M/S.b.g.electric Companyrep. By Its v. Principal Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.02.2020 CORAM THE HONOURABLE DR. JUSTICE ANITA SUMANTHWrit Petition Nos.2945 and 27805 of 2019 and WMP Nos.3215 and 27348 of 2019 M/s.B.G.Electric Companyrep. by its Partner,INDERCHAND MIMANINew No.8, Old No.25,Kalathi Pillai Street, Sowcarpet,Chennai 600 079 .... Petitioner in both Wps. Vs 1.Principal Commissioner of Income Tax-9, 2[nd] Floor, Tower-1, BSNL Building, 16, Greams Road, Chennai 600 006. .. 1[st] respondent in W.P. No.2945 of 2019 2.The Income Tax Officer, Non Corporate Ward-4(5), 2[nd ]Floor, Tower -1, BSNL Building, 16, Greams Road, Chenni 600 006. ... 2[nd] respondent in W.P. No.2945 of 2019 ...1[st] respondent in W.P.No.27805 of 2019 1/6 3.The Income Tax Office (CPC), C/o Centralized Processing Centre, Income Tax Department, Post Bag No.1, Electronic City Post Office, Bangalore - 560 100. ... 3[rd] respondent in W.P. No.2945 of 2019 PRAYER in W.P. No.2945 of 2019: PETITION under Article 226 ofthe Constitution of India praying for the issuance of Writ ofCertiorarified Mandamus to call for the records on the file ofthe 1[st] respondent in No.13/264/PCIT-9/2018-19 dated 1.1.2019 forthe AY 2009-10 and quash the same as contrary to the law andagainst the principles of natural justice and fair play anddirect the 2[nd] respondent to delete the disallowance of businessexpenditure of Rs.9,73,986/-. PRAYER in W.P. No.27805 of 2019: PETITION under Article 226 ofthe Constitution of India praying for the issuance of Writ ofCertiorari, to call for the records on the file of the 2[nd]respondent the assessment order passed in Communication RefNo.CPC/0910/15/1003623868 under PAN dated 07.09.2010and consequential order passed in communication RefNo.CPC/0910/T5/1101519543 under PAN dated 18.05.2011for the AY 2009-10 and quash the same as illegal, withoutauthority of law and violative of ARticle 265 of Constitution ofIndia. Heard Mr.Pramod Kumar Chopda, learned counsel for thepetitioner and Mrs.Hema Muralikrishnan, learned Senior StandingCounsel for the respondents. 2/6 https://hcservices.ecourts.gov.in/hcservices/ 2. The challenge is to an order of assessment for A.Y.2009-10 passed in terms of the Income Tax Act, 1961 (in short ‘Act’)and the sequence of dates and events are as follows: (i) Return of income was filed within time. (ii) An intimation was issued by the Central ProcessingCentre (CPC) under Section 143(1) of the Act on 07.09.2010. (iii) The petitioner states that it had in the return ofincome erroneously reflected a figure of Rs.9,73,986/- asdisallowance under Section 40A(2)(b) of the Act. This amount hadbeen paid to related parties and was hence not liable to bedisallowed. (iv) The petitioner thus sought rectification under Section154 of the Act. (v) The CPC rejected the request for rectification on18.05.2011. The reason for rejection is '.During the processingof the return under section 143(1), Profits and Gains fromBusiness or Profession has been wrongly considered, howeverduring rectification the same has not been corrected by theAssessee.' (vi) It is unclear as to what the reason for rejection ofthe petition was and perhaps, what was meant was that a revisedreturn ought to have been filed by the petitioner, reflectingthe correct position in law. (vii) Be that as it may, the petitioner soughtrectification of mistake again on 18.07.2011, this time by wayof a petition filed before the Assessing Officer specificallyrequesting an opportunity to produce records and explain theerror apparent in the return of the income filed that was soughtto be rectified. (viii) There was no response to the aforesaid petition tilla notice came to be issued on 11.11.2016 in terms of Section 221(1) of the Act proposing penalty for non-payment of pendingdemands. (vi) It is unclear as to what the reason for rejection ofthe petition was and perhaps, what was meant was that a revisedreturn ought to have been filed by the petitioner, reflectingthe correct position in law. (vii) Be that as it may, the petitioner soughtrectification of mistake again on 18.07.2011, this time by wayof a petition filed before the Assessing Officer specificallyrequesting an opportunity to produce records and explain theerror apparent in the return of the income filed that was soughtto be rectified. (viii) There was no response to the aforesaid petition tilla notice came to be issued on 11.11.2016 in terms of Section 221(1) of the Act proposing penalty for non-payment of pendingdemands. (ix) On 23.11.2016, the petitioner immediately brought tothe notice of the Assessing Officer that the intimation givingrise to the demand was, in fact, pending rectification andenclosing a copy of the 154 petition filed. 3/6 (x) On 19.05.2017, the CPC again writes to the petitionerstating that 'your return for the above mentioned assessmentyear will henceforth be rectified by your Assessing Officer' .The petitioner was requested to contact the jurisdictionalAssessing Officer for the request of rectification immediately. (xi) Thus, on 08.06.2017, the petitioner approached theAssessing Officer enclosing copies of the return filed, 143(1)intimation and subsequent communications. (xii) Even without hearing the petitioner, though thepetitioner specifically sought an opportunity of hearing inletter dated 18.07.2011, an order has come to be passed on11.07.2017 rejecting the application under Section 154. (xiii) The petitioner sought revision of order dated11.07.2017 on 23.10.2017 by way of an application under Section264 before the Commissioner of Income Tax (CIT). (xiv) The petition under Section 264 was rejected by way ofthe impugned order dated 01.01.2019, which does not appear tohave been preceded with a notice. The decision is cryptic andreads as follows: 'I have carefully gone through the oral and writtensubmissions of the assessee, as also the reports ofthe AO and the Joint Commissioner. The sole orderunder section 154 of the Act in this case had beenpassed on 18[th] May 2011. The revision petition filed on7[th] November 2017 after the lapse of over six years isthus clearly not maintainable in terms of provisionsof section 264(3) of the Act, which stipulate that arevision petition must be filed in a year from thedate of communication of the order sought to berevised.' 3. In my considered view, the impugned order is clearlyflawed insofar as the CIT has proceeded on the basis that the154 order in this case was passed on 18.05.2011 and thus therevision petition was barred by limitation. He has completelylost sight of the subsequent request for rectification by thepetitioner on 18.07.2011, that has been rejected by way of orderdated 11.09.2017. The order also indicates complete non-application of mind to the sequence of dates and events asnoticed by me above, apart from being wholly non-speaking. 4. Impugned order dated 01.01.2019 is thus set aside. Thepetitioner will be heard afresh on the Revision Petition underSection 264 filed by it and orders passed on merits and inaccordance with law, within a period of four (4) weeks from dateof receipt of a copy of this order. 4/6 5. As regards W.P.No.27805 of 2019, the petitioner haschallenged intimation dated 07.09.2010. I am of the view thatthe said Writ Petition is not maintainable since the petitionerhas, in fact, sought appropriate remedy against the same beforethe CIT under Section 264 of the Act, as considered by me inW.P.No.2945 of 2019. 6. In the light of the above, W.P.No.2945 of 2019 is allowedand W.P.No.27805 of 2019 is dismissed. No costs. ConnectedMiscellaneous Petitions are closed. Sl -s/d- Assistant Registrar True Copy Sub-Assistant Registrar 4/6 5. As regards W.P.No.27805 of 2019, the petitioner haschallenged intimation dated 07.09.2010. I am of the view thatthe said Writ Petition is not maintainable since the petitionerhas, in fact, sought appropriate remedy against the same beforethe CIT under Section 264 of the Act, as considered by me inW.P.No.2945 of 2019. 6. In the light of the above, W.P.No.2945 of 2019 is allowedand W.P.No.27805 of 2019 is dismissed. No costs. ConnectedMiscellaneous Petitions are closed. Sl -s/d- Assistant Registrar True Copy Sub-Assistant Registrar To1. Principal Commissioner of Income Tax-9, 2[nd] Floor, Tower-1, BSNL Building, 16, Greams Road, Chennai 600 006. 2.The Income Tax Officer, Non Corporate Ward-4(5), 2[nd ]Floor, Tower -1, BSNL Building, 16, Greams Road, Chenni 600 006.3.The Income Tax Office (CPC), C/o Centralized Processing Centre, Income Tax Department, Post Bag No.1, Electronic City Post Office, Bangalore - 560 100. +2 ccs to M/s.Hemamuralikrishnan Advocate sr10809 & 11287 +2 ccs to Mr.Pramodkumar Chopda Advocate sr11088 & 11089 Writ Petition Nos.2945 and 27805 of 2019 and WMP Nos.3215 and 27348 of 2019 aa07/07/2020 5/6 https://hcservices.ecourts.gov.in/hcservices/