Income Tax Case

W.P.No.34991 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 03.01.2023 CORAM THE HONOURABLE MR.JUSTICE M.SUNDAR W.P.No.34991 of 2022 &W.M.P.Nos.34439 and 34430 of 2022 inW.P.No.34991 of 2022 Mr.V.S.Dhandapani & Son 4, Anderson Road, Habibullah AvenueGreams Road, Chennai – 600 006(Now at) No.30, 6[th] Cross StreetShenoy Nagar, Chennai – 600 030 Represented by its PartnerShri D. Subrahmanyam .. Petitioner Vs. 1. The Income Tax Officer Non-Corporate Ward 15(1) Wanaparthy Block, 121 M.G.Road Chennai – 600 034 2. National Faceless Assessment Circle Income Tax Department ... Respondents Writ Petition is filed under Article 226 of the Constitution of India, seeking for a Writ of Certiorari to call for the records on the file of the 1[st] respondent and quash the impugned order under Section 148A(d) of the Income Tax Act, 1961 in PAN dated 31.07.2022 in W.P.No.34991 of 2022 DIN & Order No.ITBA/COM/F/17/2022-23/1044368969(1) and the consequential notice under Section 148 of the Act dated 31.07.2022 in DIN ITBA/AST/M/148_1/2022-23/1044377664(1) for the assessment year 2014-15. For Petitioner : Mr.Vikram Vijayaraghavan of M/s.Subbaraya Aiyar Padmanabhan & Ramamani (Law Firm) For Respondents : Mr.A.P.Srinivas Senior Standing Counsel (Income Tax) O R D E R Captioned matter arises under the 'Income Tax Act, 1961' ('IT Act' for the sake of brevity, convenience and clarity). 2. Mr.Vikram Vijayaraghavan, learned counsel of M/s.Subbaraya Aiyar Padmanabhan & Ramamani (Law Firm) for the writ petitioner is before this writ Court. 3. Short facts (shorn of granular particulars) are that the subject matter of the captioned writ petition pertains to 'Assessment Year 2014-15' [hereinafter 'said AY' for the sake of convenience and clarity]; that the writ petitioner filed a return of income on 21.07.2014 qua said AY admitting a gross total income of Rs.6,02,970/-; that thereafter the first respondent issued a notice dated 30.06.2021 under Section 148 of IT https://www.mhc.tn.gov.in/judis 2/15 W.P.No.34991 of 2022 Act stating that there are reasons to believe that income chargeable to tax has escaped assessment; that such income has escaped assessment is within the meaning of Section 147 of IT Act; that the first respondent called upon the writ petitioner to file return of income within 30 days; that thereafter notice under Section 142(1) being notice dated 15.11.2021 calling upon the writ petitioner to furnish accounts and documents which were set out therein was issued; that under such circumstances, as Section 148A of IT Act kicked in on and from 01.04.2021 vide Finance Act, 2021, a notice dated 18.05.2022 under Section 148A(b) was issued; that first respondent called upon the writ petitioner-assessee to file objections for the purpose of legal drill under Section 148A(d) of IT Act; that in response to the above, writ petitioner uploaded some material; that the writ petitioner requested the first respondent to supply material; that such exchange of correspondence continued; that writ petitioner made an application dated 23.08.2022 to examine the details of recommendations and information relied upon by the approving authority; that first respondent by communication dated 17.11.2022 furnished copy of what is described as 'insight information' and approval copy of competent authority; that thereafter an 'order dated 31.07.2922 bearing reference DIN & Order No.ITBA/COM/F/17/2022-23/1044368969(1) under https://www.mhc.tn.gov.in/judis3/15 W.P.No.34991 of 2022 W.P.No.34991 of 2022 Section 148A(d)' and a even dated 'notice under Section 148 bearing reference ITBA/AST/S/91/2022-23/1044377736(1)' also came to be issued [hereinafter 'impugned order' and 'impugned notice' respectively for the sake of brevity, convenience and clarity]; that the writ petitioner has filed the captioned writ petition assailing the impugned order and impugned notice primarily on the ground that Dissemination Note between the authorities of the Department i.e., inter se department wrongly refers to cash deposits as Rs.169921/- lakhs instead of Rs.1,699.21 lakhs. 4. Mr.A.P.Srinivas, learned Senior standing counsel for Income Tax accepted notice for the respondents. 5. Owing to the nature of the matter, considering the acute angle on which the challenge to the impugned order turns and grounds on which challenge to impugned notice are predicated, captioned main writ petition was taken up with the consent of both sides. 6. Learned counsel for writ petitioner in his campaign against impugned order and impugned notice pitched his arguments or in other words, predicated his submissions primarily on the aforementioned figures qua cash deposits i.e., as to whether it is Rs.169921 lakhs or https://www.mhc.tn.gov.in/judis4/15 Rs.1699.21 lakhs. This is captured in paragraph 16 of the synopsis, which reads as follows: '16. On perusal of the Insight information furnished it can be seen that the total of Debit Transactions and Credit Transactions in INDUS IND BANK ACCOUNT No 200999217025 is Rs.17,46,74,984/- and Rs.17,47,80,901/- respectively which corroborates and confirms the claim of the Petitioner. However, the Dissemination Note between the authorities of the department has wrongly refers to cash deposit of Rs.169921 lacs instead of Rs.1699.21 lacs. Thus an error committed by department on its part can not result in reopening of the assessment relating to the Petitioner which is an error in law and in facts.' 7.Learned counsel also drew the attention of this Court to a communication dated 21.07.2022 bearing reference F.No.2/Re-opening u/s.147/NCR-10/2022-23 from the Additional Commissioner of Income Tax wherein the Additional Commissioner has opined that this is not a fit case to issue notice under Section 148 but nine days later on 30.07.2022, Principal Chief Commissioner of Income Tax who is 'Specified Authority' placing reliance on order of Hon'ble Supreme Court dated 04.05.2022 in Ashish Agarwal's case (Union of India Vs. Ashish Agarwal) [to be noted, Ashish Agarwal case is reported in 2022 SCC OnLine SC 543] held that this is a fit case for issuing notice under https://www.mhc.tn.gov.in/judis5/15 W.P.No.34991 of 2022 Section 148 of IT Act. This according to the writ petitioner is a dichotomy. 8. At the outset, it has to be made clear that Ashish Agarwal's case is one where notices were issued ignoring or not noticing the amendment to IT Act qua Section 148A which kicked in on and from 01.04.2021 vide Finance Act, 2021. It is submitted that Section 148A is a codified form of what was known as GKN Driveshaftsprinciple being the ratio laid down by Hon'ble Supreme Court in GKN Driveshafts (India) Ltd., Vs. Income-Tax Officer and others reported in (2003) 259 ITR 19. 9. Before proceeding further, this writ Court reminds itself that Chapter XIV of IT Act captioned 'PROCEDURE FOR ASSESSMENT' in terms of working principle is in two parts. In effect, it consists of Sections 139 to 158. Upto Section 143, it is either inquriy before assessment or assessment. After Section 143, it is a post assessment scenario. As regards Section 147 which we are concerned with, this Writ Court is of the considered view that Section 147 which deals with income that is chargeable with tax that has escaped assessment is controlled by Sections 148 to 153. https://www.mhc.tn.gov.in/judis 6/15 10. This Writ Court with the above fundamental first principle 9. Before proceeding further, this writ Court reminds itself that Chapter XIV of IT Act captioned 'PROCEDURE FOR ASSESSMENT' in terms of working principle is in two parts. In effect, it consists of Sections 139 to 158. Upto Section 143, it is either inquriy before assessment or assessment. After Section 143, it is a post assessment scenario. As regards Section 147 which we are concerned with, this Writ Court is of the considered view that Section 147 which deals with income that is chargeable with tax that has escaped assessment is controlled by Sections 148 to 153. https://www.mhc.tn.gov.in/judis 6/15 10. This Writ Court with the above fundamental first principle in mind has also taken note of the fact that the codified form of GKN Driveshafts principle is Section 148A which kicked in on and from 01.04.2021 as already alluded to supra. 11. In response to the submissions made by learned counsel for writ petitioner-assessee, learned Revenue counsel drew the attention of this Court to the order made under Section 148A(d) i.e., the impugned order and more particularly paragraph 4 thereat, which reads as follows: ' 4. I have considered the reply of assessee and the same is not acceptable. The assessee had filed the return of income within due date showing a turnover of Rs.134.02 crores. On perusal of the current account No.200999217025 in Indusind bank, it is seen that the total credit for the whole year under consideration was Rs.17.49 crores. But the High Value Cash deposit aggregating to Rs.169921 lakhs as against the total turnover declared by the assessee of Rs.134.02 crores followed by immediate utilization of proceeds coupled with transactions not matching with declared profile of the customer needs to be verified further.' 12. Learned Revenue counsel also drew the attention of this Court to the uploading made by the Assessee and a scanned reproduction of the same as placed before this Court by the writ petitioner-assessee is https://www.mhc.tn.gov.in/judis7/15 as follows: W.P.No.34991 of 2022 W.P.No.34991 of 2022 W.P.No.34991 of 2022 13. Adverting to the above uploading, learned Revenue counsel pointed out that even according to the writ petitioner-assessee sales as per the P&L account was Rs.1,34,022 lakhs. Furthering his submissions in this direction, learned Revenue counsel submitted that writ petition is clearly premature as Section 148 drill which was preceded by Section 148A is now under way and the writ petitioner has filed the writ petition by going into the realm of surmises and conjectures i.e., that the order will certainly go against the writ petitioner. It was submitted that the writ petition is not entertainable a) because it is premature and b) because it is in the realm of surmises and conjectures. 14. Responding to the above, learned counsel for writ petitioner-assessee submitted that reference to the figure Rs.1,34,022/- qua P & L Accounts as the sales figure is a typographical error. If that be so and if there is an error in the decimal, it is open to the writ petitioner-assessee to pursue the matter further and that certainly is not a ground for interference in writ jurisdiction. Likewise, as regards the letter of the Additional Commissioner dated 21.07.2022, it is clearly an inter-office communication where the Additional Commissioner has written to the Principal Chief Commissioner of Income Tax, who admittedly is the https://www.mhc.tn.gov.in/judis11/15 W.P.No.34991 of 2022'Specified Authority' within the meaning of Section 148A(d) read with Section 151 of IT Act. Therefore, this 21.07.2022 letter is not from the 'Specified Authority' and it is an inter-office mail. The Specified Authority on 30.07.2022 has clearly opined that it is a fit case for issuing notice under Section 148. That puts an end to the argument predicated on the letter dated 21.07.2022 from the Additional Commissioner to the Principal Chief Commissioner of Income Tax. W.P.No.34991 of 2022'Specified Authority' within the meaning of Section 148A(d) read with Section 151 of IT Act. Therefore, this 21.07.2022 letter is not from the 'Specified Authority' and it is an inter-office mail. The Specified Authority on 30.07.2022 has clearly opined that it is a fit case for issuing notice under Section 148. That puts an end to the argument predicated on the letter dated 21.07.2022 from the Additional Commissioner to the Principal Chief Commissioner of Income Tax. 15. Learned counsel for writ petitioner submitted that once the order is made and once Section 148 legal drill is carried to its logical end, if it goes against the writ petitioner, the writ petitioner will have to make 20% deposit for stay. This Court refrains itself from expressing any opinion on this aspect of the matter as it is premature and as rightly pointed out by learned Revenue counsel, it is in the realm of surmises and conjectures and in any event, this submission does not persuade this Court to interfere at this stage. The argument that post logical end of Section 148 legal drill if the writ petitioner comes to this Court alternate remedy rule will be put against the writ petitioner is going beyond the realm of surmises and conjectures also. It all has to be dealt with on a case to case basis and it is clearly premature to interfere at this stage. This Court is of the considered view that Section 148A is a codified https://www.mhc.tn.gov.in/judis12/15 W.P.No.34991 of 2022 mechanism that has been put in place for the benefit of the assessee and if that is stretched to the levels to which the writ petitioner wants to carry the matter, the very objective of a pre-notice drill qua Section 148 read with section 147 will become counter productive. 16. In the light of the discussion and dispositive reasoning thus far, this Court is not inclined to interfere qua impugned order and impugned notice, both dated 31.07.2022. 17. Before concluding, though obvious it is made clear that Section 148 legal drill shall proceed without being impeded by this order and it will not in any manner serve as impetus either. 18. Sequitur is captioned writ petition fails and the same is dismissed. Consequently, captioned WMPs are also dismissed. There shall be no order as to costs. Neutral Citation: Yes/NoIndex: yes/nogpa 03.01.2023(½) 1. The Income Tax Officer Non-Corporate Ward 15(1) Wanaparthy Block, 121 M.G.Road Chennai – 600 034 Non-Corporate Ward 15(1) Wanaparthy Block, 121 M.G.Road Chennai – 600 034 2. National Faceless Assessment Circle Income Tax Department Income Tax Department 14/15 https://www.mhc.tn.gov.in/judis W.P.No.34991 of 2022M.SUNDAR, J., gpa W.P.No.34991 of 2022 &W.M.P.Nos.34439 and 34430of 2022in W.P.No.34991 of 2022 03.01.2023(1/2)