M.muthian v. Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P.No.38338 of 2003 &W.P.M.P.No.46536 of 2003 M.Muthian ... Petitioner Vs. Commissioner of Income Tax,121, Mahatma Gandhi Road,Chennai-600 034. ... Respondent Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorarified Mandamus, calling forthe records of the respondent in Ref:C.No.CC.V/24(26) 2003-2004dated 06.10.2003 issued by the respondent and quash the same asillegal and without jurisdiction and direct the respondent toissue suitable direction to dispose of the petition of thepetitioner before him as per law. For Petitioner : Mr.R.Sivaraman For Respondent : Mrs.R.Hema Muralikrishnan O R D E R Heard Mr.R.Sivaraman, learned counsel appearing for thepetitioner and Mrs.Hema Muralikrishnan, learned counselappearing for the Revenue. 2.The petitioner has challenged the order passed by theCommissioner of Income Tax-V, dated 06.10.2003, by which thepetitioner’s application for waiver of interest under Section234B/234C of the Income Tax Act, 1961, (Act) was rejected. 3. The petitioner had owned a property at Anna Nagar, whichwas acquired by him during July 1989, with a view to enter intoproperty development busines. The petitioner promoted a companyunder the name and style 'Macro Marvel Projects Limited' andtransferred the said house property in favour of the company onallotment of shares in lieu of the property. Thus, thepetitioner did not receive any cash nor any sale that took placeon the date of entering into the joint venture agreement withthe company. The failure in real estate business and various https://hcservices.ecourts.gov.in/hcservices/ other factors leading to lack of funds prevented the petitionerfrom filing the return for the assessment year 1997-98, inrespect of the deemed income accrued under the provisions of theAct. However, the petitioner filed return on 25.05.1999,without payment of self-assessment tax, as adviced by hisauditor and had made the payment of tax on 06.11.2000. This hasresulted in the charging of interest under Sections 234A, 234Band 234C of the Act. 4.Further, the petitioner contended that the nature of thetransaction, which has resulted in the deemed capital gains is apeculiar one. The petitioner owned land and building in AnnaNagar. He started venture of real estate and he was doing thesame for a long time. At one point of time he thought it fit tochange his business into a limited company. So he promoted thecompany in the name of Macro Marvel Projects Limited for thesole purpose of expanding real estate business. Therefore, hetransferred his above said land and building in favour of thecompany and the sale consideration was mere a book adjustmentand a sole sale consideration of Rs.1,00,00,000/- (Rupees OneCrore only) was by book adjustment allotted as shares to thepetitioner in that company. Thereby, he became a major shareholder, holding more than 50% of shares of the Company and hestill remains as the major share holder. Therefore, the claimis that he is entitled to get exemption under Section 47(xiv) ofthe Income Tax Act. 5.After hearing the learned counsels on either side forconsiderable length of time, this Court pointed out that thesefactual issues, which cannot be taken up or decided in a writpetition filed under Article 226 of the Constitution of India.The learned counsel for the petitioner would state that thepetitioer may be permitted to file a revision under Section 264of the Act, before the Commissioner and may be permitted toraise all factual issues before the revisional authority. 5.After hearing the learned counsels on either side forconsiderable length of time, this Court pointed out that thesefactual issues, which cannot be taken up or decided in a writpetition filed under Article 226 of the Constitution of India.The learned counsel for the petitioner would state that thepetitioer may be permitted to file a revision under Section 264of the Act, before the Commissioner and may be permitted toraise all factual issues before the revisional authority. 6.The learned counsel appearing for the respondent does nothave serious objection to the liberty being granted to thepetitioner to file a revision under Section 264 of the Actbefore the Commissioner of Income Tax. Though the writ petitionis pending from the year 2003, the points urged by thepetitioner for not being able to pay the tax on time beingfactual has to be agitated before the appropriate fact findingauthority and cannot be examined in a Writ Petition underArticle 226 of the Constitution of India. 7.In the light of the above, the Writ Petition is disposedof granting liberty to the petitioner to file revision beforethe Commissioner of Income Tax under Section 264 of the Act andif such revision is filed, the revisional authority, whilecomputing limitation shall exclude the period during which, thiswrit petition was pending before this Court (i.e.) from 22.12.2003, till the date of receipt of certified copy of thisorder and thereafter, proceed to decide the matter on meritsafter affording an opportunity of personal hearing to thepetitioner or his authorized representative. No costs.Consequently, the connected miscellaneous petition is closed. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrarabr/pbnToCommissioner of Income Tax,121, Mahatma Gandhi Road,Chennai-600 034.+1cc to Mr.R.Sivaraman, Advocate SR.No.23443+1cc to Mrs.Hema Muralikrishnan, Advocate SR.No.52576W.P.No.38338 of 2003EV)(CO)GN(05/10/2017)