M/S.gay Travels (P) Ltd v. Deputy Commissioner Of Income Tax, Company Circle Ii ((2), Chennai – 34

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM M/s.Gay Travels (P) Ltd.,61, Nungambakkam High Road,Chennai – 34. ... Petitioner in both W.Ps'.Vs.Deputy Commissioner of Income Tax,Company Circle II ((2), Chennai – 34. ... Respondent in both W.Ps'. Common Prayer: Petitions filed under Article 226 of theConstitution of India to issue a WRIT OF CERTIORARI, to call forthe records of the case on the files of the respondent herein inP.A.No.AAA CG 1081A dated 16.08.2002 issued under Section 148 ofthe Income Tax Act, 1961 relating to the Assessment years 1997-98 and 1998-99 respectively and quash the same. For Petitioner : Ms.Lakshmi Sriram(In both W.Ps') for M/s.R.V.Chitra & AssociatesFor Respondent : Mr.Naveen Durai Babu(In both W.Ps') Standing Counsel ***** Heard Ms.Lakshmi Sriram, learned counsel for the petitionerand Mr.Naveen Durai Babu, learned Standing Counsel forrespondent. 2. The petitioner has filed these writ petitions praying forissuance of a writ of Certiorari to quash the notices issued bythe respondent dated 16.08.2002, under Section 148 of the IncomeTax Act, 1961, relating to the assessment years 1997-98 and1998-99 respectively. 3. The petitioner is an assessee on the file of therespondent under the provisions of the Income Tax Act, 1961 (inshort 'the Act'). The petitioner had entered into an agreement https://hcservices.ecourts.gov.in/hcservices/ for sale dated 04.07.1996 with M/s.Shorelines Pvt. Ltd.,agreeing to sell their agricultural lands located in MuttukaduVillage, for a total sale consideration of Rs.3,50,00,000/-(Rupees three crores and fifty laks only) and received a sum ofRs.1,60,00,000/- (Rupees one crore and sixty laksh only) in theaccounting year 1996-97 relevant to the assessment year 1997-98and a sum of Rs.1,90,00,000/- in the accounting year 1997-98relevant to the assessment year 1998-99. 4. The returns filed by the petitioner were accepted by therespondent that there is no capital gains attracted on the saletransaction and the assessment for the year 1997-98 wascompleted. For the assessment year 1998-99, since the saleconsideration was to be assessed in the previous years i.e.,1997-98, as the petitioner had entered into the agreement for1996-97, the assessment for 1997-98 was reopened to consider thequestion of assessing the capital gains arising on the sale ofagricultural lands. Therefore, the said consideration was notconsidered for taxability in the assessment year 1998-99. 5. Notice was issued under Section 148 of the Act dated25.01.2001 for reassessment of the assessment made for the year1997-98. The petitioner sought for reasons for reopening andthe same were furnished by the respondent, which was priming onthe ground that the lands sold were not agricultural lands.This was on the basis that the sale consideration received bythe petitioner was grossly different from the amount invested bythem for the purchase of the property, the location of theproperty and the development of the property into plots done bythe purchasers. The petitioner was served with a notice underSection 142 (2) of the Act on 22.06.2001, fixing the date ofenquiry as 08.03.2001. In terms of Section 153(2) of the Act,the time limit for completing the assessment for thereassessment proceedings is given as one year from the end ofthe financial year in which notice under Section 148 was served. 6. The petitioner's case is that the notice dated 25.01.2001was served on 01.02.2001 and the last date for passingreassessment was 31.03.2002. While so, on 16.08.2002 for thevery same assessment year 1997-98, the respondent issued noticeunder Section 148 of the Act proposing to reassess the incomefor the said year and requiring the petitioner to file a returnof income within 30 days. The petitioner submitted replies on03.09.2002 and 09.09.2002 for furnishing the basis for reopeningand submitted that in the light of the first notice issued andthe proceedings have been failed to be pursued as contemplatedunder Section 153(2) of the Act, in the absence of any furthermaterials at the hands of the respondent, the second noticeissued is without jurisdiction. Since no further action wasinitiated on those representations, the petitioner approachedthis Court by way of these writ petitions. 7. The petitioner's contention is that it is an admittedfact that the petitioner had filed its returns in compliancewith the notice of reassessment issued at the first instance,summons were also issued and also acted upon. In terms ofSection 153(2) of the Act such reassessment can be done withinthe period of limitation prescribed therein. Admittedly, withinthe said period, no action was initiated and consequently, anyfresh proceedings taken ignoring the earlier notice is withoutjurisdiction. 8. Learned Standing counsel for respondent by referring tothe counter affidavit filed by the respondent submitted that theearlier notice dated 25.01.2001 was dropped on 31.03.2002 fortechnical reasons, as recorded in the file wherein, it has beenspecifically mentioned that another notice under Section 148 ofthe Act would be issued after obtaining necessary approval.Therefore, the respondent would state that the second noticeissued, after obtaining approval from the AdditionalCommissioner of Income Tax, Company Range-II, Chennai is proper,as it has been issued well within the period of limitationprescribed under Section 148 of the Act. 9. Further the learned counsel for the respondent alsoreferred to the merits of the matter and sought to substantiateas to why the respondent was justified in issuing the impugnednotices and the petitioner should file a return of income andparticipate in the assessment proceedings and if aggrieved, theycould prefer an appeal as against the assessment. 10. After hearing the learned counsels for the parties andcarefully perusing the materials placed on record as well as theOriginal file, it is seen that pursuant to the notice dated25.01.2001 served on the assessee on 01.02.2001, the petitionersought for reasons for reopening, which were furnished and thepetitioner through their authorized representative appeared forhearing on 19.03.2001 and produced the books of accounts andcase was heard and subsequently adjourned for furnishing furtherdetails. On the adjourned date viz., 21.03.2001, once again thecase was heard and the assessee filed the details and the filenote shows, no other endorsement except say "case heard". Whileso, there is a typed note signed by an Officer dated 31.03.2002,stating that on technical grounds necessary approval will beobtained to issue Section 148 notice afresh and treated astechnically dismissed. 11. The learned standing counsel for the respondent soughtto sustain the impugned notice by referring to a judgment of theDivision Bench of Punjab and Haryana High Court in the case ofR.Kakkar Glass and Crockery House Vs. Commissioner of Income-Tax [2002 252 ITR 273 PH]. The Division Bench examined the issue https://hcservices.ecourts.gov.in/hcservices/ 11. The learned standing counsel for the respondent soughtto sustain the impugned notice by referring to a judgment of theDivision Bench of Punjab and Haryana High Court in the case ofR.Kakkar Glass and Crockery House Vs. Commissioner of Income-Tax [2002 252 ITR 273 PH]. The Division Bench examined the issue https://hcservices.ecourts.gov.in/hcservices/ as to whether a notice under Section 148 could be issued inrespect of the same income for a second time. After noting thevarious distinguishing features, it was pointed out that when anotice is quashed on some technical ground, it would be in orderto issue a fresh notice under Section 148 provided all otherlegal requirements of law have been complied with. One moreimportant factor which was pointed out in the judgment, whichwould be relevant for the purpose of this case, is as follows:“However, if a notice under Section 148 isquashed after examination of the material reliedon by the Assessing Officer and after recording afinding that on the basis of such material theadditional income cannot be said to have escappedassessment, then it shall not be permissible forAssessing Officer to issue a fresh notice on thebasis of the same material in respect of the sameitem of income. However, in case some freshmaterial comes into the possession of AssessingOfficer subsequently suggesting escapement ofincome under the same head or some other head, wesee no fetters on his power to issue a freshnotice under Section 148. Needless to emphasisethat all such subsequent notices have to conformto the parameters prescribed under the lawincluding the provision regarding limitation.”12. Thus the Division Bench held that, if a notice isquashed after examining the material relied on by the AssessingOfficer and after recording a finding that on the basis of suchmaterial the additional income cannot be said to have escapedassessment, then it will be impermissible for the AssessingOfficer to issue a fresh notice. However, in case some freshmaterial comes into the possession of the Assessing Officersuggesting escapement of income under the same head or someother head, no fetters could be imposed on his power to issue afresh notice. 13. On a careful perusal of the original file including thenote file, it is evidently clear that there is no factualdifference for reopening the assessment as proposed in the firstnotice and as presently proposed in the impugned notices. Theonly difference being the language, as the officers aredifferent. The same documents which formed the basis forreasons for reopening and issuance of notice dated 25.01.2001is identical to that of the reasons, which are set out for theissuance of the impugned notice. Further the petitioner waskept completely in the dark about the closing of the proceedingson technical grounds, stated to be endorsed on 31.03.2002 andthe Officers, who endorsed the same was very well aware that itwill be a time barred assessment if anything is not done withinthe said date as already reassessment proceedings were commenced and the petitioner is being heard in the matter. 14. Therefore, I find that there is no fresh material inpossession of the Assessing Officer suggesting escapement of theincome at the time of issuance of notice dated 25.01.2001. Thusit is a clear case where the respondent is attempting to reopena settled issue with no fresh materials and therefore, theimpugned notice is wholly without jurisdiction as it is a merechange of opinion. 15. For the above reasons, these writ petitions are allowedand the impugned orders are set aside. No costs. Sd/- Assistant Registrar(CS II) //True Copy// Sub Assistant RegistrarvsmToDeputy Commissioner of Income Tax,Company Circle II ((2), Chennai – 34.+1 cc to Ms.Hema Muralikirshnan Advocate sr 54679+1 cc to Ms.Lakshmi Sriram Advocate sr 54608W.P.Nos.35606 and 35607 of 2002rj(co)aa29/08/2017