Montecarlo Limited v. Assistant Commissioner Of Income Tax Central Circle 1(3), Ahmedabad ==========================================================

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 15357 of 2021 ========================================================== MONTECARLO LIMITED VersusASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(3),AHMEDABAD ========================================================== Appearance: MR. HARDIK V VORA(7123) for the Petitioner(s) No. 1 for the Respondent(s) No. 1,2 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANIandHONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 12/10/2021 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) The petitioner Company is a Public LimitedCompany incorporated under the provisions of theCompanies Act, 1956. It is engaged in the business ofInfrastructure Development, Mining and Infrastructurefor power transmission and distribution as well as in theReal Estate business. As part of the infrastructureconstruction and development operations, the companyundertakes highway projects on BOT, EPC and HAM onthe basis of Mining Project on MDO basis. 2.It is the case of the petitioner that it had filed theReturn of Income declaring total income of Rs171,31,23,145/- and claimed deduction under ChapterVI-A of Rs 87,50,11,896/- offering the said amount as taxable amount. 3.His case was selected for scrutiny and petitionersubmitted various details along with the audit report fromthe Chartered Account in Form 10CCB duly certifyingthe claim of deduction made under section 80IA of theIncome Tax Act (for “the Act” for short) of each project,profit and loss account of project and other relevantdocuments. 4.It is the case of the petitioner that a show causenotice was issued on 19.6.2021 . He was asked to explainas to why the deduction claimed under 80IA of the Act tothe tune of Rs 123,25,69,872/- and deduction claimedunder Section 35 AD of the Act of Rs 5,21,35,505/-should not be disallowed and added to the total income. 5. It is further the case of the petitioner 19.6.2021vide notice no. DCIT/CC.1(3)/Ahd/MCL/DVO/2021-22 therespondents referred the matter to the ValuationOfficer, Bhopal, for estimating the value of the land soldduring the year under consideration situated at villageNoornagar, Tehsil Udaypura, Madhya Pradesh. 6.It is the grievance of the petitioner that the assesseehad already accepted the circle rates as declared by theState Government authority and yet, such reference ofvaluation have been made. 7.On 25.6.2021 in response to the show cause noticeseeking to explain the direction claimed under Section 5. It is further the case of the petitioner 19.6.2021vide notice no. DCIT/CC.1(3)/Ahd/MCL/DVO/2021-22 therespondents referred the matter to the ValuationOfficer, Bhopal, for estimating the value of the land soldduring the year under consideration situated at villageNoornagar, Tehsil Udaypura, Madhya Pradesh. 6.It is the grievance of the petitioner that the assesseehad already accepted the circle rates as declared by theState Government authority and yet, such reference ofvaluation have been made. 7.On 25.6.2021 in response to the show cause noticeseeking to explain the direction claimed under Section 801-IA, the reply have been submitted along with therelevant documents. It is the case of the petitioner that ithad raised various contentions including the objection ofthe audit report in form 10CCB having been uploadedelectronically along with Profit and Loss accounts andhis contract from Government of each undertaking beingeligible for deduction under Section 80-IA (4). It was alsosubmitted to the concerned officer that the petitionercompany maintained separate books of accounts for 80-IA and 35AD projects in SAP based ERP system whichaccording to the petitioner,is an elaborate,comprehensive and containing the robust accountingsystem. The books of accounts were duly audited by thequalified Chartered Accountant and while filing thereturn of income, audit report in Form 10CCB along withthe profit and loss accounts had been furnished on theIncome Tax Portal. It is also his claim that his deductionunder Section 80-IA (4) in preceding years had beenallowed, where in some of those years the, AssessingOfficer had disallowed, the Appellate Authority hadallowed the same and, therefore, the Assessing Officerhad no reason to take a different view treating theearlier views as erroneous. There are other elaborateobjections which have been raised on the part of thepetitioner. It is further his say that the notice underSection 50C had been issued by the Valuation Officer,Bhopal on 1.7.2021 after the notice had gone on19.6.2021 by the respondent referring the matter to theValuation officer. 7.1 In response to the said notice also, the petitioner had submitted detailed submissions along with therelevant documents. 8. His grievance is that at the fag end of the timebarring assessment dated 30.9.2021 and after two yearsfrom initiation of assessment proceedings and aftermore than three months from the date of detailed showcause notice, the assessing Officer had proposed theSpecial Audit of books under Section 142(2A), and he leftjust one working day to represent the matter by statingthat having regard to the nature and complexities in thebooks of accounts, the voluminous details and datainvolved, the doubts about the correctness of theaccounts and reports filed as form 10CCB, themultiplicity of the transactions and specialised nature ofbusiness, and their impact on the income and in theinterest of revenue, would lead him to get the account ofthe petitioner audited by an accountant, as defined underSection 288(2) for the AY 2018-2019 and nominated byPr. CIT (Central), Ahmedabad. The hearing for the saidpurpose have been fixed on 27.9.2021. 9.The notice had been replied to by the petitioner. Hisgrievance is that he was granted only one working dayi.e on 24.9.2021 as 25[th] and 26[th] fell on a weekend. Hereceived the notice and when he represented his case ,instead of considering his version to proposed thereference for in the Special audit of account underSection 142(2-A) of the I.T Act. It appears to be anattempt on the part of the Assessing officer to fetchmore time and to pass an assessment order. His 9.The notice had been replied to by the petitioner. Hisgrievance is that he was granted only one working dayi.e on 24.9.2021 as 25[th] and 26[th] fell on a weekend. Hereceived the notice and when he represented his case ,instead of considering his version to proposed thereference for in the Special audit of account underSection 142(2-A) of the I.T Act. It appears to be anattempt on the part of the Assessing officer to fetchmore time and to pass an assessment order. His grievance is also multiplied when the Assessing Officerhad proposed the entire disallowance under Section 80-IA (4), on 19.6.2021 which according to him is a sign ofverification on the part of the respondents and whounderstood the documents on record and yet thereafter,he chose to issue the show cause notice. However, at theend of the limitation period before passing theassessment order and without availing an opportunity heproposed the special audit which is nothing but an excuseto get more time, therefore, the petitioner is before thisCourt with the following prayers. 5. The petitioner accordingly prays that this Hon’ble Court may kindlybe pleased to issue ; a. A writ of certiorari or writ, order, or direction in the nature ofCertiorari quashing/ setting aside the order disposing objections forproposed referral for special audit under section 142(2A) on 29.9.2021and consequent order dated 30.9.2021 giving directions under section142(2A) of the Income Tax Act, 1961. b. Pending hearing and final decision of the writ petition, to stay theorder dated 30.9.2021 giving directions under section 142(2A) of theIncome Tax Act, 1961 and consequent proceedings of special audit; c. Pass any other orders as this Hon’ble Court may deem fit and moreappropriate in order to grant interim relief to the petitioner; d. Any other and further relied deemed just and proper be granted in theinterest of justice; e. To provide for the cost of this petition. 10.We have heard extensively learned Advocate Mr.Vora who has taken us through the entire material.According to him, the twin conditions necessary forinvoking the powers under Section 142(2A) of the I.TAct are missing. He has also urged that there has been aviolation of principles of natural justice as giving ofopportunity only for a day before reference to the SpecialAudit would amount to non-availment of an opportunity.He has also further urged that what the AssessingOfficer himself ought to have done he has chosen to getit done through the Special Auditor which not onlywould put the present petitioner to the jeopardy but thebasic requirement of the provisions are not beingsatisfied and that would be the reason for the Court tointervene and indulge at this juncture. In support of hissubmissions he had taken us through the responsesgiven by him to the issuance of the show cause noticeand the details which have been furnished whichaccording to the petitioner if would have been taken intoconsideration, there would not be any necessity for himto make a reference as has been done presently. 10.1He has relied on the following authorities insupport of his submissions. (a) Swadeshi Cotton Mills Company Ltd. Vs Commissioner ofIncome Tax and Ors. Vs Commissioner Of Income Tax and Orspassed in Civil Misc. Writ No. 41 of 1978 decided on 3.3.1987. (b) Sahara India (Firm), Lucknow Vs Commissioner ofIncome Tax, Central I and Ors passed in Civil Appeal No. 2783 of2008 and allied matters decided on 11.4.2008. (C) Alidhara Texpro Engineering Pvt. Ltd. Vs DeputyCommissioner of Income Tax in Special Civil Application No 7240of 2008 decided on 17.3.2009. 11.As the Court was disinclined to entertain thispetition, learned Advocate Mr. Vora, for the petitionerhas sought permission to withdraw this petition,permission is granted. 12.Petition is dismissed as withdrawn. Notice isdischarged. (SONIA GOKANI, J) MARY VADAKKAN (RAJENDRA M. SAREEN,J)