M/S.keesara Plastics Pvt.ltd.,Rep.by Its Director Shri K.vijayvardhan Reddy v. The Assistant Commissioner Of Income Tax,Corporate Circle 4(2),Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.6.2016 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P.Nos.19477 & 19478 of 2016and W.M.P.Nos.16889 & 16890 of 2016 16891 & 16892 of 2016 M/s.Keesara Plastics Pvt.Ltd.,rep.by its Director Shri K.Vijayvardhan Reddy ... Petitioner in both the W.Ps. Vs The Assistant Commissioner of Income Tax,Corporate Circle 4(2),Room No.433, 4th Floor,Main Building,121, AAYAKAR Bhavan,Nungambakkam,Chennai-34 ... Respondent in both the W.Ps. Petitions filed under Article 226 of the Constitution ofIndia praying for issuance of a writ of certiorarified mandamuscalling for the records of the respondent in PAN videOrder u/s.271(1)(c) dated 29.4.2016, for Assessment years 2010-2011 and 2011-2012, respectively, and quash the same andconsequently direct the respondent to give one more opportunityto the petitioner before passing orders under Section 271(1)(c)of the Income Tax Act 1961. For Petitioner: Mr.P.J.Rishikesh in both Heard Mr.P.J.Rishikesh, learned counsel for thepetitioner and Mr.P.Rajkumar Jhabakh for Mr.T.PramodkumarChopda, learned counsel, who accepts notice for the respondentand with the consent of parties, the writ petitions are takenup for final disposal. https://hcservices.ecourts.gov.in/hcservices/ 2. The petitioner has filed these writ petitionschallenging the order passed by the respondent under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as'the Act' in short). By virtue of the impugned order, thepetitioner has been levied with penalty of Rs.2,50,00,000/- forthe assessment year 2010-11 and Rs.1,00,000/- for the assessmentyear 2011-12 and they have been called upon to remit the same.The impugned order has been challenged primarily on threegrounds. Firstly on the ground of violation of principles ofnatural justice; secondly on the ground that in respect of theearlier assessment years, the orders are under scrutiny of theTribunal as well as this Court and thirdly on the ground thatthe authority did not take into consideration the recentdecision of the Honourable Supreme Court in the case ofCommissioner of Income Tax, Ahmadabad vs. Reliance PetroproductsPrivate Limited - (2010) 11 Supreme Court Cases 762. 3. From the record of proceedings it is seen that theissue as to whether the claim for exemption by the petitionerunder Section 80IC of the Income Tax Act is admissible or not isthe subject matter of challenge by the petitioner before theIncome Tax Appellate Tribunal for the assessment years 2010-11and 2011-12. In respect of the same issue, for the assessmentyears 2007-08, 2008-09, 2009-10, the petitioner has challengedthe orders passed by the Income Tax Appellate Tribunal beforethis Court in T.C.A.Nos.164 to 166 of 2015. The respondentissued a show cause notice for the assessment years, namely,2010-11 and 2011-12, under Section 271(1)(c) of the Income TaxAct, calling upon the petitioner to show cause as to why anorder imposing penalty should not be made under Section 271(1)(c) of the Act. The petitioner was directed to appear in personon 14.3.2016 at 11.30 a.m. This show cause notice dated1.3.2016 was received by the petitioner on 10.3.2016. This isevident from the postal cover, which has been filed along withthe material papers, in these writ petitions. Thus, thepetitioner had only 3 days in between, to make arrangements toappear for the hearing. It is the case of the petitioner thathis Chartered Accountant was away from the country and though hehad immediately scanned the copy of the notice and forwarded thesame to his Chartered Accountant, he received a reply statingthat the Chartered Accountant would be returning only by the endof the month. Since the petitioner did not appear before therespondent, the respondent passed the impugned order dated29.4.2016. 4. Section 274 of the Income Tax Act states that noorder imposing a penalty under Chapter XXI of the Act shall bemade unless the assesee has been heard or has been given areasonable opportunity of being heard. The expression'reasonable opportunity' could be broadly defined as sufficient opportunity for a normal person to respond to a proposal made bya statutory authority. There cannot be a straight jacketformula in assessing what is "reasonable opportunity" and eachcase has to be considered on its own merits taking note of thefacts. 5. In the instant case, taking into consideration thefact that the issue whether the petitioner is entitled forexemption under Section 80IC is not only pending before theIncome Tax Appellate Tribunal, but also before this Court, asTax Case Appeals and the petitioner having paid the tax for allthe earlier years, one more notice of hearing could have beenissued to the petitioner, before finalising the proposal in thenotice dated 1.3.2016. This Court is inclined to make thisobservation because though the notice was dated 1.3.2016, it wasdispatched much later and received by the petitioner only on10.3.2016. Therefore, this Court finds that there is denial ofreasonable opportunity to the petitioner. Hence, the matterrequires to be remanded for fresh consideration. 6. The other issue, the respondent should consider, isas to what would be the effect of the proceedings, which arenow pending before the Income Tax Appellate Tribunal as well asbefore this Court. The submission of the petitioner is that theentire tax liability for the other years have been cleared.That apart, the respondent, while passing the impugned order,had taken note of the decision of the Honourable Supreme Courtin the case of Union of India and Others vs. Dharmendra TextilesProcessors and Others - (2008) 306 ITR 277 (SC). In fact, thisdecision was taken note of by the Honourable Supreme Court in asubsequent decision in the case of Reliance Petroproducts Ltd.,(Supra), wherein, the Honourable Supreme Court, whileconsidering the scope of Section 271 (1)(c) of the Act, has heldas follows: "18. We must hasten to add here that in thiscase, there is no finding that any detailssupplied by the assessee in its return were foundto be incorrect or erroneous or false. Such notbeing the case, there would be no question ofinviting the penalty under Section 271(1)(c) ofthe act. A mere making of the claim, which is notsustainable in law, by itself, will not amount tofurnishing inaccurate particulars regarding theincome of the assessee. Such claim made in thereturn cannot amount to inaccurate particulars." 7. In the light of the above discussion, this Court isof the view that the petitioner should be afforded one moreopportunity to place their objections to the proposal made bythe respondent in the show cause notice dated 1.3.2016 and after https://hcservices.ecourts.gov.in/hcservices/ affording an opportunity of personal hearing to the petitioner,the respondent should consider all the issues and pass aspeaking order. 8. In the light of the above, the writ petitions areallowed. The impugned order is set aside and the matter isremanded to the respondent for fresh consideration, who shallissue a notice of personal hearing to the petitioner, grantingthem reasonable time and during the course of personal hearing,the petitioner shall place their written objections as well asmake oral submissions, after which, the respondent shallconsider and pass a reasoned order on merits and in accordancewith law. No costs. Connected miscellaneous petitions areclosed. Sd/- Assistant Registrar(CS V) //True Copy// Sub Assistant Registrar To The Assistant Commissioner of Income Tax,Corporate Circle 4(2),Room No.433, 4th Floor,Main Building,121, AAYAKAR Bhavan,Nungambakkam,Chennai-34. +2cc to M/S.P.J.Rishikesh, Advocate sr.33104+1cc to M/S.T.Pramodkumar Chopda, Advocate sr.33190 Sd/- Assistant Registrar(CS V) //True Copy// Sub Assistant Registrar To The Assistant Commissioner of Income Tax,Corporate Circle 4(2),Room No.433, 4th Floor,Main Building,121, AAYAKAR Bhavan,Nungambakkam,Chennai-34. +2cc to M/S.P.J.Rishikesh, Advocate sr.33104+1cc to M/S.T.Pramodkumar Chopda, Advocate sr.33190 W.P.Nos.19477 & 19478 of 2016rp[co]srg 28/06/2016