M/S.jothi Malleables P Ltd.,(Rep By Its Managing Director),B-22, New v. The Assistant Commissioner Of Income Tax, Central Circle –

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 09.12.2021 CORAM: THE HONOURABLE MR.JUSTICE M.SUNDARW.P. No.21791 of 2021 and W.M.P. No.18405 of 2021 M/s.Jothi Malleables P Ltd.,(Rep by its Managing Director),B-22, New No.3, 1[st] Floor,Sastri Road, Thillai Nagar,Tiruchirapalli – 620 018.... Petitioner Vs. 1.The Assistant Commissioner of Income Tax, Central Circle – 1, Income Tax Department, Trichy Main Building, Williams Road, Cantonment Trichy, Tiruchirapalli – 620 001. 2.The Principal Commissioner of Income Tax, Central – 2, 108, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.... Respondents P RAYER: Writ Petition filed under Article 226 of the Constitutionof India for issuance of Writ of Certiorari, to call for therecords of the Writ Petitioner / Assessee on the file of the FirstRespondent to quash the impugned notice u/s 148 of the Act datedl9.01.2021 in DIN and Notice No.ITBA/AST/S/148/2020-21/1029885993(1) for the assessment year 2018-19 for want of jurisdiction. For Petitioner: Mr.A.S.SriramanFor Respondents: Mr.N.Dilip Kumar Senior Standing Counsel Assisted by Ms.P.Ajitha O R D E R *********** In the captioned main writ petition a notice dated 19.01.2021bearing Reference No.ITBA/AST/S/148/2020-21/1029885993(1)quaassessment year 2018-19 regarding the writ petitioner [hereinafter'impugned notice' for the sake of convenience and clarity] has beencalled in question. To be noted assessment year 2018-19 shallhereinafter be referred to as 'said AY' for the sake of conveniencehttps://hcservices.ecourts.gov.in/hcservices/and clarity. 2.Owing to the narrow compass on which the captioned main writpetition turns, with the consent of Mr.A.S.Sriraman, learnedCounsel on record on behalf of writ petitioner and Mr.N.DilipKumar, learned Senior Standing Counsel assisted by Ms.P.Ajitha, whoaccepted notice on behalf of both the respondents, captioned mainwrit petition was taken up and heard out. 3.Notwithstanding several grounds that have been raised in thewrit affidavit and very many averments that have been raised in thewrit affidavit, besides case laws that have been annexed to thewrit paper book, learned Counsel for writ petition at the hearingin the Admission Board submitted that he will restrict hissubmission to one point qua his campaign against the impugnednotice. That one point turns on GKN Driveshafts principle beinglaw laid down by Hon'ble Supreme Court in GKN Driveshafts (India)Ltd., Vs. Income Tax Officer and Ors.reported in (2003) 1 SCC 72.This is also reported in [2002] 125 TAXMAN 963 (SC) but I wouldrefer to the case law as reported in MANU/SC/1053/2002. 3.Notwithstanding several grounds that have been raised in thewrit affidavit and very many averments that have been raised in thewrit affidavit, besides case laws that have been annexed to thewrit paper book, learned Counsel for writ petition at the hearingin the Admission Board submitted that he will restrict hissubmission to one point qua his campaign against the impugnednotice. That one point turns on GKN Driveshafts principle beinglaw laid down by Hon'ble Supreme Court in GKN Driveshafts (India)Ltd., Vs. Income Tax Officer and Ors.reported in (2003) 1 SCC 72.This is also reported in [2002] 125 TAXMAN 963 (SC) but I wouldrefer to the case law as reported in MANU/SC/1053/2002. 4.Before I proceed further, owing to the short point andnarrow compass, bare minimum facts imperative for appreciating thisorder ie., factual matrix in a nutshell will suffice and such factsshorn of unnecessary particulars are that the writ petitioner filedoriginal return of income qua said AY on 26.10.2015; that18.06.2019 intimation under Section 143(1) of 'the Income Tax Act,1961' ['IT Act' for the sake of brevity] accepting the return ofincome filed by the assessee / writ petitioner was sent to the writpetitioner; that thereafter on 12.09.2019 there was a survey in theplace of business of the writ petitioner and to be noted, thissurvey is under Section 133A of IT Act; that thereafter the writpetitioner retracted the statement given in the survey and this ison 29.01.2020; that post retraction, on 19.01.2021 the impugnednotice under Section 148 of IT Act came to be issued; that returnof income pursuant to impugned notice was filed by the writpetitioner on 22.01.2021; that thereafter on 30.09.2021 a noticeunder Section 143(2) of the IT Act was issued by the assessingofficer giving the reasons that reopening [on writ petitioner'srequest]; that the writ petitioner on 15.10.2021 filed objectionsto the reasons for reopening; that on 01.11.2021 further notice wasissued by the assessing officer under Section 143(2) r/w. Section129 of IT Act for proceeding with reassessment; that thereafter thecaptioned writ petition has been filed assailing the impugnednotice ie., notice dated 19.01.2021 under Section 148 of IT Act. 5.As already alluded to supra, learned Counsel for writpetitioner notwithstanding very many averments and several groundsraised in the writ affidavit now restricts his prayer to only onepoint and that one point turns on GKN Driveshafts principle. https://hcservices.ecourts.gov.in/hcservices/ 6.Learned Revenue Counsel pointed out that there is noinfirmity in the Section 148 notice ie., the impugned notice butthe point is GKN Driveshafts principle consists of four stages {i)assessee asking for reasons for reopening, ii) Department givingreasons for reopening, iii) assessee filing objections to suchreasons and iv) Department passing a 'speaking order' afterconsidering the assessee's objections} and only three stages havebeen completed in the case on hand and the final stage of making aspeaking order has not been made. In my considered view this iswhat calls for minimum interference / intervention qua impugnednotice, the details of which will be alluded to set out infra. 7.GKN Driveshafts is a case where the assessee assailednotices under Section 143(2) and 148 unsuccessfully before the HighCourt, carried the matter to Hon'ble Supreme Court and Hon'bleSupreme Court while refusing to interfere with the order of HighCourt put in place a mechanism in cases where 148 notice is issued.This is neatly captured in paragraph No.5 of GKN Driveshafts caselaw as reported in Manupatra and paragraph No.5 reads as follows: 7.GKN Driveshafts is a case where the assessee assailednotices under Section 143(2) and 148 unsuccessfully before the HighCourt, carried the matter to Hon'ble Supreme Court and Hon'bleSupreme Court while refusing to interfere with the order of HighCourt put in place a mechanism in cases where 148 notice is issued.This is neatly captured in paragraph No.5 of GKN Driveshafts caselaw as reported in Manupatra and paragraph No.5 reads as follows: '5.We see no justifiable reason to interferewith the order under challenge. However, we clarifythat when a notice under Section 148 of the IncomeTax Act is issued, the proper course of action forthe notice is to file return and if he so desires,to seek reasons for issuing notices. The assessingofficer is bound to furnish reasons within areasonable time. On receipt of reasons, the noticeis entitled to file objections to issuance of noticeand the assessing office is bound to dispose of thesame by passing a speaking order. In the instantcase, as the reasons have been disclosed in theseproceedings, the assessing officer has to dispose ofthe objections, if filed, by passing a speakingorder, before proceeding with the assessment inrespect of the abovesaid five assessment years.'[Extracted and reproduced as such] 8.A careful perusal of paragraph No.5 supra read inconjunction with the factual matrix in instant case ie., inconjunction with the trajectory the assessment has taken in thecase on hand will make it clear that all the stages in GKNDriveshafts principle except the last stage of the assessingofficer passing a speaking order have been completed. In theinstant case there is no disputation or disagreement that theassessing officer has not passed a speaking order on the objectionsof the writ petitioner / assessee ie., objections to the reasonsfor reopening. It is therefore now imperative that the GKNhttps://hcservices.ecourts.gov.in/hcservices/Driveshafts principle is complied with. On this short point, the matter is now sent back to the assessing officer viz., the firstrespondent to make a speaking order qua the writ petitioner'sobjections to the reasons for reopening. This shall be done by thefirst respondent assessing officer within three [3] weeks fromtoday ie., on or before 30.12.2021. In the captioned W.M.P. thelimited order will be to the effect that the first respondentassessing officer will keep the assessment proceedings in abeyancefor a period of three [3] weeks from today ie., till 30.12.2021 andthereafter carry the matter (subject of course to the speakingorder) to its logical end ie., after 30.12.2021. 9.Captioned Writ Petition and captioned Writ MiscellaneousPetition is disposed of in the aforesaid manner with theaforementioned directives. There shall be no order as to costs.Sd/- Assistant Registrar (W) MR / /2021 Sub Assistant Registrar(CS) NOTE:In view of the present lock down owing to COVID-19 pandemic,a web copy of the order may be utilized for official purposes,but, ensuring that the copy of the order that is presented is thecorrect copy, shall be the responsibility of the advocate/litigantconcerned. To 1.The Assistant Commissioner of Income Tax, Central Circle – 1, Income Tax Department, Trichy Main Building, Williams Road, Cantonment Trichy, Tiruchirapalli – 620 001. 2.The Principal Commissioner of Income Tax, Central – 2, 108, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034. RS (09.12.2021) 4P 3Chttps://hcservices.ecourts.gov.in/hcservices/