Sri v. M. Radhakrishnan

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. WEDNESDAY, THE 7 DAY OF DECEMBER 2022 / 16TH AGRAHAYANA, 1944 WP(C) NO. 37527 OF 2022 PETITIONER: M/S.VISWABHARATHI MEDICALS,HOSPITAL ROAD, PERINTHALMANNA, MALAPPURAM DISTRICT, PIN – 679 322, REPRESENTED BY ITS MANAGING PARTNER SRI. V. M. RADHAKRISHNAN, BY ADVS.K.S.HARIHARAN NAIRHARIMA HARIHARANRAJATH R NATHG.REMADEVI RESPONDENT: INCOME TAX OFFICER,WARD-2, TIRUR,OFFICE OF THE INCOME TAX OFFICER,CHEMBRA, TIRUR, MALAPPURAM DISTRICT, PIN – 680 001.ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON07.12.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT The petitioner has approached this Court being aggrievedby the fact that reassessment proceedings have been initiatedagainst the petitioner under the provisions of the Income TaxAct, 1961 in respect of assessment year 2016-17 illegally andwithout jurisdiction. It is the case of the petitioner that thepetitioner filed its return of income for the assessment year inquestion within the due date and the same was processedaccepting the return. Thereafter, Ext.P4 notice was issued tothe petitioner on 25.06.2021 under Section 148 of the IncomeTax Act, 1961 and the petitioner was required to show cause asto why the reassessment proceedings should not be continuedin terms of the judgment of the Supreme Court which held thatall notices issued under Section 148 of the Income Tax Act on orafter 01.04.2021 shall be governed by the provisions introducedby way of amendment w.e.f 01.04.2021. 2. The petitioner submitted a reply to the show causenotice. After affording to the petitioner an opportunity ofhearing, Ext.P7 order has been issued rejecting the objectionsraised by the petitioner and finding that the reassessmentproceedings should continue against the petitioner. According to the petitioner, Ext.P7 is illegal and unsustainable in law. 3.Adv.K.S.Hariharan Nair, the learned counselappearing for the petitioner firstly contends that Ext.P7 orderhas been issued in violation of principles of natural justice in asmuch as the contentions taken by the petitioner in reply to theshow cause notice have not been properly considered in Ext.P7order. Secondly, it is contended that Ext.P7 order cannot besustained as the reassessment proceedings are in respect ofassessment year 2016-17 and the proceedings are beyond thetime prescribed in Section 149 of the Income Tax Act, 1961. It isalso submitted that a reading of Ext.P7 suggests that there iscomplete non application of mind by the officer and that heproceeded to issue Ext.P7 order mechanically and withoutappreciating the contentions taken by the petitioner in the replyto the show cause notice. The learned counsel for the petitioneralso relies on the judgments of the Delhi High Court in RithalaEducation Society v. Union of India and Others [W.P.(C)No.11334/2022 & C.M.No.33392/2022] and Divya CapitalOne Private Limited v. Assistant Commissioner of IncomeTax [W.P.(C)No.7406/2022], to contend that in almost similarcircumstances, the orders similar to Ext.P7 had been set asideand the matter was remanded to the officer concerned for fresh consideration. consideration. 4.The learned Standing Counsel appearing for therespondent Department submits that there is absolutely noviolation of natural justice in as much as every possibleopportunity was extended to the petitioner and he waspersonally heard before Ext.P7 order was passed. It is submittedthat Ext.P7 order itself shows that the contentions taken by thepetitioner with reference to bank accounts had to be examinedminutely in the assessment proceedings and therefore, thereassessment proceedings have to continue to determinewhether any income has escaped assessment. It is submittedthat the petitioner is not prejudiced by Ext.P7 order as thepetitioner will get a full opportunity at the time of reassessment.It is submitted that the decisions of the Delhi High Court, whichhave been relied on by the learned counsel for the petitionerwere rendered in completely different fact circumstances andtherefore, cannot be pressed into consideration by thepetitioner to substantiate its case. It is also pointed out that thereassessment notice is within time as the case falls withinSection 149(1)(b) of the Income Tax Act, which provides for atime limit of 10 years from the end of the assessment year inquestion and not under Section 149(1)(a) of the Income Tax Act where the time limit is only three years. 5.Having heard the learned counsel for the petitionerand the learned counsel appearing for the respondentDepartment, I am of the opinion that there is considerable meritin the contentions taken by the learned counsel appearing forthe respondent Department. Ext.P7 order cannot be held to bein violation of principles of natural justice as the said order waspreceded by a show cause notice and the petitioner was givenan opportunity to reply to the same. It is also clear that thepetitioner was heard before Ext.P7 order was issued. Thecontention of the petitioner that the matters set out in the replyto the show cause notice have not been properly consideredcannot be stated to be a violation of principles of natural justice.The judgments relied on by the learned counsel for thepetitioner indicate that they were rendered in completelydifferent fact circumstances. In the judgment in RithalaEducation Society (supra), the Delhi High court has taken theview that since the final order proposing to proceed with thereassessment proceedings was issued without considering thereply filed by the petitioner in that case, on 03.04.2022, theorder had to be quashed and the matter had to be remanded forconsideration of the authority. In Divya Capital One Private Limited (supra), the Court finds that the order had been passedin violation of principles of natural justice as the petitioner inthat case was not given a reasonable time to file a reply. Thesesituations are completely different from the fact situation in thiscase and therefore, I am of the view that the law laid down inthe judgments of the Delhi High Court, which have beenreferred to by the learned counsel for the petitioner do notapply. I also note that Ext.P7 order has considered thesubmission made by the petitioner and has found that thecontentions taken have to be examined in the reassessmentproceedings which, will follow. The officer holds that the natureof transactions mentioned in the show cause notice which havebeen explained in the reply of the assessee dated 03.06.2022require detailed examinations with necessary evidence insupport of assessee's claim during the reassessmentproceedings. I am, therefore, of the view that there is no groundon which Ext.P7 order can be interfered with in exercise ofjurisdiction under Article 226 of the Constitution of India. Thewrit petition fails and it is accordingly dismissed. Sd/- GOPINATH P.JUDGE APPENDIX OF WP(C) 37527/2022