R.k.palaniswamy v. The Principal Commissioner Of Income Tax –

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.06.2021 CORAM THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAMW.P.No.32366 of 2017and W.M.P.No.35658 of 2017 R.K.Palaniswamy ...Petitioner Vs 1.The Principal Commissioner of Income Tax – 1, Income Tax Department, 67A, Race Course Road, Coimbatore 641 018. 2.The Joint Commissioner of Income Tax, Non Corporate Range – 3, Income Tax Department, 67A, Race Course Road, Coimbatore 641 018. 3.The Income Tax Officer, Non Corporate Ward – 3(1), Income Tax Department, 67A, Race Course Road, Coimbatore 641 018....Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India, to issue a Writ of CertiorarifiedMandamus, calling for the records of the 3[rd] respondent to quashthe impugned order dated 09.01.2017 in PAN: /2016-17/NCW. 3(1) and consequently quash the impugned Notice dated01.07.2016 in PAN: issued in terms of Section 148 ofthe Income Tax Act, 1961 on the assumption of jurisdiction underSection 147 of the said Income Tax Act, 1961 for framing re-assessment in relation to the Assessment Year 2011-12 andfurther direct the Third Respondent to drop the proceedingsinitiated under 147 of the Act for the said Assessment Year2011-12. For Petitioner : Mr. S.SridharFor Respondents : Mr. A.P.Srinivas(Senior Standing Counsel for IT)and Mr.A.N.R.Jaya Prathap ORDER The Writ on hand is filed challenging the Notice issuedunder Section 148 of the Income Tax Act, 1961 (hereinafterreferred to as, 'the Act') for reopening of assessment as wellas the order dated 09.01.2017, disposing of the objections filedby the writ petitioner. 2.The petitioner is an Assessee and filed his Return ofIncome for the Assessment year 2011-12 on 05.05.2012. Thescrutiny proceedings were undertaken on issuance of notice underSection 143(2) of the Act, dated 12.08.2013. The scrutinyassessment was completed by the 3[rd] respondent and an order ofassessment was passed on 10.03.2014 for the Assessment Year2011-12. 3.Surprisingly, the petitioner received the impugned noticeon 01.07.2016, under Section 148 of the Act, for reopening ofassessment. The petitioner filed a letter indicating adoption ofthe original Return of the Income as the Return of Income inresponse to the notice issued under Section 148 of the Act, on18.07.2016. Through another letter dated 20.07.2016, thepetitioner requested for furnishing of reasons recorded forassuming jurisdiction under Section 147 of the Act. The saidletter was responded by the respondents and reasons werefurnished. Thereafter, the petitioner filed his objections forreopening of assessment on 02.11.2016 and the said objectionswere not considered in a proper manner and the impugned order ofrejection was passed by the 3[rd] respondent on 09.01.2017. 3.Surprisingly, the petitioner received the impugned noticeon 01.07.2016, under Section 148 of the Act, for reopening ofassessment. The petitioner filed a letter indicating adoption ofthe original Return of the Income as the Return of Income inresponse to the notice issued under Section 148 of the Act, on18.07.2016. Through another letter dated 20.07.2016, thepetitioner requested for furnishing of reasons recorded forassuming jurisdiction under Section 147 of the Act. The saidletter was responded by the respondents and reasons werefurnished. Thereafter, the petitioner filed his objections forreopening of assessment on 02.11.2016 and the said objectionswere not considered in a proper manner and the impugned order ofrejection was passed by the 3[rd] respondent on 09.01.2017. 4.The grievances of the writ petitioner is that all thematerials, informations, books of accounts, etc., were submittedbefore the Assessing Officer during the original assessment andthe said materials and informations were considered elaboratelyand the original order of assessment was issued. With referenceto the reasons furnished for reopening of the assessment by theAssessing Officer, the petitioner, in his objections, haselaborated the nature of transactions, more specifically, thepetitioner contended that when Indusind Bank statements weresubmitted, it showed the deposit of Rs.31,24,000/- on18.11.2010. The AO asked to produce the evidence for the sameand the petitioner had produced the receipt of payment to theAO. The amount of Rs.50,00,000/- was given through bank channelsonly for a project in the Financial Year 2009-10 and it wasinformed by the party, Mr.D.Srinivasan, that the project was notable to obtain statutory approvals and thus, the petitionerinsisted for payment and Mr.T.Srinivasa, who in turn returnedthe money through cheque drawn on M/s.Dhanalakshmi Bank,Coimbatore, vide Cheque No.917391/17.11.2010 and deposited in Indusind Bank, Coimbatore account and the Bank statement wasalready submitted at the time of hearing. The petitioner haselaborated the transactions. The petitioner is of an opinionthat all these factors were placed before the Assessing Officerat the first instance during the original assessment and thesame was considered and final assessment order was passed. Thus,the very initiation of reopening proceedings is not inconsonance with the conditions stipulated under Section 147 ofthe Act. 5.Perusal of the order disposing of the objections by the3[rd] respondent in proceeding dated 09.01.2017 reveals that theobjections were considered. The findings in this regard made bythe Assessing Officer is that it may be true that certain factshave been put across to the then Assessing Officer whilecompleting the scrutiny proceedings. However, the newinformation unearthed during the search proceedings in theaforesaid cases has brought forth the fact that you havereceived on money on this transactions of Rs.30.19 Lakhs. Basedon this new information and after due consideration of theinformation, the case has been reopened. 5.Perusal of the order disposing of the objections by the3[rd] respondent in proceeding dated 09.01.2017 reveals that theobjections were considered. The findings in this regard made bythe Assessing Officer is that it may be true that certain factshave been put across to the then Assessing Officer whilecompleting the scrutiny proceedings. However, the newinformation unearthed during the search proceedings in theaforesaid cases has brought forth the fact that you havereceived on money on this transactions of Rs.30.19 Lakhs. Basedon this new information and after due consideration of theinformation, the case has been reopened. 6.This Court is of the considered opinion that when there isa new information of material on the record, the AssessingOfficer is empowered to initiate reopening proceedings underSection 147 of the Act. Various circumstances are contemplatedunder Section 147 of the Act and based on any one of suchcircumstances, the Assessing Officer has reason to believe, thenhe is empowered to reopen the assessment. Even under-assessmentis a ground for reopen. Thus, this Court is of the consideredopinion that the reopening of assessment in the present case isdone based on new information unearthed and such an informationis to be clarified by the assessee, by participating in theadjudicating process and this Court cannot go into the detailsregarding transactions or the intricacies involved in suchtransactions. All such disputes on facts are to be adjudicatedwith reference to the original documents and evidences madeavailable between the parties and the scope of the jurisdictioncannot be extended to conduct a roving enquiry in these aspects. 7.The power of judicial review under Article 226 of theConstitution of India is to scrutinise the processes throughwhich the decision is arrived by the competent authority byfollowing the procedures as contemplated under the law, but notthe decision itself. Thus, the petitioner-assessee has toparticipate in the adjudication. It is needless to state thatthe respondents are bound to provide opportunities to defend thecase by the petitioner. By affording the opportunities, ascontemplated, the proceedings are to be concluded. In this viewof the matter, the case on hand is not a fit one for the purpose of quashing of the proceeding. Further, the respondents aredirected to proceed with reopening of the assessment byaffording opportunity to the petitioner to defend his case inthe manner known to law. 8.With these observations, the Writ Petition standsdismissed. No costs. Consequently, connected MiscellaneousPetition is closed. Sd/-Assistant Registrar(CS-III) //True Copy// Sub Assistant Registrar gsaTo1.The Principal Commissioner of Income Tax – 1, Income Tax Department, 67A, Race Course Road, Coimbatore 641 018.2.The Joint Commissioner of Income Tax, Non Corporate Range – 3, Income Tax Department, 67A, Race Course Road, Coimbatore 641 018.3.The Income Tax Officer, Non Corporate Ward – 3(1), Income Tax Department, 67A, Race Course Road, Coimbatore 641 018. +1cc to Mr.A.P.Srinivas, Senior Standing Counsel, Sr.No.30315 GPL(CO)RVM(23/07/2021) W.P.No.32366 of 2017