Pannalal Madan Bainew v. Assistant Commissioner Of Income Taxnon Corporate Circle – 9(1)

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.11.2021 CORAM: THE HONOURABLE MR.JUSTICE C.SARAVANAN WP.NOS.1604 & 1606 OF 2020ANDWMP.NOS.1876 & 1878 OF 2020 AND 21504 & 21505 OF 2021 W.P.No.1604 of 2020 Pannalal KocharNew No.43, Ritherdon RoadVepery, Chennai – 600 007. ....Petitioner Assistant Commissioner of Income TaxNon Corporate Circle – 9(1)121, M.G.Road, Chennai – 600 034......Respondent Prayer :- Writ Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari to call for the records onthe file of the respondent passed in reassessment order u/s. 143(3) r/w Section 147 of I.T.Act, 1961 in NCC-9(1)/SCRUTINY-147/AACPK5972B/2019-20, dated 30.12.2019 for AY 2012-13 inpursuance to the notice u/s 148 dated 31.03.2019 and quash thesame as illegal, without jurisdiction authority of law, barredby limitation and against the principles of natural justice. W.P.No.1606 of 2020 Pannalal Madan BaiNew No.43, Ritherdon RoadVepery, Chennai – 600 007. ....Petitioner -Vs.- Assistant Commissioner of Income TaxNon Corporate Circle – 9(1)121, M.G.Road, Chennai – 600 034......Respondent Prayer :- Writ Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari to call for the records onthe file of the respondent passed in reassessment order u/s. 143(3) r/w Section 147 of I.T.Act, 1961 in NCC-9(1)/SCRUTINY-147/AAOPP8550C/2019-20, dated 30.12.2019 for AY 2012-13 inpursuance to the notice u/s 148 dated 31.03.2019 and quash thesame as illegal, without jurisdiction authority of law, barredby limitation and against the principles of natural justice. For Petitioner in both WP's:Mr.T.Pramod Kumar ChopdaFor Respondent in both WP's:Ms.Hema Muralikrishnan, Senior Standing Counsel COMMON ORDER W.P.No.1604 of 2020 has been filed by the petitioner thereinchallenging the reassessment order u/s. 143(3) r/w Section 147of I.T.Act, 1961 in NCC-9(1)/SCRUTINY-147/AACPK5972B/2019-20,dated 30.12.2019 for AY 2012-13 in pursuance to the notice u/s148 dated 31.03.2019. 2.W.P.No.1606 of 2020 has been filed by the petitionertherein challenging the reassessment order u/s. 143(3) r/wSection 147 of I.T.Act, 1961 in NCC-9(1)/SCRUTINY-147/AAOPP8550C/2019-20, dated 30.12.2019 for AY 2012-13 inpursuance to the notice u/s 148 dated 31.03.2019. 3.The learned counsel for the petitioners submits that therespondent had issued notices to the respective Writ Petitionersunder Section 148 of the Income Tax Act on 31.03.2019 being thelast date of expiry of the limitation for reopening of theassessment under Section 143(3) r/w Section 147 of Income TaxAct, 1961 and has thereafter, proceeded to pass the impugnedorder in violation of the decision of the Hon'ble Supreme Courtin GKN Driveshafts (India) Ltd reported in 259 ITR 119 (SC). 4.The learned counsel for the petitioner submits that thedispute relates to the sale of land and the claim of long termcapital gain under the provisions of the Income Tax Act and wassubject matter of scrutiny assessment in the year 2014 andassessment orders dated 03.04.2014 were passed by the AssessingOfficer under Section 143(3) of the Income Tax Act. 5.The case of the petitioners is that both the petitionersi.e., husband and wife had entered into a Joint DevelopmentAgreement (JDA) with the builder on 01.05.2007. It is submittedthat over a period of time, they ended up selling their shares https://hcservices.ecourts.gov.in/hcservices/ i.e., 4 villas allotted to them and 50% of sale consideration inanother villa. It is the further case of the petitioners thatafter notice under Section 148 of the Income Tax Act were issuedon 31.03.2019, the petitioners replied to the aforesaid noticeon 15.04.2019, pursuant to which a notice under Section 142(1)r/w Section 129 of the Income Tax Act, 1961 was issued for re-assessment by a different officer. 5.The case of the petitioners is that both the petitionersi.e., husband and wife had entered into a Joint DevelopmentAgreement (JDA) with the builder on 01.05.2007. It is submittedthat over a period of time, they ended up selling their shares https://hcservices.ecourts.gov.in/hcservices/ i.e., 4 villas allotted to them and 50% of sale consideration inanother villa. It is the further case of the petitioners thatafter notice under Section 148 of the Income Tax Act were issuedon 31.03.2019, the petitioners replied to the aforesaid noticeon 15.04.2019, pursuant to which a notice under Section 142(1)r/w Section 129 of the Income Tax Act, 1961 was issued for re-assessment by a different officer. 6.It is submitted that though the respondent has issued thereasons for reopening the assessment, the guidelines issued bythe Hon'ble Supreme Court in the case of GKN Driveshafts(India) Ltd reported in 259 ITR 119 (SC) were not followed. Onthe other hand, the respondent straightaway proceeded to issuethe show cause notice and thereafter, disposed the objection on24.12.2019, copy of which was not served on the petitioner. Itis further submitted that the notice dated 27.12.2019 was issuedin the forenoon asking the petitioners to appear before therespondent in the evening by 05.15 P.M on the same date. It issubmitted that the respondent thereafter proceeded to pass theimpugned orders wherein the objection of the petitioners againstreopening the assessment was discussed for the first time. 7.The learned counsel for the petitioner further submitsthat the reasons for rejecting the objection vide communicationdated 24.12.2019 was merely based on the decision of theDivision Bench of this Court in the case of Dayanidhi Maran vs.Assistant Commissioner of Income Tax in W.P.Nos.3405 and 43944of 2016 vide order dated 10.10.2018. It is further submittedthat the entire procedure followed by the respondent whilepassing the impugned assessment order was irregular and contraryto the decision of the Hon'ble Supreme Court in the case of GKNDriveshafts (India) Ltd reported in 259 ITR 119 (SC) and alsowithout considering the objection as to why the assessmentcannot be revised in terms of the reasons given for reopeningthe assessment. The learned counsel for the petitionerstherefore submits that the impugned orders are liable to bequashed. 8.Appearing on behalf of the respondent, the learned SeniorStanding Counsel submits that the communication dated 24.12.2019rejecting/over-ruling the objection of the petitioner forreopening the assessment for the assessment year 2012-13 and thesubsequent communication dated 27.12.2019 was communicated tothe respective petitioners through their designated email idgiven by them and therefore, there is no question of anyviolation of principles of natural justice and hence, these WritPetitions are devoid of merits. 9.The learned Senior Standing Counsel for the respondentfurther submits that there are several disputed question of facts involved in this case. It is submitted that thepetitioners have declared the sale of agricultural land, whereasthe petitioners had sold Villas and therefore, there ismisrepresentation to the Department both at the time of filingthe returns under Section 139 of the Act and thereafter, whenthe assessment orders came to be passed under Section 143(1) ofthe Income Tax Act, 1961 on 10.09.2013 and at the time when thesubsequent assessment order came to be passed under Section 143(3) of the Income Tax Act, 1961 for the first time on 03.04.2014for the petitioner in W.P.No.1604 of 2020. 9.The learned Senior Standing Counsel for the respondentfurther submits that there are several disputed question of facts involved in this case. It is submitted that thepetitioners have declared the sale of agricultural land, whereasthe petitioners had sold Villas and therefore, there ismisrepresentation to the Department both at the time of filingthe returns under Section 139 of the Act and thereafter, whenthe assessment orders came to be passed under Section 143(1) ofthe Income Tax Act, 1961 on 10.09.2013 and at the time when thesubsequent assessment order came to be passed under Section 143(3) of the Income Tax Act, 1961 for the first time on 03.04.2014for the petitioner in W.P.No.1604 of 2020. 10.It is further submitted that the petitioners failed toparticipate and for the first time when the show cause noticeswere issued on 19.12.2019 and wanted to reset the clock byasking the Department to furnish the reasons for reopening theassessment in terms of decision of the Hon'ble Supreme Court inthe case of GKN Driveshafts (India) Ltd reported in 259 ITR 119(SC). The learned Senior Standing Counsel appearing for therespondent would therefore submit that the Writ Petitions areliable to be dismissed. 11.Heard the learned counsel for the petitioner and thelearned Senior Standing Counsel for the respondent. Perused thenotices issued under Section 148 of the Income Tax Act, 1960 andthe reasons given for reopening of the assessment on 28.10.2019and the subsequent communications which culminated in theissuance of the show cause notices and the disposal of theproceedings vide impugned assessment orders dated 30.12.2019. 12.It is the case where there is slight irregularity in theproceedings carried out by the respondent in as much as thedecision of the Hon'ble Supreme Court in the case of GKNDriveshafts (India) Ltd reported in 259 ITR 119 (SC) was notfollowed. Though the requirement for giving a speaking order ispursuant to the aforesaid decision of the Hon'ble Supreme Courtin the case of GKN Driveshafts (India) Ltd reported in 259 ITR119 (SC), is doubtful in the light of the change in the methodof assessment under the e-assessment. Nevertheless, assessmentought not to have been carried out in a mechanical manner.Though the petitioners have also not replied to the show causenotices, the fact remains that the objections to reopening ofthe assessment was conveyed after issuing the show causenotices. The petitioners were also not given sufficient time.Thus, there is procedural irregularity while passing theimpugned orders. 13.Considering the same, the impugned orders are set asideand the matters are remitted back to the respondent to passorders afresh on merits. The petitioners are directed to appearbefore the Competent Authority through Video Conferencing or any other modes either in person or through their authorizedrepresentative provided under the rules for completion of theassessment pursuant to the notices issued under Section 148 ofthe Income Tax Act, 1961 on 31.03.2019. On a date to be fixedthe petitioner is at liberty to file additionalrepresentation/reply, if any within a period of 15 days from thedate of receipt of a copy of this order. 14.The Competent Authority is directed to pass orders inrespective cases, preferably within a period of 60 days from thedate of receipt of a copy of this order. 15.These Writ Petitions are disposed of in above terms.Consequently, connected miscellaneous petitions are closed. Nocosts. Sd/- Assistant Registrar(CS IX) //True Copy// Sub Assistant Registrar pgp To 1Assistant Commissioner of Income TaxNon Corporate Circle – 9(1)121, M.G.Road, Chennai – 600 034. +4ccs to Mr.T.Pramod Kumar Chopda, Advocate, S.R.No.63176,63175+1cc to Ms.Hema Muralikrishnan, Advocate, S.R.No.62484 W.P.Nos.1604 & 1606 of 2020 SRA(CO)PM/04/01/2022