M/S.hotel Saravana Bhavanrep.by Its v. The Assistant Commissioner Ofincome Tax, Central Circle-I [3]Mahatma Gandhi Road, Chennai-34

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:02.12.2016 THE HONOURABLE Mr.JUSTICE T.S.SIVAGNANAM & WMP.Nos.34664 to 34667/2016 M/s.Hotel Saravana Bhavanrep.by its partner, No.19, VadapalaniAndavar Koil Street, Vadapalani,Chennai.26. ..Petitioner in both the Writ Petitions Vs. The Assistant Commissioner ofIncome Tax, Central Circle-I [3]Mahatma Gandhi Road, Chennai-34. .. Respondent in both the Writ Petitions Writ petitions filed under Article 226 of theConstitution of India praying for issuance of a Writ ofCertiorarified Mandamus calling for the records of the impugnedorder of the respondent in No.PAN. for the AssessmentYears 2013-2014 and 2014-2015 respectively dated 30.09.2016 andquash the same and direct the respondent to provide a freshopportunity of personal hearing. Heard Mr.V.S.Jayakumar, learned counsel appearing forthe petitioner and Mr.T.Pramodkumar Chopda, learned StandingCounsel appearing on behalf of the respondent and with theconsent on either side, the writ petition is taken up for finaldisposal. 2Since the challenge to the impugned proceedingswas on a very narrow campus, this Court requested the learned https://hcservices.ecourts.gov.in/hcservices/ Standing counsel for the revenue/respondent, to get instructionsin the matter, so that the writ petitions can be disposed of. 3The orders challenged in these writ petition arethe orders passed by the respondent u/s.271AAB of the Income TaxAct, 1961. A search and seizure operation was conducted in thevarious business premises of the assessee on 23.07.2013 and as apart of the search operations, the residences of the partnersand related persons were also covered in the search. Thedeficiencies which were found out at the time of the search werepointed out to the assessee and the statements were recordedfrom the partners of the assessee's Firm. Though the assesseedid not file the original return of income for the year 2013-2014, in response to the notice u/s.153-A, they filed return ofincome for the Assessment Year 2013-2014 on 10.02.2015,admitting the total income at Rs.19,84,17,450/- which includesthe undisclosed income of Rs.12.5 crores admitted during thecourse of search and the assessment was completed u/s.143[3]read with section 153A of the Act and an oder dated 30.03.2016was passed. Thereafter, a Show Cause Notice was issued on30.03.2016 u/s.274 read with section 271AAB of the Act, callingupon the petitioner to appear in person and to show cause as towhy penalty should not be imposed under section 271 of the Act.In the said notice, the penalty proposed was at 10% of theundisclosed income of the specified Previous Year. In responseto that, the petitioner submitted their objections and theimpugned order has been passed levying penalty at 30%. 4Similarly, for the Assessment Year 2014-2015, thefacts are somewhat identical. But for the said year, theassessee had filed the return of income on 01.05.2015, admittingthe total income of Rs.18,55,05,110/- which includes theundisclosed income of Rs.12.5 Crores admitted during thesearch. The Assessment was completed u/s.143[3] read with 153B[1][b] vide order dated 30.03.2016. Thereafter, a show causenotice was issued u/s.274 read with 271AAB of the Act dated30.03.2016, proposing to levy penalty at 10% of the undisclosedincome of the specified Previous Year. The petitioner submittedtheir objections and the respondent passed the impugned orders,levying 30% penalty. 4Similarly, for the Assessment Year 2014-2015, thefacts are somewhat identical. But for the said year, theassessee had filed the return of income on 01.05.2015, admittingthe total income of Rs.18,55,05,110/- which includes theundisclosed income of Rs.12.5 Crores admitted during thesearch. The Assessment was completed u/s.143[3] read with 153B[1][b] vide order dated 30.03.2016. Thereafter, a show causenotice was issued u/s.274 read with 271AAB of the Act dated30.03.2016, proposing to levy penalty at 10% of the undisclosedincome of the specified Previous Year. The petitioner submittedtheir objections and the respondent passed the impugned orders,levying 30% penalty. 5The only ground on which the petitioner is beforethis Court is by contending that the impugned orders have beenpassed beyond what was proposed in the show cause notices. Itis not in dispute that the show cause notice proposed thepenalty only at 10%. When this issue was pointed out, thelearned Standing Counsel for the revenue submitted that he hasobtained instructions from the respondent by way of a letterdated 30.11.2016, wherein the respondent has admitted that in https://hcservices.ecourts.gov.in/hcservices/ the penalty notice, what was proposed was 10% on the undisclosedincome and not 30% and this is pleaded to be an inadvertence.In the said letter, the respondent has agreed to give one moreopportunity of being heard to the petitioner / assessee, beforedeciding the quantum of penalty on merits and in accordance withlaw. 6In the light of the above stand taken by therespondent, there would not be any necessity to set aside theimpugned orders. But, however, there will be a direction to therespondent to issue a rectified notice so that the petitionerwill be able to respond to the same and the petitioner should beafforded reasonable opportunity in which personal hearing shouldbe granted. The only difficulty expressed by the respondent asset out in paragraph [d] of the letter dated 30.11.2016 is onthe question of limitation. Since this Court has issued certaindirections, the petitioner / assessee shall not be entitled toraise the plea of limitation in the event, proceedings areinitiated by the respondent in pursuant to the directions issuedby this Court. The learned counsel for the petitioner alsoaffirms before this Court that the petitioner will not raise anysuch plea of limitation consequent upon the remand order to bepassed by this Court. 7In the light of the above, the respondent isdirected to issue a rectified notice to the petitioner andafford a reasonable opportunity to the petitioner including theopportunity of personal hearing, in which, the petitioner wouldbe entitled to canvass not only the issue relating to penaltybut certain other issues which in the opinion of the petitioner,has not been dealt with in the impugned order. Afterconsidering all the contentions raised by the petitioner, therespondent shall pass a speaking order on merits and inaccordance with law. 8The writ petitions stand disposed of with theabove direction. No costs. Consequently, the connectedmiscellaneous petitions are closed.APSd/- Assistant Registrar //True Copy// Sub Assistant Registrar To The Assistant Commissioner ofIncome Tax, Central Circle-I [3]Mahatma Gandhi Road, Chennai-34. + 1 cc to Mr.V.S.Jayakumar, Advocate Sr 71546 +1 cc to Mr.T.Pramodkumar Chopda, Advocate Sr 71483 KR/28/12 WP.Nos.40663 & 40664/2016