The Madras High Court Cooperative Society Limited v. Additional/Joint/Deputy/Assistant Commissionerof Income Tax Income-Tax Officer,National E-Assessment Centre, Delhi.of Income Tax Income-Tax Officer,National E-A

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 03.03.2022 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR W.P.No.3249 of 2022andW.M.P.Nos.4398, 4402 & 4414 of 2022 The Madras High Court Cooperative Society Limited,Represented by its Secretary, Mr.N.Balakrishnan,214, Madras High Court Building,Paris Corner,Chennai – 600 104. ...Petitioner Vs 1. Additional/Joint/Deputy/Assistant Commissionerof Income Tax Income-tax Officer,National e-Assessment Centre, Delhi.of Income Tax Income-tax Officer,National e-Assessment Centre, Delhi. 2. Assistant Commissioner of Income Tax,Non-Corporate Circle 11(1) ChennaiBSNL Building, 2nd Floor Income Tax Office-BSNL Tower,No.16, Greams Road,Chennai – 600 034.Non-Corporate Circle 11(1) ChennaiBSNL Building, 2nd Floor Income Tax Office-BSNL Tower,No.16, Greams Road,Chennai – 600 034. 3. The Bank Manager, Indian Bank, Madras High Court Branch,High Court, Chennai – 600 108. ...Respondents PRAYER: Petition filed under Article 226 of the Constitution ofIndia, praying for issuance of a Writ of Certiorari, to call forthe records and quash the notice issued under Section 156 of theIncome Tax Act ('Act') in PAN in DIN and LetterNo.ITBA/AST/S/156/2020-21/1030894072(1)dated23.02.2021['impugned notice']. For Respondents : Mrs.Hema Muralikrishnan Senior Standing Counsel [For R1 and R2] Mr.V.Kalyanaraman Standing Counsel For M/s.Aiyar & Dolia[For R3] https://hcservices.ecourts.gov.in/hcservices/ ORDER The prayer sought for herein is for a Writ of Certiorari, tocall for the records and quash the notice issued under Section156 of the Income Tax Act ('Act') in PAN in DIN andLetter No.ITBA/AST/S/156/2020-21/1030894072 (1) dated 23.02.2021['impugned notice'] 2.For the Assessment Year 2018-19, there was an assessmentunder Section 143 (3) of the Income Tax Act, 1961 [in short, theAct], and an assessment order was passed on 23.02.2021, where,according to the learned counsel for the petitioner that, therewas no tax liability against the petitioner. 3.However, subsequently, since there has been a demand,which has come by way of demand notice under Section 156 of theAct by order dated 23.02.2021, the petitioner decided to preferan appeal before the Commissioner of Income Tax (Appeals,) [inshort CIT(A)] against the original assessment order dated23.02.2021 and the said appeal having been filed is pendingbefore the Appellate Authority. 4.In the meanwhile, as against the said notice of demandunder Section 156 of the Act dated 23.02.2021, the present writpetition has been filed. 5.When this writ petition came up for admission on17.02.2022, after hearing the learned counsel for the petitioneras well as Mrs.Hema Muralikrishnan, learned Standing counsel forthe respondents 1 and 2, I have passed the following orders: “As per the assessment order under Section 143(3)of the Income Tax Act, 1961 (in short 'the Act') dated23.02.2021, there was no tax liability against thepetitioner. However, subsequently since the demand hascome by way of demand notice under Section 156, by orderdated 23.02.2021, the petitioner decided to preferappeal against the assessment order and the said appealhaving been filed is pending before the AppellateAuthority. At this juncture, pursuant to the Section 156demand for Assessment Year 2018-2019, they have freezedthe Bank account of the petitioner and therefore, atthis juncture, the petitioner has moved the present writpetition challenging the demand made under Section 156of the Act. 2. However, Mrs.Hema Muralikrishnan, learned SeniorStanding Counsel, who takes notice for respondents,would submit that, the assessment order dated 23.02.2021is under Section 143(3). However, prior to which, whennotice was issued under Section 143(1), the deductionsought for under Section 80P was disallowed and that wasintimated in the proposal under Order 143(1), therefore,that amount now is demanded through the present notice 2. However, Mrs.Hema Muralikrishnan, learned SeniorStanding Counsel, who takes notice for respondents,would submit that, the assessment order dated 23.02.2021is under Section 143(3). However, prior to which, whennotice was issued under Section 143(1), the deductionsought for under Section 80P was disallowed and that wasintimated in the proposal under Order 143(1), therefore,that amount now is demanded through the present notice under Section 156 of the Act. 3. She will also submit that, anyhow since thepetitioner chosen to file an appeal as against theassessment order, the petitioner cannot maintain boththe appeal before the Appellate Authority as well asthis writ petition and if it is the definite stand ofthe petitioner that, the petitioner has no tax liabilityas per the assessment order dated 23.02.2021, he oughtnot to have filed any appeal. 4. In response to the same, the learned counselappearing for the petitioner wants a week's time to takedecision to withdraw the appeal filed already againstthe assessment order dated 23.02.2021 in order to pursuethis writ petition. 5. In view of the aforestated, post the matter on22.02.2022. In the meanwhile, status quo as on todayshall be maintained.” 6.Pursuant to which, the case has come up for furtherhearing today and Mr.V.Kalyanaraman, learned Standing CounselFor M/s.Aiyar & Dolia, accepts notice on behalf of the thirdrespondent. 7.On instructions, Mrs.Hema Muralikrishnan, learned SeniorStanding Counsel appearing for the respondents 1 and 2 wouldsubmit that, if at all there is no tax liability on the part ofthe assessee for the said Assessment Year as per the assessmentorder dated 23.02.2021, there was no necessity for thepetitioner/assessee to prefer an appeal before the CIT(A).Therefore, the petitioner cannot maintain the said appeal byfiling the present writ petition. Therefore, in order to pursuethe present writ petition on the pretext that, there was no taxliability payable by the petitioner for the relevant AssessmentYear to challenge the demand notice issued under Section 156 ofthe Act, the same cannot be done by maintaining the appealstatutorily filed before the Appellate Authority. 8.However, in response to the said arguments advanced by thelearned Senior Standing Counsel appearing for the respondents,Mr.N.V.Balaji, learned counsel for the petitioner/assessee, oninstructions, would submit that, though attempt has been made towithdraw the appeal before the CIT(A), due to technical reasons,he could not file the memo to withdraw the appeal, but soon orlater, it will be done whenever it become possible for theassessee, it would be withdrawn and therefore, that kind ofundertaking given on behalf of the petitioner / assessee can berecorded by this Court. 9.The learned counsel for the petitioner/assessee would alsosubmit that, once the appeal is withdrawn, the petitioner canvery well pursue the present writ petition against demand noticepassed under Section 156 of the Act, where, since there has beenno tax liability as per the assessment order dated 23.02.2021, absolutely, there is no reason or ground for issuing the presentimpugned notice. Hence, on that ground, he seeks indulgence ofthis Court. 9.The learned counsel for the petitioner/assessee would alsosubmit that, once the appeal is withdrawn, the petitioner canvery well pursue the present writ petition against demand noticepassed under Section 156 of the Act, where, since there has beenno tax liability as per the assessment order dated 23.02.2021, absolutely, there is no reason or ground for issuing the presentimpugned notice. Hence, on that ground, he seeks indulgence ofthis Court. 10.However, the learned Senior Standing Counsel for theRevenue would contend that, if it is the stand of thepetitioner/assessee that there is no tax liability as per theassessment order dated 23.02.2021 and he has also assured andmade an undertaking before this Court to withdraw the appealfiled before the CIT(A), on that ground, the matter can beremitted back to the respondent, where, it is open to thepetitioner/assessee to make an application for rectificationunder Section 154 of the Act. If such an application is made,the plea now raised by the petitioner before this Court can verywell be raised before the concerned authority to consider anddecide on the basis of the assessment order dated 23.02.2021 andif such a plea is made by filing a rectification petition underSection 154 of the Act, certainly, that would be considered anddecided on merits and in accordance with law by the authorityconcerned within a period of time, that may be stipulated bythis Court, she contended. 11.I have considered the said rival submissions made by thelearned counsel appearing for both parties and have perused thematerials placed before this Court. 12.Now, the petitioner/assessee has come forward to give anundertaking before this Court to withdraw the appeal filedagainst the assessment order dated 23.02.2021 pending before theCIT(A). The said undertaking given on behalf of the assessee bythe learned counsel for the assessee is hereby taken on record. 13.Now, the question is whether the petitioner is liable topay tax as per the assessment order dated 23.02.2021, where, ifat all, there is no tax liability as claimed by thepetitioner/assessee, the question of making demand as has beendone under Section 156 of the Act, i.e., the present impugnedorder, may not arise. 14.However, that issue can be gone into by the AssessingAuthority, who issued the demand notice, which is impugnedherein, in which, if at all, any rectification is required to bemade by the Assessing Authority, that can be done only if thepetitioner come forward to make an application under Section 154of the Act for rectification. 15.In that view of the matter, this Court is inclined todispose of this writ petition with the following orders: (i) That the petitioner/assessee shall withdraw the appealfiled against the assessment order dated 23.02.2021 for theAssessment Year 2018-19 at the earliest. (ii)It is also open to the petitioner to file an application under Section 154 of the Act, seeking rectification and to passan order either confirming or otherwise of the assessment orderdated 23.02.2021 and in respect of such rectification petition,whatever the further input to be supplied, that can also besupplied by the petitioner, which shall be consideredobjectively by the Assessing Authority before deciding theapplication to be filed under Section 154 of the Act. (iii)The needful as indicated above shall be undertaken bythe Assessing Authority in disposing the rectificationapplication within a period of two weeks from the date ofreceipt of such application from the petitioner/assessee. It isneedless to mention that, once the rectification application isdisposed of and if it is allowed in favour of the petitioner,the Bank attachment made against the petitioner/assessee shallbe considered to be lifted forthwith. (iii)The needful as indicated above shall be undertaken bythe Assessing Authority in disposing the rectificationapplication within a period of two weeks from the date ofreceipt of such application from the petitioner/assessee. It isneedless to mention that, once the rectification application isdisposed of and if it is allowed in favour of the petitioner,the Bank attachment made against the petitioner/assessee shallbe considered to be lifted forthwith. 16.With these observations and directions, the writ petitionstands disposed of. However, there shall be no order as tocosts. Consequently, connected miscellaneous petitions areclosed. //True Copy// kakTo Sub Assistant Registrar 1. Additional/Joint/Deputy/Assistant Commissionerof Income Tax Income-tax Officer,National e-Assessment Centre, Delhi. 2. Assistant Commissioner of Income Tax,Non-Corporate Circle 11(1) ChennaiBSNL Building, 2nd Floor Income Tax Office-BSNL Tower,No.16, Greams Road,Chennai – 600 034.3. The Bank Manager,Indian Bank, Madras High Court Branch,High Court, Chennai – 600 108.+1cc to M/s.Hema Muralikrishnan, Senior Standing Counsel, S.R.No.14392+1cc to Mr.N.V.Balaji, Advocate, S.R.No.14802W.P.No.3249 of 2022RGN(CO)RGA(31/03/2022) https://hcservices.ecourts.gov.in/hcservices/