New v. The Deputy Commissioner Of Income Taxcorporate Circle-2(1)Room

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 12.12.2018 Fairmacs Shipping and Transport Services Private LimitedRepresented by its DirectorMr.Sunil Shete, New No.31, B.A.Estates, Moore Street,Parrys, Chennai-600 001. ..Petitioner vs. 1.The Deputy Commissioner of Income TaxCorporate Circle-2(1)Room No.511, Wanaparthy Block121, MG Road, NungambakkamChennai-600 034. 2.The Assistant Commissioner of Income TaxCorporate Circle-2(1)Wanaparthy Block,121, MG Road, NungambakkamChennai-600 034. .. Respondents Writ Petition filed under Article 226 of the Constitution ofIndia praying to issue a Writ of Certiorari, to call for therecords of the 2nd respondent and quash the impugned noticeunder Section 148 of the Act in PAN: dated 17.01.2018for the assessment year 2013-2014. For Petitioner :Mr.R.V.Eswar, Senior Counsel for Mr.R.Sandeep Bagmar O R D E R Mrs.Hema Muralikrishnan, learned standing counsel takesnotice for the respondents. By consent of the parties, the mainwrit petition itself is taken up for final disposal at theadmission stage, since the issue involved in this case can bedecided without filing a counter affidavit and hearing anelaborate arguments on either side for and against the reasonsset out for re-opening the assessment. https://hcservices.ecourts.gov.in/hcservices/ 2. Heard Mr.R.V.Eswar, learned Senior Counsel appearing forthe petitioner and Mrs.Hema Muralikrishnan, learned standingcounsel who takes notice for the respondent. For Petitioner :Mr.R.V.Eswar, Senior Counsel for Mr.R.Sandeep Bagmar O R D E R Mrs.Hema Muralikrishnan, learned standing counsel takesnotice for the respondents. By consent of the parties, the mainwrit petition itself is taken up for final disposal at theadmission stage, since the issue involved in this case can bedecided without filing a counter affidavit and hearing anelaborate arguments on either side for and against the reasonsset out for re-opening the assessment. https://hcservices.ecourts.gov.in/hcservices/ 2. Heard Mr.R.V.Eswar, learned Senior Counsel appearing forthe petitioner and Mrs.Hema Muralikrishnan, learned standingcounsel who takes notice for the respondent. 3. The petitioner is an Assessee. In respect of theassessment year 2013-2014, a scrutiny assessment order waspassed on 27.03.2016 under Section 143(3) of the Income Tax Act,1961. Thereafter, the Assessing Officer issued a notice dated17.01.2018 under Section 148 of the IT Act, 1961, by statingthat he has reasons to believe that the income of the Assesseechargeable to tax for the assessment year 2013-2014, has escapedassessment within the meaning of Section 147 of the IT Act,1961. In response to the said notice, the petitioner throughtheir communication dated 22.01.2018 informed the AssessingOfficer that the return filed by them on 30.11.2013 may betreated as the return in response to the notice under Section148 of the IT Act, 1961. However, for the purpose of compliance,they also filed a return of income dated 20.01.2018. In thevery same communication, the petitioner sought for furnishingthe reasons for re-opening the assessment. The AssessingOfficer through a communication dated 20.04.2018 has furnishedthe reasons. It is stated therein that one of the Director ofthe petitioner-Company viz., Dattatray Ramkrushna Shete has solda property for Rs.97,37,500/- on 23.07.2012; that the saidtransaction has been duly considered in the income of thepetitioner-Company; however, the market value of the propertywas Rs.3,21,61,000/- and since the market value of the propertywas more than the amount for which the property was sold by theassessee, the provisions of Section 50C of the IT Act, 1961 isapplicable. Thus, the Assessing Officer has stated that thedifference between the market value and the sale considerationof the property sold has escaped the assessment and thus, it isto be brought to tax. The petitioner filed their objections byway of two communications dated 09.11.2018 and 18.11.2018. Inboth the communications, more specifically, in the communicationdated 09.11.2018, apart from raising other objections, theAssessee informed the Assessing Officer that the provisions ofSection 50C does not arise in this case, since the lands sold bythe Assessee have been held as a business income and the gainson the sale has been shown under the head profits and gains fromthe business. Apart from raising such objections, thepetitioner has also dealt with in detail as to why the re-opening is not justifiable. The Assessing Officer, thereafter,passed the order dated 22.11.2018, rejecting the objectionsraised by the petitioner. Hence, the present writ petition isfiled before this Court. 4. The learned Senior Counsel for the petitioner afterinviting this Court's attention to the original return filed andthe assessment order passed under Section 143(3) of the IT Act,1961, dated 27.03.2016, submitted that treating the income 4. The learned Senior Counsel for the petitioner afterinviting this Court's attention to the original return filed andthe assessment order passed under Section 143(3) of the IT Act,1961, dated 27.03.2016, submitted that treating the income derived out of selling the lands, by the assessee, as businessincome, has been considered and dealt with by the AssessingOfficer in detail in the order of assessment at ParagraphNos.8.1 & 8.2. Therefore, he submitted that the AssessingOfficer is not entitled to now re-open the assessment bychanging his view on the same issue. Apart from raising theabove said contention, the learned Senior Counsel furthercontended that the reliance placed on by the Assessing Officerto Section 50C of the IT Act, 1961, to re-open, is totallyerroneous, as the said provision is applicable only in respectof capital gain and not in respect of business income, as hasbeen accepted by the Assessing Officer in the order ofassessment. 5. The learned standing counsel for the respondentssubmitted that the Assessing Officer, while passing the orderdated 22.11.2018 has only referred to the objection raised bythe petitioner on 18.11.2018 and not referred to anotherobjection dated 09.11.2018, wherein, the petitioner hasspecifically raised the issue with regard to the applicabilityof Section 50C of the IT Act, 1961. Therefore, she fairlysubmitted that the matter may be remitted back to the AssessingOfficer to pass fresh orders after considering both theobjections viz., objections dated 09.11.2018 & 18.11.2018. 6. As rightly pointed out by the learned standing counselfor the respondents, the Assessing Officer while rejecting theobjections raised against the re-opening, has only referred tothe objection dated 18.11.2018 and not the objection dated19.11.2018, wherein, the Assessee has specifically raised thequestion with regard to the applicability of Section 50C of theIT Act, 1961. Perusal of the impugned order further indicatesthat the Assessing Officer except extracting some case laws andmaking his general observation on the power under Section 147,has not adverted to any of the contentions raised by thepetitioner in their objection against the reasons forre-opening, more particularly, with regard to the applicabilityof Section 50C of the IT Act, 1961 to the facts andcircumstances of the present case. Needless to state that theAssessing Officer while considering the objections raisedagainst re-opening has to necessarily deal with each of theobjections raised and express his decision on those objections.A mere statement of power vested on the authority under Section147 is not enough to presume that he has applied his mind to theobjections. At the same time, this Court makes it very clearthat it is not expressing any view on the merits of the abovecontentions raised by the learned Senior Counsel for thepetitioner, as this Court is inclined to set aside the orderdated 22.11.2018 and remit the matter back to the AssessingOfficer to pass fresh orders, by considering all the objectionsraised by the petitioner, through their communications dated 09.11.2018 and 18.11.2018. 7. Accordingly, this writ petition is allowed and theimpugned order is set aside. Consequently, the matter isremitted back to the first respondent/Assessing Officer to passfresh orders after considering the objections raised by thepetitioner against the re-opening of the assessment on meritsand in accordance with law. No costs. Consequently, connectedmiscellaneous petition is closed. Sd/- Assistant Registrar(CS IX) mk //True Copy// Sub Assistant Registrar 09.11.2018 and 18.11.2018. 7. Accordingly, this writ petition is allowed and theimpugned order is set aside. Consequently, the matter isremitted back to the first respondent/Assessing Officer to passfresh orders after considering the objections raised by thepetitioner against the re-opening of the assessment on meritsand in accordance with law. No costs. Consequently, connectedmiscellaneous petition is closed. Sd/- Assistant Registrar(CS IX) mk //True Copy// Sub Assistant Registrar 1.The Deputy Commissioner of Income TaxCorporate Circle-2(1)Room No.511, Wanaparthy Block121, MG Road, NungambakkamChennai-600 034.2.The Assistant Commissioner of Income TaxCorporate Circle-2(1)Wanaparthy Block,121, MG Road, NungambakkamChennai-600 034.+1cc to Mr.Hema Muralikrishnan, Advocate, S.R.No.86021+1cc to Mr.Sandeep Bagmar, Advocate, S.R.No.86054 W.P.No.33072 of 2018KAN(CO)rrs 13/12/2018