Authority, which if satisfied, may grant himrelief and refund the tax paid in excess, if any. Suchmatters can be brought to the notice of the authorityconcerned in a case when refund is due and payable, andthe authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by Section240 of the Act, an obligation is cast upon the Revenueto refund the amount to the assessee without his havingto make any claim in that behalf. In appropriate casestherefore, it is open to the assessee to bring facts tothe notice of the authority concerned on the basis ofthe return furnished, which may have a bearing on thequantum of the refund, such as those the assessee couldhave urged under Section 237 of the Act. The authorityconcerned, for the limited purpose of calculating theamount to be refunded under Section 240 of the Act, maytake all such facts into consideration and calculatethe amount to be refunded. So viewed, an assessee willnot be placed in a more disadvantageous position thanwhat he would have been, had an assessment been made inaccordance with law.” 29. Relying on the above paragraph 35, the learned Seniorcounsel reiterated that in the present case, the AssessingOfficer miserably failed to conclude the re-opening ofassessment proceedings initiated under Section 148 of the Act bypassing orders before the last date on 31.12.2019 and therefore,the return of income assessed and the assessment orders passed,amounts to deemed acceptance of return of income filed by theassessee. Thus, there is no scope for fu