Kausalya Maruthachalam v. Additional/Joint/Deputy/ Assistant Commissioner Of Income Tax, National Faceless Assessment Centre, Delhi

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED : 03.02.2022CORAMTHE HON'BLE MR. JUSTICE M.SUNDARW.P(MD)No.2053 of 2022 and W.M.P.(MD)No.1765 of 2022 Kausalya Maruthachalam ... Petitioner -Vs- 1.Additional/Joint/Deputy/ Assistant Commissioner of Income Tax, National Faceless Assessment Centre, Delhi. 2.The Deputy Commissioner of Income Tax Circle-1, No.44, Williams Road, Cantonment, Tiruchirappalli, Tamil Nadu 620 001.... Respondents Prayer:Writ Petition filed under Article 226 of Constitution ofIndia, to issue a Writ of Certiorari, calling for the records of the1[st] respondent with regard to the impugned assessment order passedagainst the Petitioner dated 20.12.2021 for the Assessment Year2008-2009 bearing DIN in Order No.ITBA/AST/S/147/2021-22/1037961473(1) under Section 147 read with Section 144B of the Income Tax Act,and quash the same as unreasonable, illegal, wholly withoutjurisdiction. For Petitioner : Mr.Nithyaesh NatrajFor Respondents : Mr.N.Dilipkumar, Senior Standing Counsel. Mr.Nithyaesh Natraj, learned counsel for the writ petitioner(assessee) and Mr.N.Dilipkumar, learned Senior Standing Counsel forIncome Tax (Revenue Counsel) who has accepted notice on behalf ofboth the respondents are before this virtual Court. Owing to theshort point that is being canvassed in the captioned matter, mainwrit petition was taken up with the consent of both sides. 2. In the light of short point that is being canvassed factualmatrix in a nutshell containing the facts that are imperative forappreciating this order will suffice. Such factual matrix is thatthe captioned matter pertains to an assessment made under the'Income Tax Act, 1961' (hereinafter 'IT Act' for the sake ofconvenience and clarity) qua 'Assessment Year 2008-2009'(hereinafter 'said AY' for the sake of convenience and clarity);https://hcservices.ecourts.gov.in/hcservices/ that there was search proceedings under Section 153C of IT Act; thatan assessment order came to be made on 24.12.2009 under Section 143(3) of IT Act; that this was followed by further proceedings whichculminated in another assessment order dated 23.12.2011 made underSection 143(3) read with Section 147 of IT Act; that thereafter thewrit petitioner was visited with a notice dated 31.03.2015 being anotice under Section 148 of IT Act for re-assessment qua said AY;that this notice was assailed by the writ petitioner in this Courtin a writ petition vide W.P.(MD)No.5110 of 2016 and this writpetition along with WMPs therein came to be disposed of by a Hon'bleSingle Judge of this Court on 18.03.2021 (date wrongly mentioned as21.10.2021 in synopsis); that this order was carried in appeal bythe writ petitioner-assessee by way of an intra Court appeal to aHon'ble Division Bench of this Court; that Hon'ble Division Bench ofthis Court Vide W.A.No.1876 of 2021 dismissed the appeal; that aconjoint reading of the order of Hon'ble Single Judge and that ofthe Hon'ble Division Bench brings to light that it was a consentorder before the Hon'ble Single Bench and the directive of theHon'ble Single Judge is to give an opportunity of personal hearingto the petitioner and thereafter pass orders in accordance with law;that thereafter there was a notice dated 12.11.2021 under Section142(1) of IT Act; that in response to this notice, writ petitionersent 'objections dated 23.11.2021' (hereinafter 'said objections'for the sake of convenience and clarity); that thereafter a showcause notice (SCN) dated 16.12.2021 together with a draft assessmentorder came to be issued and this has led to an assessment order'dated 20.12.2021 bearing reference DIN in Order No.ITBA/AST/S/147/2021-22/ 1037961473(1)' (hereinafter 'impugned order' for thesake of convenience and clarity). 3. In the hearing before this Court today, notwithstanding verymany averments made in the writ affidavit and notwithstandingseveral grounds raised in the writ affidavit, the matter was arguedon one point and that one point is GKN principle [GKN Driveshafts(India) Limited Vs. Income Tax Officer and others] has not beenfollowed post aforementioned orders of this Court. To be noted, GKNprinciple, is a reference to an order of Hon'ble Supreme Court inCivil Appeal No.7731 of 2002 etc. being order dated 25.11.2002reported in (2003) 1 SCC 72. For clarity and specificity this Courtmakes it clear that the GKN Driveshafts principle has beensuccinctly set out in paragraph 5 and the same reads as follows:'5.We see no justifiable reason to interfere withthe order under challenge. However, we clarify thatwhen a notice under Section 148 of the Income tax Actis issued, the proper course of action for the noticeeis to file return and if he so desires, to seek reasonsfor issuing notices. The assessing officer is bound tofurnish reasons within a reasonable time. On receipt ofreasons, the noticee is entitled to file objections toissuance of notice and the assessing officer is boundhttps://hcservices.ecourts.gov.in/hcservices/ to dispose of the same by passing a speaking order. Inthe instant case, as the reasons have been disclosed inthese proceedings, the assessing officer has to disposeof the objections, if filed, by passing a speakingOrder before proceeding with the assessment in respectof the abovesaid five assessment years.' 4. Having set out the trajectory and the lone point that isbeing argued in the hearing it is necessary to set out the bone ofcontention between the assessee and the Department in a nutshell.The bone of contention is fairly simple and that is whether profiton sale of what according to the writ petitioner is agriculturalland are not liable to capital gains tax under Section 45 of IT Act.The issue is nothing more nothing less. 5. This Court now reverts to the GKN Driveshafts principle.From the narrative thus far which also captures the trajectory thematter has taken, it will be clear that after the orders of Hon'bleSingle Judge and the order of the Hon'ble Division Bench of thisCourt, the Department had issued a notice dated 12.11.2021 underSection 142(1) of IT Act and the writ petitioner has sent objectionsdated 23.11.2021, which is being referred to as said objections. IfGKN Driveshafts principle is to be followed, the Assessing Officershould have considered this objections and made an order which hasnow come to stay in litigation parlance as 'speaking order'. 6. Learned Revenue Counsel attempted to say that theaforementioned SCN dated 16.12.2021 contains a draft assessmentorder and therefore that by itself will serve as a speaking order.This Court is unable to accept this argument as a careful reading ofparagraph 5 GKN Driveshafts case law which has been extracted andreproduced supra will make it clear that it is a mechanism out sideof the IT Act which has been put in place in assessments of thisnature more particularly in re-assessment of this nature andtherefore, the objections have to necessarily be dealt with and anorder made before the draft assessment is served on the writpetitioner. Therefore the argument of learned Revenue Counsel thatthe draft assessment itself will serve as speaking order thoughingenious and attractive at first blush does not find favour withthis Court. 7. As already alluded to supra, the entire matter was argued onone point and in the light of the discussion and dispositivereasoning that one point now can be given a quietus by freezing thematter qua the objections of writ petitioner/assessee i.e., saidobjections dated 23.11.2021 and calling upon the Assessing Officeri.e, Department to proceed from this objections stage in accordancewith GKN Driveshafts principle and complete the re-assessment asexpeditiously as the business of the first respondent i.e.,Assessing Officer (AO) would permit. Before this Court does that ithttps://hcservices.ecourts.gov.in/hcservices/ is deemed appropriate to extract and reproduce the orders of Hon'bleSingle Judge and the order of the Hon'ble Division Bench in writpetitioner's earlier challenge to 31.03.2015 notice under Section148 of IT Act. The reason is the order of the Single Judge has beenplaced before this Court as part of the case file but the intraCourt appeal has not been mentioned and the order of the DivisionBench has not been placed before this Court. It was brought to thenotice of this Court by the learned Revenue Counsel. Forconvenience and ease of reference, both the orders i.e., order ofthe Hon'ble Singe Judge and the order of the Hon'ble Division Benchare reproduced infra one after other. 8. Order of the Hon'ble Single Judge dated 18.03.2021 is asfollows: 'Heard the learned counsel on either side. 2. The petitioner questions the impugned noticedated 31.03.2015 and the consequential communicationdated 18.02.2016 issued by the second respondent on thegrounds set out in the affidavit filed in support ofthis writ petition. 3. This Court indicated that since the petitionerhas come at the notice stage itself, this Court may notbe inclined to entertain this writ petition. Thereupon,the petitioner's counsel submitted that all thecontentions of the petitioner may be left open. Thepetitioner has already given reply before the secondrespondent. 4. The second respondent shall give an opportunityof personal hearing to the petitioner and thereafter,pass orders in accordance with law. I make it clearthat all the contentions of the petitioner are leftopen and I have not gone into the merits of the matter.5. This writ petition stands disposed ofaccordingly. No costs. Consequently, connectedmiscellaneous petitions are closed.' 9. Order of the Hon'ble Division Bench dated 05.10.2021 is asfollows:Challenging the order passed in W.P(MD)No.5110 of2016, dated 18.03.2021, the writ petitioner has filedthe above Writ Appeal. 2.The appellant filed the Writ Petition to issue aWrit of Certiorari, to call for the records pertainingto the impugned second notice dated 31.03.2015 and theconsequential communication dated 18.02.2016 issued bythe second respondent and to quash the same. 3.On a perusal of the order impugned in the WritAppeal, it could be seen that the same is a consenthttps://hcservices.ecourts.gov.in/hcservices/order passed by the learned Single Judge. 4.When the Writ Petition came up for hearingbefore the learned Single Judge, the petitioner'scounsel submitted that all the contentions of thepetitioner may be left open and that the petitionerhas already given her reply to the second respondentfor the notices issued to her. The learned SingleJudge directed the second respondent to give anopportunity of personal hearing to the appellant andthereafter pass orders in accordance with law. Thelearned Single Judge also made it clear that all thecontentions of the writ petitioner are left open.5.Since the appellant/writ petitioner has filedthe Writ Appeal as against the consent order passed bythe learned Single Judge, the same cannot beentertained by this Court.6.In such view of the matter, the Writ Appeal isliable to be dismissed and accordingly, the same isdismissed.Nocosts.Consequently,connectedMiscellaneous Petition is closed.' 10. The conclusion is, all proceedings post writpetitioner's /assessee's objections dated 23.11.2021 are set asidesolely on the ground that GKN Driveshafts principle has not beenstrictly adhered to. The first respondent Assessing Officer shallproceed from this 23.11.2021 objection stage, pass a speaking order,complete the re-assessment as expeditiously as his business wouldpermit and in any event within 12 weeks from today i.e., on orbefore 28.04.2022. 11. Captioned writ petition is disposed of in above manner.Consequently captioned WMP is disposed of as closed. There shall beno order as to costs. Sd/- Assistant Registrar (CS-I) // True Copy // Vsm Sub Assistant Registrar(CS) Note :In view of the present lock down owing to COVID-19 pandemic,a web copy of the order may be utilized for official purposes, but,ensuring that the copy of the order that is presented is the correctcopy, shall be the responsibility of the advocate / litigantconcerned. https://hcservices.ecourts.gov.in/hcservices/ To 1.Additional/Joint/Deputy/ Assistant Commissioner of Income Tax, National Faceless Assessment Centre, Delhi. Assistant Commissioner of Income Tax, National Faceless Assessment Centre, Delhi. 2.The Deputy Commissioner of Income Tax Circle-1, No.44, Williams Road, Cantonment, Tiruchirappalli, Tamil Nadu 620 001.+1 CC to M/s.N.DILIPKUMAR, Advocate ( SR-4363[F] dated 04/02/2022 ) RD(15.02.2022) 6P 4C W.P(MD)No.2053 of 2022 and W.M.P.(MD)No.1765 of 2022 03.02.2022