M/S.tcv Engineering Ltd v. The Deputy Commissioner Of Income Tax, Central Circle Ii (2), New

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 02.11.2018 M/s.TCV Engineering Ltd.,Represented by its Director, C.MohanNo.25, 1[st] StreetParameswari Nagar,Adayar, Chennai-600 020. .. PetitionerVs. The Deputy Commissioner of Income Tax,Central Circle II (2),New No.46 (Old No.108),Mahatma Gandhi Road,Nungambakam,Chennai-600 034... Respondent Prayer:- Writ Petition has been filed under Article 226 ofConstitution of India, praying to issue a Writ of Certiorari, tocall for the proceedings in PAN:AAACT 2709E dated 16.07.2008 ofthe respondent relating to the block period 1987-88 to 1997-98and quash the same. For Respondent : Mr.Jayaprathap ORDER The present writ petition has been filed by thepetitioner praying to quash the proceedings in PAN:AAACT 2709Edated 16.07.2008 of the respondent relating to the block period1987-88 to 1997-98. 2.M/s.TCV Engineering Limited is the petitioner before thisCourt and is represented by its Director who claims that thepetitioner's limited company is an assessee under the Income Tax https://hcservices.ecourts.gov.in/hcservices/ Act who was issued the notice u/s 158 BD of the Income Tax Actcalling upon the petitioner to submit a return of undisclosedincome for the period from 01.04.1986 to 15.07.1996. Thepetitioner claims that the above said notice was issued pursuantto an action u/s 132A of the Income Tax Act in the case ofT.T.V.Dinakaran, who is the another Director of the petitionercompany. 3.The learned counsel for the petitioner would submit thatimmediately after the receipt of the aforesaid notice, thepetitioner's company submitted a return undisclosed income ofRs.1,41,04,160/-. However, the assessing authority aftercompletion of the assessment determined Rs.2,96,88,746/- asundisclosed income of the petitioner's company by including asum of R.42,37,323/-. This addition was made on the basis ofcertain sheets of paper alleged to have been recovered by thedepartment in the course of a search in the premises ofSengamala Thayar Educational Trust. 4.The petitioner alleged that the above assessment was madewithout giving an opportunity and the petitioner has challengedthe assessment order as invalid by way of an appeal before theIncome Tax Appellate Tribunal and the Tribunal by its orderdated 28.11.2002, held that the assessment of the aforesaid sumof Rs.42,37,323/- cannot be sustained as the said assessment wasmade without affording the petitioner an opportunity and theTribunal set aside the assessment and remanded the matter backto the Assessing Authority. Thereafter, the Assessing Authoritymade a fresh assessment. It is alleged that the assessment wasonce again putting the petitioner with no notice of thematerials sought to be relied on by the Assessing Authority. 5.The petitioner would further contend that the assessmentwas set aside in full. The petitioner bonafidely believed thatall the contentions that are open to the petitioner could beurged before the Assessing Authority. The petitioner wouldfurther allege that despite there being direction by the IncomeTax Appellate Tribunal by order dated 28.11.2002, the AssessingAuthority made a further order dated 17.03.2004 u/s 158 BD readwith u/s 158 BC of the Income Tax Act without affording anopportunity to the petitioner. 6.The petitioner once again challenged the said orderbefore the Income Tax Appellate Tribunal. The petitioner wouldcontend that, the assessment order is without jurisdiction andconsequently the assessment has to be set aside. The Income TaxAppellate Tribunal had disposed of the said appeal by orderdated 17.10.2007 holding that the assessment order has been madein violation of the principles of natural justice. However, theTribunal has further held that, the Assessing Authority can 6.The petitioner once again challenged the said orderbefore the Income Tax Appellate Tribunal. The petitioner wouldcontend that, the assessment order is without jurisdiction andconsequently the assessment has to be set aside. The Income TaxAppellate Tribunal had disposed of the said appeal by orderdated 17.10.2007 holding that the assessment order has been madein violation of the principles of natural justice. However, theTribunal has further held that, the Assessing Authority can proceed in accordance with law pursuant to the same, theAssessing Authority issued a notice u/s 158 BD of the Income TaxAct proposing to make an assessment for the block period from1987-88 to 1997-98 by assessment PAN:AAACT 2709E dated16.07.2008, which is impugned in this writ petition. Thepetitioner's counsel would further content that the question ofjurisdiction of the Assessing Authority was not permitted to beraised by the Assessing Authority. The assessment should havebeen completed within a period of limitation prescribed u/s 158BE (1) which provides for the extension of the limitation incertain specified circumstances, which the Assessing Authorityfailed to consider and the assessment is being bared bylimitation. 7.The counter affidavit has been filed on behalf of therespondent and they have alleged that initially the assessmentu/s 158 BD read with Section 254 was completed as earlier as17.03.2004 with regard to unexplained investment in immovableproperties of the assessee on the basis of certain seizedmaterials assessed. Accordingly, the assessee was informed bythe valid notice issued u/s 158 BD of the Income Tax Act whichthe assessee challenged before the Tribunal for want ofopportunity. Initially, the Tribunal had set aside theassessment and remanded the matter back to the Assessing Officerfor fresh assessment; based on which, final assessment was madeafter making an opportunity. The said assessment order was alsochallenged once again before the Tribunal. The Tribunal, byorder dated 17.10.2007 has held that the penalty is levied onthe basis of the addition made by the Assessing Officer inregard to the alleged payment made by the assesee toShri.Selvam. In the quantum appeal ITA No.627/Mds/2002 thematter was restored to the file of the Assessing Officer forfresh adjudication, by which the Assessing Officer is at libertyto initiate penalty proceedings on the basis of the findingsrecorded in the fresh assessment order. 8.Thereafter, the Assessing Officer has issued a noticedated 10.06.2008, pertaining to the block period 1987-88 to1997-98 and posted the hearing on 19.06.2008 for consideration.After hearing the arguments on behalf of the petitioner andrespondent, by order dated 16.07.2008, the petitioner wasdirected to furnish the details with regard to the propertytransaction involved during the Block Period and the matter wasreposted for hearing on 04.08.2008, which order has beenchallenged in this Court by the petitioner. As it is merely arequest made to the petitioner to furnish the details regardingthe property transaction during the block period, the petitionerought to have furnished the details of the transaction and theassessment well within the limitation period. Hence, prayed fordismissal of the writ petition. 9.Heard, the learned counsel for the petitioner and thelearned counsel for the respondent and perused the materials onrecord. 10.The learned counsel appearing for the petitionervehemently argue that the assessment order, which is beingimpugned is beyond the period of limitation provided u/s 158 BDof the Income Tax Act and the authority had no jurisdiction toissue such assessment as Tribunal has set aside the assessmentorder challenged by the petitioner. 9.Heard, the learned counsel for the petitioner and thelearned counsel for the respondent and perused the materials onrecord. 10.The learned counsel appearing for the petitionervehemently argue that the assessment order, which is beingimpugned is beyond the period of limitation provided u/s 158 BDof the Income Tax Act and the authority had no jurisdiction toissue such assessment as Tribunal has set aside the assessmentorder challenged by the petitioner. 11.Per contra, the learned standing counsel for the IncomeTax Department would argue for sustaining the impugned order,that the impugned order is only an order requesting thepetitioner to produce the details regarding the propertytransaction held during the block period 1987-88 to 1997-98.Apart from that, it is also contended by the learned standingcounsel for the Income Tax Department that the assessment orderis well within the period of limitation. 12.On perusal of the entire materials on records and on acareful reading of the impugned order, it is clear that byvirtue of earlier orders passed by the Tribunal especially theorder dated 17.10.2007, wherein which the petitioner has filedthe appeal before the Income Tax Appellate Tribunal Bench 'C'challenging the order dated 17.03.2004 passed by the DeputyCommissioner of Income Tax, Central Circle II (2) Chennairelating to the block assessment years 1987-88 to 1997-98, onthe ground that, the order purported to be issued u/s 158 BD ofthe Income Tax Act 1961 is violative of principles of naturaljustice and as much as the assessee was not provided withreasonable opportunity of being heard. The authorities, beforethe Tribunal, relied upon the relevant block period whereinwhich the assessee acquired vacant lands through 6 sale deedsexecuted on different dates on various other papers that havebeen seized by the Assessing Officer, based on which, separatenotices have been issued. However, no opportunity was offeredthereby, the Tribunal allowed the appeal filed by the assesseein ITA(SS)A No.47/Mds/2004 thereby setting aside the impugnedorder and restored the same on the file of the Assessing Officerwith the direction to decide the issues afresh in accordancewith law after providing adequate opportunity to the assessee ofbeing heard. 13.Insofar as the another appeal in ITA No.627/Mds/2002 isconcerned the appeal was filed as against the order passed bythe Commissioner (appeals) of Police, Chennai relating to anorder dated 28.02.2002, which was challenged before theTribunal, on the ground that no proper service was made on the assessee and in fact before the Tribunal it was assured that ifan opportunity was given, the assessee can produce before theAssessing Officer the relevant materials for necessaryexamination and to explain the veracity of the said transaction. 14.The Tribunal, after hearing the appeals, has restored theITA No.627/Mds/2002 for fresh adjudication by conferring theliberty to the Assessing Officer to initiate the penaltyproceedings on the basis of the findings recorded in the freshassessment order. Based on the above directions, wherein whichthe order of the Appellate Tribunal was not challenged by thepetitioner herein before the higher forum, the Assessing Officerhas issued a notice dated 10.06.2008 informing the petitionerfixing the hearing date as 19.06.2008 for considering the issuerelating to block assessment as well as the assessment year1998-99. 14.The Tribunal, after hearing the appeals, has restored theITA No.627/Mds/2002 for fresh adjudication by conferring theliberty to the Assessing Officer to initiate the penaltyproceedings on the basis of the findings recorded in the freshassessment order. Based on the above directions, wherein whichthe order of the Appellate Tribunal was not challenged by thepetitioner herein before the higher forum, the Assessing Officerhas issued a notice dated 10.06.2008 informing the petitionerfixing the hearing date as 19.06.2008 for considering the issuerelating to block assessment as well as the assessment year1998-99. 15.It is further seen from the records that, the petitionerhas appeared before the Deputy Commissioner of IncomeTax/respondent and raised the question of jurisdiction and theassessment order being issued beyond the period of limitation.The respondent herein has negatived the issue of jurisdiction assame was not raised any where before in any of the proceedingsinvolving the block assessment proceedings of block period 1987-88 to 1997-98 and directed the petitioner to appear for thefurther hearing on 04.06.2008 and furnish the details withregard to the property transaction. It is clear from theimpugned order that the respondent is not correct in baring thepetitioner to raise jurisdiction issue as it was raised only forthe 1[st] occasion before the respondent and not in the previousassessment orders. An order passed by the authority, who had nojurisdiction to pass such order, can have no legal enforcementand the question of jurisdiction can always be raised during thecurrency of the proceedings. As the Income Tax AppellateTribunal, while restoring the matter back to the respondent, theparties were at liberty to raise the question of jurisdiction.The assessee can be curtained of the right to question thejurisdiction of the authority merely because the assessee hadfailed to raise the same before in the earlier proceedings, butthe matter is restored back to the respondent. The respondentcan issue fresh notice and in those circumstances, the assesseecan raise the issue of jurisdiction before the authority. 16.Under these circumstances, the contention raised by therespondent as far as the jurisdiction that the jurisdictionissue was not raised before the Appellate Authority and the samecannot be raised before this Court alone is set aside and thematter is directed to be proceeded further from where it isstopped that is questioning the petitioner to furnish thedetails with regard to the property transactions and the petitioner is bound to produce details, as the petitioner hasnot challenged the order of the Appellate Tribunal dated17.10.2007 which has become final and the further proceedingsbased on the order of the Appellate Tribunal has been commencedby the respondent. 17.Since the issue is pending before the respondent for morethan twenty years, the respondent is directed to complete theproceedings within a period of 3 months from the date of receiptof copy of the order by affording sufficient opportunity to thepetitioner, on day-to-day basis, to which the petitioner and therespondent shall co-operate. 18.The Writ petition is disposed of, with the abovedirections. Consequently, connected Miscellaneous Petition isclosed. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar To The Deputy Commissioner of Income Tax,Central Circle II (2),New No.46 (Old No.108),Mahatma Gandhi Road,Nungambakam,Chennai-600 034. +1cc to Mr.M.Muthukumar, Advocate sr.no.76206+1cc to M/s.A.P.Srinivas, Advocate sr.no.76178 W.P.No.20054 of 2008and M.P.No. 1 of 2008 nr 28/02/2019