M/S. Frolic Reality Pvt. Ltd v. The Chief Commissioner Of Income Tax & Ors

HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE Writ Petition No.2876/2014 (M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 1 - Indore, dated 05/12/2018 Mr. P. M. Choudhari, learned Senior Counsel with Mr. Anand Prabhawalkar, learned counsel for the petitioner. Ms. Veena Mandlik, learned counsel for the respondents. The matter was listed for consideration of application for vacating stay on 27/11/2018 and a joint request was made by the parties to list the matter on 05/12/2018 to decide the matter on merits and therefore, with the consent of the parties, the matter was heard on merits and a judgment is being passed in the matter. 02-The petitioner before this Court has filed present petition being aggrieved by order dated 27/03/2014 passed by Chief Commissioner of Income Tax, Indore (Annex.-P/1). The petitioner is also challenging assessment order dated 29/03/2014 for the Assessment Year 2011-12. 03-The petitioner's contention is that the petitioner Company is a Private Limited Company engaged in the business of trading of Pulses and other commodities and is having registered office at Mumbai and a branch office at Indore. The petitioner Company was incorporated on 31/03/2007 under the provisions of Companies Act, 1956 with registered office at Mumbai. There was a change in the address of registered office, but as per contention of the petitioner Company it continued with a registered office in the State of HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 2 - Maharashtra. 04-The petitioner's contention is that the petitioner is assessable under the provisions of Income Tax Act, 1961 and has filed all its returns right from the year of incorporation mentioning registered office at Maharashtra. A notice was issued under Section 143(2) of the Income Tax Act, 1961 for the Assessment Year 2011-12 by the Income Tax Officer – 3 (1), Indore and the petitioner Company has raised an objection in respect of jurisdiction vide letter dated 26/08/2013 informing the Income Tax Officer that jurisdiction lies in the State of Maharashtra. 05-The petitioner has further stated that at the same time the petitioner Company approached the respondent No.1 Chief Commissioner of Income Tax, Indore vide letter dated 23/08/2013 for transferring of the case and as nothing was being done in the matter, the petitioner Company preferred a writ petition before this Court i.e. Writ Petition No.1609/2014 and this Court vide order dated 04/03/2014 has directed the respondents therein to decide the issue in respect of jurisdiction and till then the assessment proceedings were held in abeyance. A review petition was also preferred in the matter i.e. Review Petition No.137/2014, however, the same was withdrawn. 06-As directed by this Court an order was passed on 27/03/2014 HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 3 - by respondent No.1 in respect of jurisdiction and the respondent No.1 has also declined to transfer the case to the Chief Commissioner of Income Tax against which the writ petition has been filed. 07-Learned Senior Counsel has argued before this Court that income tax returns of the Company were submitted from Maharashtra. Registered office of the Company, which is in the Maharashtra and by no stretch of imagination the Income Tax Officer – 3 (1), Indore, was having jurisdiction in the matter to proceed ahead and therefore, the order passed by the Chief Commissioner as well as the assessment order are bad in law. 08-Reliance has been placed by learned counsel for the petitioner upon the judgments delivered in the case of Commissioner of Sales - 3 - by respondent No.1 in respect of jurisdiction and the respondent No.1 has also declined to transfer the case to the Chief Commissioner of Income Tax against which the writ petition has been filed. 07-Learned Senior Counsel has argued before this Court that income tax returns of the Company were submitted from Maharashtra. Registered office of the Company, which is in the Maharashtra and by no stretch of imagination the Income Tax Officer – 3 (1), Indore, was having jurisdiction in the matter to proceed ahead and therefore, the order passed by the Chief Commissioner as well as the assessment order are bad in law. 08-Reliance has been placed by learned counsel for the petitioner upon the judgments delivered in the case of Commissioner of Sales Tax, U.P. Vs.Sarjoo Prasad Ram Kumar reported in (2005) 7 STJ 535 (SC), R. B. Shreeram Durga Prasad and Fatechand Nursing Das reported in 1989 SC 169, Shaily Engineering Plastics Ltd. Vs. Designated Authroity under Kar Vivad Samadhan Scheme reported in 239 ITR 90 and Commissioner of Income Tax Vs. ShailyEngineering Plastic Ltd. reported in 258 ITR 437 (SC). 09-On the other hand, a reply has been filed in the matter. The respondents have admitted that assessee has filed returns of income tax electronically and the acknowledgments are annexed with the petitioner as Annex.-P/4 (Page No.52 to 58) and the same reflects HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE Writ Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 4 - that assessee himself has mentioned the designation of the Assessing Officer as Income Tax Officer – 3 (1), Indore in the returns for all the assessment years. 10-It has been further stated that notice under Section 142 (1) was issued on the address, which is mentioned in the income tax return and the address given in the income tax return is used as communication address of assessee and the same has been followed by the Assessing Officer. The respondents have further stated that a notice under Section 143 (2) was issued on 14/08/2013 and the assessee has filed a written submission on 26/08/2013 and he has stated that he would file an application for transfer of the case to Panvel. The assessee has filed an application under Section 127 (1) of the Income Tax Act, 1961. 11-It has been further contended that Panvel station is under the jurisdiction of Income Tax, Thane and accordingly, the Commissioner of Income Tax, Thane was requested to give “No Objection” of the concerned Assessing Officer for transfer of the case, however, the Commissioner of Income Tax, Thane has denied to give “No Objection” as on inquiry it was found that there was no office of the assessee on the given address at the relevant point of time. Respondents have also stated that assessee has not made any objection under Section 124 (3) of the Income Tax Act, 1961, HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 5 - however, assessee has submitted only an application under Section 127 (1) of the Income Tax Act, 1961. 12-The respondents have also stated that notice under Section 143 (2) and 142 (1) were issued on 14/08/2013, 15/01/2014, 28/02/2014, meaning thereby, sufficient opportunity was granted to the assessee and summons were issued to the Director of the Company namely Shri Shailesh Gupta as he was the signatory of the return filed for the year under consideration. He was working Director and he was having knowledge of day to day activity and therefore, as the notice was issued it can never be said that the order has been passed in violation of principles of natural justice and fair play. The respondent Department has stated that assessee has obtained Pan Cards by applying at Indore and therefore, no case for interference is made out in the matter. 12-The respondents have also stated that notice under Section 143 (2) and 142 (1) were issued on 14/08/2013, 15/01/2014, 28/02/2014, meaning thereby, sufficient opportunity was granted to the assessee and summons were issued to the Director of the Company namely Shri Shailesh Gupta as he was the signatory of the return filed for the year under consideration. He was working Director and he was having knowledge of day to day activity and therefore, as the notice was issued it can never be said that the order has been passed in violation of principles of natural justice and fair play. The respondent Department has stated that assessee has obtained Pan Cards by applying at Indore and therefore, no case for interference is made out in the matter. 13-Ms. Veena Mandlik, learned counsel for the Income Tax Department has drawn the attention of this Court towards affidavit filed by the petitioner Company and the name of the Director, who has filed the affidavit, finds place in the affidavit and his address is again an address of the State of Madhya Pradesh. Learned counsel has further argued that the sole aim and object of the writ petition was to ensure that the limitation to conclude the assessment comes to an end and therefore, a frivolous petition was filed before this HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE Writ Petition No.2876/2014 (M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 6 - Court by the assessee. 14-This Court has heard learned counsel for the parties at length and perused the record. The matter is being disposed of with the consent of the parties. 15-The order dated 27/03/2014, which is the subject of the present writ petition is on record as Annex.-P/1. The relevant paragraph of the order which deals with the present present Company in paragraph No.3 reads as under:- “3.M/s. Frolic Reality Pvt. Ltd. [PAN ] : M/s. Frolic Reality Pvt. Ltd. was incorporated on 31.03.2007 and has been e-filing its return right from the beginning with Ward 3(1), Indore. As per Income Tax Return filed by the company, the address was shown as A-9/2, MIDC Taloja Industrial Estate, District – Raigarh, Maharashtra. The case has been selected for scrutiny in the F.Yr. 2011-12 for the assessment year 2010-11 and the assessment for the same has been completed on 31.03.2013 wherein a demand of Rs.5,93,14,060/- has been raised. The case for assessment year 2011-12 & 2012-13 are selected for scrutiny in CASS i.e. through computer. The original return for the A.Y. 2011-12 was filed on 27/9/2011 and the revised return was filed on 31/03/2013 and return for A.Y. 2012-13 was filed on 27/9/2012. Notice u/s 143(2) was issued for the A. Y. 2011-12 on 14.08.2013 and for the A.Y. 2012-13 on 06.08.2013. Notice u/s 142(1) was issued on 27.12.2013 for the A.Y. 2011-12. The assessee filed application requesting for transfer of case u/s 127(1) on 23.08.2013. Thereafter, vide letter dated 21st January, 2014, has informed that the registered office has been shifted to 205, Sujata Chambers, 2[nd] Floor, 1/3, Abhichand Gandhi Marag, off Katha Bazar, Masjid (W), Mumbai 400009.” The aforesaid order makes it very clear that the assessee was filing e-return from inception with Ward 3 (1), Indore. The case of the assessee was selected for scrutiny in the Financial Year 2011-12 for the assessment year 2010-11 and the assessment for the same was completed on 31/03/2013. A demand of Rs.5,93,14,060/- was raised, HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 7 - meaning thereby, in respect of assessment year prior to the assessment year, which is the subject matter of the present writ petition, the assessee was assessed in the State of Madhya Pradesh to be more specific at Ward 3 (1), Indore. The aforesaid order makes it very clear that the assessee was filing e-return from inception with Ward 3 (1), Indore. The case of the assessee was selected for scrutiny in the Financial Year 2011-12 for the assessment year 2010-11 and the assessment for the same was completed on 31/03/2013. A demand of Rs.5,93,14,060/- was raised, HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 7 - meaning thereby, in respect of assessment year prior to the assessment year, which is the subject matter of the present writ petition, the assessee was assessed in the State of Madhya Pradesh to be more specific at Ward 3 (1), Indore. 16-The case of the assessee for the Assessment Year 2011-12 and 2012-13 was selected for the scrutiny through computer and therefore, in the considered opinion of this Court, the learned Commissioner was justified in passing the impugned order. The assessee in respect of previous years has accepted the jurisdiction of the Assessing Officer at Indore. 17-Original record was also produced before this Court by the Income Tax Department and the same reveals that the demand was issued after passing of the assessment order to the tune of Rs.5,93,14,060/- to the petitioner Company for the Assessment Year 2010-11. 18-The Income Tax Department has also passed an assessment order against the assessee for the subsequent years i.e. 2011-12 on 29/03/2014, against which the assessee has preferred an appeal at Indore itself, meaning thereby, the assessee again challenged the same impugned order dated 29/03/2014 before this Court and has preferred an appeal as per the provisions of Income Tax Act, 1961 and the same is also pending. HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014(M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 8 - 19-This Court has carefully gone through the judgment relied upon by the learned counsel and all the judgments relied upon by the learned counsel are distinguishable on facts. In the case of Sarjoo Prasad Ram Kumar (Supra) it has been held that the jurisdiction of the assessing authority is confined to the area allotted to him. In the present case, this Court has held that Assessing Officer is having jurisdiction in the matter and therefore, the assessment order cannot be said to be bad in law. 20-In the case of R. B. Shreeram (Supra), it has been held that an order which is passed in violation of principles of natural justice and fair play is bad in law. In the present case, notice was issued to the assessee and if the assessee has not participated in the proceedings, it is his fault and the revenue cannot be blamed for the same and therefore, judgment is of no help to the petitioner in any manner. 21-Reliance has also been placed upon the judgment delivered in the case of Shaily Engineering Plastics Ltd. (Supra) and it has been argued that authorities have abused their powers for extraneous considerations. This Court has carefully gone through the entire record of the case and fails to understand that what extraneous consideration is involved in the present case. The assessee who has made all possible attempts to ensure that limitation prescribed for HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014 (M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 9 - assessment expires, is blaming the Department and alleging the exercise of powers for extraneous considerations. The judgment also does not help the petitioner. 22-Reliance has also been placed upon a judgment delivered in the case of Commissioner of Income Tax Vs. Shaily Engineering Plastics Ltd. (Supra) and again the judgment does not help the petitioner as the assessee has rightly been assessed at Indore. HIGH COURT OF MADHYA PRADESH, BENCH AT INDOREWrit Petition No.2876/2014 (M/s. Frolic Reality Pvt. Ltd. Vs. The Chief Commissioner of Income Tax & Ors.) - 9 - assessment expires, is blaming the Department and alleging the exercise of powers for extraneous considerations. The judgment also does not help the petitioner. 22-Reliance has also been placed upon a judgment delivered in the case of Commissioner of Income Tax Vs. Shaily Engineering Plastics Ltd. (Supra) and again the judgment does not help the petitioner as the assessee has rightly been assessed at Indore. 23-In the considered opinion of this Court, the Chief Commissioner of Income Tax Department was justified in passing the impugned order dated 27/03/2014 keeping in view the earlier returns filed by the assessee and the earlier assessment orders passed by Income Tax Officer, Ward 3 (1), Indore and no case for interference is made out in the matter. Accordingly, the writ petition is dismissed. 24-Ms. Veena Mandlik, learned counsel has argued before this Court that on account of interim order passed in the matter on 05/05/2014, the Department has not been able to proceed ahead in the mater of recovery. As this Court has dismissed the writ petition, the department is certainly free to proceed ahead in the matter of recovery in accordance with law. Certified copy as per rules. Tej (S. C. SHARMA) J U D G E (VIRENDER SINGH)J U D G E