Sambathiraj Vijayraj v. The Income Tax Officer, Ward 1, Kumbakonam

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED : 29.04.2022 THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P(MD).No.9044 of 2022andW.M.P(MD).Nos.6497 and 6498 of 2022 Sambathiraj Vijayraj ... Petitioner Vs. 1.The Income Tax Officer, Ward 1, Kumbakonam, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam, Tamil Nadu-612001. 2.The Principal Chief Commissioner of Income Tax, No.121, Mahatama Gandhi Road, Chennai-34. ...Respondents Prayer: Writ Petition filed under Article 226 of the Constitutionof India, praying this Court to issue a Writ of Certiorari,calling for the records of the file of the first Respondent andquash the impugned order in ITBA/AST/F/148A/2022-23/1042565142(1)dated 06.04.2022 under Section 148A(d) of the Income Tax Act, 1961and the consequential Impugned notice dated 06.04.2022 inITBA/AST/S/148_1/2022-23/1042567717(1) under section 148 of theAct passed by the first Respondent for the Assessment Year 2015-16as illegal and not in accordance with law. For Petitioner : Mr.R.SivaramanFor Respondents: Mr.N.Dilipkumar Senior Standing Counsel ORDER The petitioner has challenged the impugned order, dated06.04.2022 passed under Section 148 A (d) of the Income Tax Act,1961. The relevant portion from the aforesaid order reads asunder:“In view of the assessee's reply and based on theabove financial transactions carried out by the assesseeavailable on record and as the assessee did not file hisreturn of income for the year under consideration. Isuggest that this case is a fit case for re-opening ofassessment under Section 148 for assessment year 2015-2016being deemed to be a case where income chargeable to taxhttps://hcservices.ecourts.gov.in/hcservices/has escaped assessment. This order is issued with the prior approval of thespecified authority under Section 151 of the Income TaxAct, 1961.” 2. The challenge to the impugned order seeking to re-open theassessment under Section 148 A (d) of the Income Tax Act, 1961for the assessment year 2015-2016 is primarily on the ground thatthe petitioner was not put to notice as to the allegations in theimpugned order. It is submitted that the notice under Section 148A (b) of the Income Tax, 1961 was issued to the petitioner on26.03.2022 and the reasons for issuing the aforesaid notice wasthat there was a deposit to the tune of Rs.2,66,90,364/- andtherefore, the petitioner was called upon to furnish a reply towhich the petitioner has also responded by a reply. It issubmitted that though the amount has been quantified in theimpugned order matches with the purported reasons given at thetime of issue of Section 148 A (b) notice on 26.03.2022, thepetitioner was not put to notice as to the basis on which theaforesaid amount has been arrived. It is submitted that thepetitioner had only four bank accounts with the following banks:(i) KarurVysya Bank -Valasaravakkam Branch, Chennai- A/cNo.1264155000004303 (ii) Punjab National Bank – Sirkali Branch – A/cNo.0489000100045324. (iii) Tamil Nadu Mercantile Bank – T.Nagar Branch, Chennai-A/c No.055100050085615. (iv) City Union Bank – Purasawalkam Branch, Chennai – A/cNo.500101010297854. 3. It is submitted that total transaction and cash deposit wasonly for a Sum of Rs.4,10,598/- and not to Rs.2,66,90,364/-. It istherefore submitted that the impugned order seeking to re-open theassessment and further proceeding under Section 148 of the IncomeTax Act, 1961 was in gross violation of principles of naturaljustice and therefore liable to be quashed. (ii) Punjab National Bank – Sirkali Branch – A/cNo.0489000100045324. (iii) Tamil Nadu Mercantile Bank – T.Nagar Branch, Chennai-A/c No.055100050085615. (iv) City Union Bank – Purasawalkam Branch, Chennai – A/cNo.500101010297854. 3. It is submitted that total transaction and cash deposit wasonly for a Sum of Rs.4,10,598/- and not to Rs.2,66,90,364/-. It istherefore submitted that the impugned order seeking to re-open theassessment and further proceeding under Section 148 of the IncomeTax Act, 1961 was in gross violation of principles of naturaljustice and therefore liable to be quashed. 4. Opposing the prayer, the learned senior standing counselfor the repsondents submits that the petitioner has not been fileda regular return under Section 139 of the Income Tax Act, 1961 andthe information was brought to the notice of the department fromthe Income Tax portal/under the Risk Management Strategy. It issubmitted that the petitioner is a defaulter as far as thecompliance of the requirements of the Income Tax under the Rulesmade thereunder inasmuch as no returns was filed by the petitionerand that the petitioner knew as to which are subject matter of theaforesaid notice issued under Section 148 A (b) of the Income TaxAct, 1961. It is further submitted that the impugned order is notreally an order but a notice to proceed further under Section 148https://hcservices.ecourts.gov.in/hcservices/of the Income Tax Act, 1961 and therefore no prejudice will cause to the petitioner as the petitioner still has an opportunity tofurnish all defence and file a reply.5. I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned senior standing counselfor the respondents. I have also perused the show cause notice,dated 26.03.2022 issued under Section 148 A (b) of the Income TaxAct, 1961 which preceded the impugned order, dated 06.04.2022 overruling the objection of the petitioner. 6. Though the conduct of the petitioner prima facie does notappear to be bonafide as the petitioner has not filed a returnunder the Income Tax Act, 1961, Nevertheless, the petitioner wasentitled to a proper show cause notice particularising the basison which the proceedings were to be concluded under Section 148 A(b) of the Income Tax Act, 1961. The reasons given in the orderwithout proper explanation cannot be sustained as it is inviolation of principles of natural justice. The petitioner isentitled for fair chance to defend himself before the respondentscan proceed to issue a notice under Section 148 of the Income TaxAct, 1961. The purpose of incorporating Section 148 A of theIncome Tax Act, 1961 is to incorporate the requirements of theHon’ble Supreme Court decision in the case of GKN Driveshafts(India) Limited Vs ITO 259 ITR 19 (SC). 7. Under these circumstances, I am inclined to quash theimpugned order and remit the case back to the respondents to passfresh order. The impugned order which now stands quashed shall betreated as a corrigendum to the show cause notice, dated26.03.2022. The petitioner is directed to file a reply within aperiod of three weeks from the date of copy of this order. Therespondents are directed to pass a fresh order denovo underSection 148 A of the Income Tax Act, 1961 within a period of threeweeks thereafter. 8. The writ petition stands disposed of with the aboveobservations. No costs. Consequently, the connected miscellaneouspetitions are closed. https://hcservices.ecourts.gov.in/hcservices/sn To 1.The Income Tax Officer, Ward 1, Kumbakonam, Ward 1, Kumbakonam, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam, Tamil Nadu-612001. Kumbakonam, Tamil Nadu-612001. 2.The Principal Chief Commissioner of Income Tax, No.121, Mahatama Gandhi Road, Chennai-34. No.121, Mahatama Gandhi Road, Chennai-34. +1 CC to M/s.M.P.SENTHIL, Advocate ( SR-22662[F] dated29/04/2022 ) +1 CC to M/s.N.DILIPKUMAR, Advocate (SR-23137[F] dated02/05/2022 ) 8. The writ petition stands disposed of with the aboveobservations. No costs. Consequently, the connected miscellaneouspetitions are closed. https://hcservices.ecourts.gov.in/hcservices/sn To 1.The Income Tax Officer, Ward 1, Kumbakonam, Ward 1, Kumbakonam, No.31, Krishnaswamy Road, Gandhi Nagar, Kumbakonam, Tamil Nadu-612001. Kumbakonam, Tamil Nadu-612001. 2.The Principal Chief Commissioner of Income Tax, No.121, Mahatama Gandhi Road, Chennai-34. No.121, Mahatama Gandhi Road, Chennai-34. +1 CC to M/s.M.P.SENTHIL, Advocate ( SR-22662[F] dated29/04/2022 ) +1 CC to M/s.N.DILIPKUMAR, Advocate (SR-23137[F] dated02/05/2022 ) W.P(MD).No.9044 of 2022 29.04.2022 USK/31.05.2022/4P/5C