The Income Tax Officer, Ward-1, Income Tax Office, Karaikudi v. The Joint Commissioner Of Income Tax, Karaikudi Range, Karaikudi

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT Reserved on : 01.04.2021 Pronounced on: 16.04.2021 CORAM: THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN W.P.(MD)Nos.23269 to 23271 of 2018 and W.M.P.(MD)Nos.21130 to 21132 of 2018 and W.M.P.(MD)Nos.17616 to 17618 of 2019 Dr.P.Hemalatha ... Petitioner in all W.Ps. 1.The Income Tax Officer, Ward-1, Income Tax Office, Karaikudi. -Vs- 2.The Joint Commissioner of Income Tax, Karaikudi Range, Karaikudi. ... Respondents in all W.Ps. Prayer in W.P.(MD)No.23269 of 2018:Petition filed under Article 226of the Constitution of India to issue a Writ of Certiorari, to callfor the records of the first respondent dated 17.03.2018 issuedunder Section 148 of the Income Tax Act for the assessment year2014-15 in PAN: and quash the same.Prayer in W.P.(MD)No.23270 of 2018:Petition filed under Article 226of the Constitution of India to issue a Writ of Certiorari, to callfor the records of the first respondent dated 17.03.2018 issuedunder Section 148 of the Income Tax Act for the assessment year2015-16 in PAN: and quash the same. Prayer in W.P.(MD)No.23271 of 2018:Petition filed under Article 226of the Constitution of India to issue a Writ of Certiorari, to callfor the records of the first respondent dated 16.03.2018 issuedunder Section 148 of the Income Tax Act for the assessment year2016-17 in PAN: and quash the same. For Petitioner : Mr.T.Vasudevan for Mr.R.JanakiramanFor Respondents: Mrs.S.Srimathy(in all W.Ps.) Special Government Pleader COMMON ORDER The petitioner in all these four writ petitions is one and thesame. The assessment years alone are different. The petitioner isa Doctor by profession. For the aforesaid assessment years, he hadhttps://hcservices.ecourts.gov.in/hcservices/filed returns of income. The returns were also accepted. While so, survey under Section 133A of the Income Tax Act was conducted inthe premises of M/s Raj Children Hospital, Ambalpuram, Karaikudi on11.01.2018. Based on the same, notice under Section 148 of the Actwas issued on 17.03.2018 for reopening the assessments. Thepetitioner filed returns of income in response to the above noticedeclaring the same total income as in the original returns. On17.04.2018, the petitioner sent a letter to the first respondentseeking the reasons recorded for reopening the assessments. On08.05.2018, the first respondent furnished the reasons recorded byhim for reopening the assessment. Thereafter, on 13.06.2018, thepetitioner submitted his objections for reopening the assessment onthe ground that the reasons recorded do not point any escapement ofincome but only for verification of certain transactions. Inresponse to the same, the first respondent replied that notice underSection 148 of the Act has been issued only after obtainingnecessary approval from the jurisdictional Joint Commissioner andhence, the reopening is in accordance with law. Thereupon, thepresent writ petitions came to be filed questioning the impugnednotices under Section 148 of the Income Tax Act for reopening theassessment. 2.The respondent has filed a detailed counter affidavit seekingto justify the initiation of the impugned proceedings. 2.The respondent has filed a detailed counter affidavit seekingto justify the initiation of the impugned proceedings. 3.The learned counsel appearing for the petitioner reiteratedall the contentions set out in the affidavit filed in support of thewrit petitions. He raised a host of contentions and relied on anumber of case laws. In fact, the compilation of case laws was alsosubmitted. As regards the assessment year 2016-17, the petitioner'scounsel pointed out that he had filed the returns of income on22.06.2017 and as per Section 143(2) of the Act and its proviso, therespondent had time till the expiry of six months from the end ofthe financial year in which the return is filed for the purpose oftaking up the case for scrutiny proceedings. The time limit forissuing notice under Section 143(2) of the Act would expire only on30.09.2018. In the decision reported in (2009) 308 ITR 249 (Mad)(Commissioner of Income Tax Vs. Qatalys Software TechnologiesLtd.,), the Madras High Court had held that the assessing officer isbarred from issuing notice for reassessment proceedings, when thetime for issuing notice under Section 143(2) of the Act has notexpired. 4.Per contra, the learned standing counsel for the respondentsplaced heavy reliance on the decision of the Hon'ble Supreme Courtreported in (1993) 4 SCC 77 (M/s.Pool Chand Bajrang Lal Vs. IncomeTax Officer and another) which was followed by a learned Judge ofthis Court in M/s.South Asia Fm Limited Vs. The AssistantCommissioner of Income Tax, Chennai (W.P.Nos.10257, 44312 and 44313of 2016) dated 10.10.2018. She contended that the petitioner oughtnot to rush to this Court at the notice stage itself. She pressedfor dismissal of these writ petitions.https://hcservices.ecourts.gov.in/hcservices/ 5.I carefully considered the rival contentions and went throughthe materials on record. I am of the view that the preliminarypoint raised by the petitioner's counsel in para 2 of the rejoinderdeserves to be accepted. The said para reads as follows:- “2.The petitioner submits that he had asked the reasonsfor reopening the assessment which was furnished by the firstrespondent and the same has been extracted in the affidavit. Amere reading of the reasons would show that there is noescapement of income as contemplated in the notice issued underSection 148. Further, the petitioner has filed a reply dated13.06.2018 objecting to the reopening on the ground that thereasons recorded do not point any escapement of income butonly for verification of certain transactions. In the reply,the petitioner has stated that regular books of accounts weremaintained and it was not available in the premises when thesurvey took place. Further, the first respondent has notpassed any order on the reply which is mandatory in pursuanceof the Supreme Court Judgment in GKN Driveshafts case reportedin 259 ITR 19. Hence, on this ground also, the notice is liableto be quashed.” 6.The Hon'ble Supreme Court, in GKN Driveshafts (India) Ltd.vs. Income Tax Officer and Ors. reported in 259 ITR 19, held asfollows:- “5. ... However, we clarify that when a notice underSection 148 of the Income Tax Act is issued, the proper courseof action for the notice is to file return and if he so desires,to seek reasons for issuing notices. The assessing officer isbound to furnish reasons within a reasonable time. On receipt ofreasons, the notice is entitled to file objections to issuanceof notice and the assessing officer is bound to dispose of thesame by passing a speaking order. In the instant case, as thereasons have been disclosed in these proceedings, the assessingofficer has to dispose of the objections, if filed, by passing aspeaking order, before proceeding with the assessment in respectof the abovesaid five assessment years.” “5. ... However, we clarify that when a notice underSection 148 of the Income Tax Act is issued, the proper courseof action for the notice is to file return and if he so desires,to seek reasons for issuing notices. The assessing officer isbound to furnish reasons within a reasonable time. On receipt ofreasons, the notice is entitled to file objections to issuanceof notice and the assessing officer is bound to dispose of thesame by passing a speaking order. In the instant case, as thereasons have been disclosed in these proceedings, the assessingofficer has to dispose of the objections, if filed, by passing aspeaking order, before proceeding with the assessment in respectof the abovesaid five assessment years.” 7.In the case on hand, the petitioner had raised a specificobjection that the proposal for reopening the assessment is liableto be dropped, since there is no finding that there was escapementof income. It was further contended that for the purpose ofcarrying on verification exercise, reopening cannot be ordered.Though such specific contention was raised, instead of dealing withthe same, by passing a speaking order, the first respondent chose tomerely inform the assessee that the proceedings have been initiatedonly with the approval of the jurisdictional Joint Commissioner.The first respondent has not at all dealt with the contentionsraised by the assessee. The Hon'ble Supreme Court in GKNhttps://hcservices.ecourts.gov.in/hcservices/ Driveshafts had specifically held that the assessing officer isbound to dispose of the assessee's objections by passing a speakingorder. In as much as this requirement of law as laid down by theSupreme Court has not been complied with, the respondent is directedto dispose of the petitioner's objections by passing a speakingorder within a period of four weeks from the date of receipt of acopy of this order. In this view of the matter, I refrain frominterfering with the impugned notices. If the assessing officerchooses to reject the petitioner's objections by passing a speakingorder, then, it is open to the petitioner herein to move this Courtagain. All the contentions of the petitioner are left open. 8. These Writ Petitions are disposed of with the aforesaiddirection. No costs. Consequently, connected miscellaneouspetitions are closed. Sub Assistant Registrar(CS) rmiNote :In view of the present lock down owing toCOVID-19 pandemic, a web copy of the order may beutilized for official purposes, but, ensuring thatthe copy of the order that is presented is thecorrect copy, shall be the responsibility of theadvocate/litigant concerned.To Ward-1, Income Tax Office, Karaikudi. 2.The Joint Commissioner of Income Tax, Karaikudi Range, Karaikudi. https://hcservices.ecourts.gov.in/hcservices/