Mrs. Padma Swaminathan v. The Income Tax Officer, Non-Corporate Ward – 15(4), Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.03.2017 CORAM THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU W.P.Nos.5855 of 2017 and W.M.P.No. 6266 of 2017 Mrs. Padma Swaminathan...PetitionerVs. The Income Tax Officer,Non-Corporate Ward – 15(4),Room No. 207, Second Floor,Wanaparthy Block,121, Mahatma Gandhi Road,Chennai – 600 034. ...Respondent Prayer: Petitions filed under Article 226 of The Constitution ofIndia, praying for the issuance of a Writ of CertiorarifiedMandamus, to call for the records of the respondent in impugnedproceeding No. Nil dated 19.12.2016 and quash the proceedingsdated 19.12.2016 issued therein and further direct therespondent to issue ''No Objection Certificate'' to enable thepetitioner to close the Deposits in Capital Gains Account withUCO Bank, Anna Nagar West Branch, Chennai and withdraw thematurity value of deposits deposited for the AY 2013-14. For Petitioner:Mrs.Pushpa SitaramanSenior Counsel For M/s.J.Sree Vidya For Respondents:Mr. S. Rajesh, Standing Counsel (IT)Mr.J.NarayanasamyStanding Counsel (IT) O R D E R The petitioner is aggrieved by the proceedings of therespondent dated 19.12.2016 refusing to issue No ObjectionCertificate for enabling the petitioner / assessee to withdrawamount from Capital Gains Accounts. 2. Heard the learned counsel for the petitioner and learnedstanding counsel appearing for the respondent. By consent ofthe learned counsel for the parties, the main writ petitionitself is taken up for final disposal at the admission stageitself. 3. The short facts that arise for consideration in thiswrit petition, are as follows:- The petitioner is a house wife, aged about 70 years. Herhusband namely R. Swaminathan, owned a non residential house,which was alloted to him by the Tamil Nadu Housing Board underlease cum sale agreement. He executed Settlement Deed dated07.02.2012, registered as a Document No.400/2012, settling 1/6[th]share in the said property in favour of the petitioner and 1/3share each on their major son and daughter respectively, therebyretaining the balance with him. The said property was sold on19.11.2012 under a registered Sale Deed for a sum of Rs. 14.75crores. Her share of sale consideration is Rs. 2,45,83,333/-.While their children returned the Capital Gain Accounts on theirrespective shares, the share of the petitioner was clubbed withher husband's Capital Gain Accounts under section 54 of theIncome Tax act and she had shown her return of Income filed forthe assessment year 2013-2014 and declared the amount ofRs.1,25,310/- as tax. The petitioner wanted to purchase anapartment and with that view, a sum of Rs. 10 Lakhs was paid toone M/s. Sumanth & Co. as an advance and the balance amount ofRs. 2,45,71,750/- was deposited in the Capital Gain Accounts,in UCO Bank, Anna Nagar West Branch, Chennai. 4. In the meanwhile, the petitioner and her husband wereadvised that as per section 64 of the Income Tax Act, theCapital Gains would be assessed only in the hands of thehusband, as the property in possession, has been settled by himin favour of the petitioner and therefore, the petitioner wouldnot get benefit under section 54 of the Income Tax Act.Therefore, the petitioner's husband filed the said income taxreturns for assessment year 2016-17 on 26.07.2016, declaring thelong term capital gain arising from his 1/3[rd] share and thepetitioner's 1/6th share and after claiming exemption undersection 54 and 54EC, computed the Income taxable under capitalgain at Rs.2,18,39,865/- and paid the tax of Rs.43,67,973/-. 4. In the meanwhile, the petitioner and her husband wereadvised that as per section 64 of the Income Tax Act, theCapital Gains would be assessed only in the hands of thehusband, as the property in possession, has been settled by himin favour of the petitioner and therefore, the petitioner wouldnot get benefit under section 54 of the Income Tax Act.Therefore, the petitioner's husband filed the said income taxreturns for assessment year 2016-17 on 26.07.2016, declaring thelong term capital gain arising from his 1/3[rd] share and thepetitioner's 1/6th share and after claiming exemption undersection 54 and 54EC, computed the Income taxable under capitalgain at Rs.2,18,39,865/- and paid the tax of Rs.43,67,973/-. 5. Since the amounts in the capital gain scheme were notutilized, the petitioner wanted to close the accounts andwithdraw the funds for the purpose of investment in a newhouse, for which, the petitioner has to get "No ObjectionCertificate" from the respondent. Accordingly, she filed anapplication seeking for issuance of "No Objection Certificate".The respondent, through the impugned communication, dated19.12.2016 refused to issue "No Objection Certificate" unless,the capital gain tax is paid by the petitioner. 6. The learned counsel appearing for the petitionersubmitted that there is no question of paying the capital gaintax once again by the petitioner, when her husband has paid thetax including that of the petitioner in respect of her 1/6[th]share in the property, while filing the return for theassessment year 2016-17 on 26.07.2016. However, she submittedthat as the impugned order was issued without giving personalhearing to the petitioner, the respondent may be directed togive an opportunity of hearing to the petitioner and pass afresh order thereafter, so that the petitioner would be in aposition to satisfy the respondent, as to how the demand is notcorrect. 7. The learned counsel appearing for the petitioner also,in all fairness, submitted that though the capital gain accountswith the UCO Bank, Anna Nagar, Chennai are in eight differentaccount numbers, the respondent may consider the request of thepetitioner for issuing "No Objection Certificate" insofar asfive accounts are concerned, by retaining the three accountswhich would cover the total demand of the tax. By saying so, thelearned counsel invited this Court's contention to the avermentsmade in Para 8 of the affidavit, giving the details of suchfixed deposit, with its maturity value as follows: 8. The learned counsel for the respondent submitted that inthe very impugned order itself, it is made clear that the "NoObjection Certificate" will be issued only on payment of capitalgain tax by the petitioner and the petitioner can very wellapproach the respondent and raise her objections /representations for re-considering the issue. 9. Heard both sides. 10. The petitioner is aggrieved by the order of therespondent in refusing to give "No Objection Certificate"enabling her to withdraw the amount made by way of fixed depositunder the capital gain account. Admittedly, there are eightaccounts with the maturity value as tabulated above. 8. The learned counsel for the respondent submitted that inthe very impugned order itself, it is made clear that the "NoObjection Certificate" will be issued only on payment of capitalgain tax by the petitioner and the petitioner can very wellapproach the respondent and raise her objections /representations for re-considering the issue. 9. Heard both sides. 10. The petitioner is aggrieved by the order of therespondent in refusing to give "No Objection Certificate"enabling her to withdraw the amount made by way of fixed depositunder the capital gain account. Admittedly, there are eightaccounts with the maturity value as tabulated above. 11. It is also not in dispute that the tax liability underdispute would cover the total amount in deposit, in respect ofthree account numbers in serial Nos. 3, 4 and 7 of the abovereferred accounts. Considering the fact that the petitioner hascome forward with a request only in respect of other fiveaccounts and willing to go before the respondent for consideringthe matter afresh in respect of those three accounts, I am ofthe view that the interest of the Revenue will not be prejudicedin any manner, if the respondent is directed to issue "NoObjection Certificate" in respect of remaining five accountsnamely under Account Nos. 21000310017661, 21000310017654,21000310017609, 21000310018033 and 21000310017562, since thepetitioner is protecting the interest of the Revenue by notgetting the "No Objection Certificate", for the present, inrespect of the other three Accounts Nos. 21000310017579,21000310017586 and 21000310017708 are concerned pending adecision to be made afresh by the respondent, after hearing thepetitioner. 12. Accordingly, this writ petition is allowed in part asfollows: (i) The respondent shall consider the request of thepetitioner for issuing "No Objection Certificate" in respect ofAccount Nos.21000310017661, 21000310017654, 21000310017609,21000310018033 and 21000310017562, and issue "No ObjectionCertificate" in respect of those accounts to the petitionerwithin a period of two weeks from the date of receipt of a copyof this order. (ii) The petitioner shall appear before the respondentwithin a period of two weeks from the date of receipt of a copyof this order and give her objections against the demand andraise all the contentions for issuing the "No ObjectionCertificate" in respect of other Accounts i.e. 21000310017579, https://hcservices.ecourts.gov.in/hcservices/ 21000310017586 and 21000310017708. (iii) On receipt of such representation/objections, therespondent shall hear the petitioner in person and pass freshorder on merits and in accordance with law, in respect of thosethree accounts within a period of four weeks thereafter. Nocosts. Consequently, connected miscellaneous petition is closed. // True Copy // -Sd/-Assistant Registrar Sub Assistant Registrar ToThe Income Tax Officer,Non-Corporate Ward – 15(4),Room No. 207, Second Floor,Wanaparthy Block,121, Mahatma Gandhi Road,Chennai – 600 034. +1 cc to Mr.S.Rajesh, Standing Counsel Sr.No.19856+ 1 cc to M/s.J.Sreevida, Advocate Sr.No.19193 & SJ(C)RRI 12/04/2017 W.P.Nos.5855 of 2017 & W.M.P.No. 6266 of 2017