R.k.palaniswamy v. The Principal Commissioner Of Income Tax, Income Tax Department

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 03.9.2021CORAMTHE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMAND THE HONOURABLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUPWRIT APPEAL NO.2152 OF 2021 & CMP.NO.13573 OF 2021 R.K.Palaniswamy Vs 1.The Principal Commissioner of Income Tax, Income Tax Department, No.67A, Race Course Road, Coimbatore-18. ...Appellant 2.The Joint Commissioner of Income Tax, Non-Corporate Range-3, Income Tax Department, No.67A, Race Course Road, Coimbatore-18. 3.The Income Tax Officer, Non Corporate Ward 3(1), Income Tax Department, No.67A, Race Course Road, Coimbatore-18.... Respondents APPEAL under Clause 15 of the Letters Patent against theorder dated 30.6.2021 made in W.P.No.32366 of 2017. Prayer in W.P.No.32366 of 2017:- calling for the records of the 3[rd] Respondent to quash theimpugned order dated 09.01.2017 in PAN : AHSPP 7915Q/2016-17/new3(1) and consequently quash the impugned Notice dated 01.07.2016in PAN: AHSPP 7915Q issued in terms of Section 148 of theincomeTax 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 section 147 of the Act for the said assessmentyear 2011-12. For Appellant : Mr.A.S.SriramanFor Respondents: Mr.A.P.Srinivas, SSC Judgment was delivered by T.S.SIVAGNANAM,J We haveheard Mr.A.S.Sriraman, learned counsel appearing for theappellant and Mr.A.P.Srinivas, learned Senior Standing Counselaccepting notice for the respondents. 2. This appeal filed by the appellant – assessee is directedagainst the order dated 30.6.2021 in W.P.No.32366 of 2017. 3. The said writ petition was filed by the appellant toquash the notice issued by the third respondent under Section148 of the Income Tax Act, 1961 (for brevity, the Act) forreopening the assessment pertaining to the year 2011-12 andconsequently to drop the proceedings. 4. We may not be required to elaborately go into the factualmatrix, as we are convinced that the grounds canvassed by theappellant – assessee challenging the reopening of assessment,which were controverted by the respondents in their counteraffidavit, have not been dealt with and decided by the learnedSingle Judge. The discussion by the learned Single Judge is inparagraph 6 of the impugned order dated 30.6.2021. On a readingof the same, we find that the learned Single Judge noted as towhat were the powers of the Assessing Officer under Section 147of the Act. 5. There can be no dispute as to the powers conferred on theAssessing Officer under Section 147 of the Act. However, thequestion, which is required to be decided in the said writpetition, is as to whether the assumption of jurisdiction by theAssessing Officer invoking Section 147 of the Act is inaccordance with law. 6. The case of the assessee was that the assumption ofjurisdiction was bad in law, as the reopening was a clear caseof change of opinion. 7. We find from the impugned order before us that thisaspect has not been dealt with and no finding has been recordedby the learned Single Judge. Admittedly, as against the orderdated 09.1.2017 disposing of the appellant's objections as beingnot tenable, the appellant – assessee has no other remedy underthe provisions of the Act and therefore, writ petitions havebeen held to be maintainable questioning the orders of theAssessing Officers disposing of the objections filed to thereopening of assessment. Hence, the learned Single Judge isrequired to decide as to whether the reopening was valid, forwhich, it would be necessary that the factual matrix has to be 7. We find from the impugned order before us that thisaspect has not been dealt with and no finding has been recordedby the learned Single Judge. Admittedly, as against the orderdated 09.1.2017 disposing of the appellant's objections as beingnot tenable, the appellant – assessee has no other remedy underthe provisions of the Act and therefore, writ petitions havebeen held to be maintainable questioning the orders of theAssessing Officers disposing of the objections filed to thereopening of assessment. Hence, the learned Single Judge isrequired to decide as to whether the reopening was valid, forwhich, it would be necessary that the factual matrix has to be gone into, as it is the specific case of the appellant –assessee that all material facts were submitted to the AssessingOfficer when the original assessment was completed under Section143(3) of the Act and the assessment having been reopened beyonda period of four years, the Assessing Officer should have afresh tangible material in his possession to reopen theassessment. 8. The case of the appellant – assessee, as mentioned in theobjections dated 02.11.2016, is that the reopening of assessmentis a clear case of change of opinion. 9. The Assessing Officer would state that a new informationwas unearthed during search proceedings, that the assesseereceived on money in respect of a transaction to the tune ofRs.30.19 lakhs and this, according to the Assessing Officer, isa new information warranting reopening. 10. The assessee, in the said writ petition, contended thatthis could never be a new information as the entire case wasdiscussed by the Assessing Officer while completing the originalassessment, all records were placed before him and specifically,it had been stated that the sale transaction did not fructifyand though the assessee paid Rs.50 lakhs, what was returned tothe assessee was only Rs.31,24,000/-, which was reflected in thebank statements as well as financials, which were filed alongwith the return of income. 11. Therefore, what is required to be seen in the said writpetition is as to whether the alleged ground, on which, thereopening was done, was based on a new material, was there asale transaction and more particularly when the assessee was notthe owner of the property. The so called material, which wasunearthed during search proceedings conducted in the premises ofthe Finance Manager of a company, has also been furnished to theassessee and the notings therein need to be considered as towhether any on money was received by the assessee. 12. Unless these are decided and a finding is rendered, itcannot be held as to whether the reopening is valid or not.Since such an exercise has not been done by the learned SingleJudge, we are inclined to interfere with the impugned order.This is more so unless and until such a finding is rendered, theAppellate Court cannot test the correctness of the findings.Therefore, in the absence of any such finding, the AppellateCourt cannot be expected to convert itself into the Court offirst instance and decide the writ petition on merits. Hence,while setting aside the impugned order passed in the said writpetition, we are inclined to restore the said writ petition tothe file of the learned Single Judge to be heard and decided on merits. 13. For all the above reasons, the writ appeal is allowed,the impugned order is set aside and W.P.No.32366 of 2017 isrestored to the file of the learned Single Judge. Consequently,the order of interim stay granted in the said writ petitionstands revived and shall continue till the disposal of the saidwrit petition. No costs. Consequently, the connected CMP isclosed. Sd/- Assistant Registrar(CS VI) //True Copy// rs Sub Assistant Registrar To1.The Principal Commissioner of Income Tax, Income TaxDepartment, No.67A, Race Course Road,Coimbatore-18. merits. 13. For all the above reasons, the writ appeal is allowed,the impugned order is set aside and W.P.No.32366 of 2017 isrestored to the file of the learned Single Judge. Consequently,the order of interim stay granted in the said writ petitionstands revived and shall continue till the disposal of the saidwrit petition. No costs. Consequently, the connected CMP isclosed. Sd/- Assistant Registrar(CS VI) //True Copy// rs Sub Assistant Registrar To1.The Principal Commissioner of Income Tax, Income TaxDepartment, No.67A, Race Course Road,Coimbatore-18. 2.The Joint Commissioner of Income Tax, Non-Corporate Range-3,Income Tax Department, No.67A, Race Course Road, Coimbatore-18. 3.The Income Tax Officer, Non Corporate Ward 3(1), Income TaxDepartment, No.67A, Race Course Road, Coimbatore-18. +1cc to Mr.S.Sridhar, Advocate, S.R.No.44848+1cc to Mr.A.P.Srinivas, Advocate, S.R.No.44515 RSV(CO)PM/22/09/2021 WA.No.2152 of 2021&CMP.No.13573 of 2021