M/S. Bharani Hospitals Pvt. Ltd v. The Income Tax Officercorporate Ward 1(2) Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR. JUSTICE P.D. AUDIKESAVALU M/s. Bharani Hospitals Pvt. Ltd.Represented by its Director22, Arcot RoadSaligramamChennai – 600 093. ... Petitioner -vs- The Income Tax OfficerCorporate Ward 1(2) Room No. 614, 6[th] FloorNew Block, Aayakar Bhavan121, MG. Road, NungambakkamChenani – 600 034. ... Respondent Prayer:- Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of CertiorarifiedMandamus, calling for the records Respondent contained in itsimpugned assessment order passed under Section 143(3) read withSection 147 of the Income Tax Act, 1961 for the assessment year2010-2011, for PAN No. , dated 15.03.2016, and toquash the same, and to consequently forebear the Respondent orany of its subordinates, agents or any other person claimingunder the Respondent from reassessing the Petitioner's incometax for the assessment year 2010-2011 under Section 147 of theIncome Tax Act, 1961. For Petitioner : Mr. Suhrith Parthasarathy For Respondents: Mrs. Hema Muralikrishnan Standing Counsel O R D E R (through video conference) Heard Mr. Suhrith Parthasarathy, Learned Counsel for thePetitioner and Mrs. Hema Muralikrishnan, Learned Counselappearing for the Respondent and perused the materials placed onrecord, apart from the pleadings of the parties, apart from thepleadings of the parties. 2.The Petitioner had filed its return of income on28.09.2010 in respect of the assessment year 2010-2011 for totalincome of Rs. Nil. The Respondent selected the return filed bythe Petitioner for scrutiny under Section 143(2) of the IncomeTax Act, 1961 (hereinafter referred to as 'the IT Act' forshort) and issued a notice dated 21.09.2011 along with aquestionnaire. The Petitioner claims to have appeared before theRespondent through its representative and produced variousdetails and the Respondent assessed the details of the income ofthe Petitioner as Rs. 27,13,957/- and made a demand forpayment of Rs. 4,62,360/- as income tax under Section 156 of theIT Act, against which the Petitioner is said to have filedappeal on 22.04.2013 before the Commissioner of Income TaxAppeals-III, Chennai, which was pending at the time of filing ofthe Writ Petition. After another incumbent had assumed theoffice of the Respondent, the Petitioner received a notice dated24.03.2015 under Section 148 of the IT Act for the sameassessment year 2010-2011. The Petitioner then by letter dated13.04.2015 sought reasons from the Respondent for re-opening theassessment for that year and the Respondent by letter dated12.10.2015 reproduced the reasons recorded for re-opening theassessment under Section 147 of the IT Act. The Petitionerclaims to have sent its objections for such re-opening of theassessment by letter dated 23.10.2015, but without disposing thesaid objections, the Respondent had proceeded to re-assess theincome tax liability of the Petitioner by Order in PAN No. dated 15.03.2016 and has held as follows:-" As per the lease agreement dated 02.07.2004, theproperty was let out to the following parties and therental income specified thereon. M/s. Vishaka Auto Rs. 46,200 x 12 = Rs. 5,54,400M/s. Manipal Automobiles P LtdRs. 76,000 x 12 = Rs. 9,12,000M/s. MPL Cars LtdRs. 1,64,967 x = Rs.19,79,610 -------------------- But the assessee company have not admitted rentalincome in respect of the above properties which was anescaped income. The assessment is completed by taking intoconsideration the above rental income as under. The Petitioner has challenged the said order of re-assessmentdated 15.03.2016 in this Writ Petition. -------------------- But the assessee company have not admitted rentalincome in respect of the above properties which was anescaped income. The assessment is completed by taking intoconsideration the above rental income as under. The Petitioner has challenged the said order of re-assessmentdated 15.03.2016 in this Writ Petition. 3.The grievance sought to be ventilated by the Petitioneris that when the Petitioner has filed objections for re-openingof the proceedings of re-assessment under Section 147 of theIT Act, it is incumbent upon the Respondent to consider the sameand pass orders, and without carry out such exercise, theRespondent could not have proceeded to re-assess the income taxliability of the Petitioner, as done in this case. There is asubstantial force in the aforesaid contentions raised by thePetitioner, which deserves acceptance, inasmuch as the failureto consider and pass orders on the objections of the Petitionerbefore proceeding to re-assess income tax liability of the https://hcservices.ecourts.gov.in/hcservices/ Petitioner is clearly an infraction of the rule in laid down bythe Hon'ble Supreme Court of India in GKN Driveshafts (India)Ltd., -vs- Income Tax Officer [(2003) 1 SCC 72]. In that view ofthe matter, the impugned order is set aside and the Respondentshall proceed from the stage of passing orders on the objectionsraised by the Petitioner in the letter 23.10.2015 for the re-opening of the assessment proceedings. 4.At this juncture, Learned Counsel for the Petitionerhighlights that the lease agreements which had been entered bythe Petitioner for renting its property to the tenants, viz.,M/s. Vishaka Auto, M/s. Manipal Automobiles Pvt Ltd and M/s. MPLCars Ltd., was for a period of 60 months from 02.07.2004, thatwas to end on 30.06.2009, but those leases had ceased evenearlier and no rent had been received from the said tenants forthe period from 01.04.2009 onwards. Having regard to thesepeculiar features involved in this case, it shall be incumbentupon the Respondent to afford opportunity of personal hearing tothe Petitioner to substantiate its contention in that regard andif necessary, verify the correctness of the same by calling forthe audited accounts and income tax returns of those tenants forthat purpose in the manner prescribed by law. The Respondentshall thereafter pass reasoned orders on merits and inaccordance with law dealing with each of the contentions raisedand communicate the decision taken to the Petitioner underwritten acknowledgment. In the result, the Writ Petition is disposed on theaforesaid terms. Consequently, the connected MiscellaneousPetition is closed. No costs. Sd/- Assistant Registrar(CO) //True Copy// To The Income Tax Officer,Corporate Ward 1(2), Room No. 614, 6[th] Floor,New Block, Aayakar Bhavan,121, MG. Road, Nungambakkam,Chenani – 600 034. +1cc to M/s.Suhrith Parthasarathy, Advocate Sr.42148W.P. No. 15212 of 2016cnr[co]srg 08/01/2021 https://hcservices.ecourts.gov.in/hcservices/