Thiru.a.r.dilli Babu v. The Income Tax Officer,Non-Corporate Ward – 8(4),Chennai – 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Thiru.A.R.Dilli Babu.. Appellant Versus The Income Tax Officer,Non-Corporate Ward – 8(4),Chennai – 600 034... Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the IncomeTax Act, 1961, against the order of the Income Tax AppellateTribunal, Madras 'C' Bench, Chennai, dated 27.02.2018 made inI.T.A.No.2396/Chny/2017 relating to the Assessment Year 2009-10,Appeal against the order dated 28.07.2017 made inITA.No.79/CIT(A)-9/2016-17 on the file of the commissioner ofIncome tax (Appeals)-9, Chennai-600 034, for the Assessment Year2009-10.& As appeal against the order dated 30.12.2016 made inPAN.No./G.I.R.No.AIEPDO578J on the file of the Income Taxofficer, Non corporate ward-8(4)(i/c), Chennai-600 034 for theAssessment Year 2009-10. For Respondent : Mr.Karthik Ranganathan Senior Standing counsel This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity),challenging the order dated 27.02.2018 passed by the Income TaxAppellate Tribunal, Chennai, 'C' Bench ('the Tribunal' forbrevity) in I.T.A.No.2396/Chny/2017 for the Assessment Year2009-10. The appeal was admitted on 05.12.2018 on the followingSubstantial Questions of Law:“Perversity:-(i) Whether on the facts and in the https://hcservices.ecourts.gov.in/hcservices/ circumstances of the case, the order of the IncomeTax Appellate Tribunal was perverse in introducingthe proceedings of the Commissioner, Kundrathurdated 27.03.2007 which was neither consideredwhile forming the belief envisaged u/s.147 as maybe seen from the reasons recorded nor even whilecompleting the reassessment and in the appealproceeding before CIT (Appeal) and use suchmaterial as the sole ground for upholding thejurisdiction and that too contrary to proviso tos.147 and assuming perversely the role which eventhe Assessing Officer cannot assume in the lightof reasons recorded? (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was perverse in law inadmitting material for the first time in secondappeal stage to justify the reasons for reopeningthe assessment, which was not cited as materialnot disclosed by the appellant, in the reason forreopening, AO’s correspondence with Appellant norin the Reassessment Order? (iii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was perverse on facts inholding that the reopening was based on freshevidence available to the Assessing Officer andnot on the basis of change of opinion, when theAssessing Officer had neither in the reasonsrecorded for reopening the assessment nor in thereassessment order, had placed reliance on theallegedproceedingsoftheCommissioner,Kundrathur dated 27.3.2007, as a fresh materialformed the “reason to believe” that income hadescaped assessment and that too, in the absence offinding of failure on the part of the appellant,is barred by limitation under the first proviso toS.147 of the Act??Jurisdiction for Re-assessment:- Reopening beyond 4 Years:-(iv) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in law in upholdingthe jurisdiction of the Assessing Officer inreopening the assessment u/s.147 of the Income TaxAct 1961? (v) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in not cancelling thereassessment since the reopening after 4 years from the end of the Assessment Year without therebeing any failure on the part of the Assessee todisclose fully and truly all material factsnecessary for assessment due to which any incomechargeable to tax has escaped assessment?Change of Opinion:- Reopening beyond 4 Years:-(iv) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in law in upholdingthe jurisdiction of the Assessing Officer inreopening the assessment u/s.147 of the Income TaxAct 1961? (v) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in not cancelling thereassessment since the reopening after 4 years from the end of the Assessment Year without therebeing any failure on the part of the Assessee todisclose fully and truly all material factsnecessary for assessment due to which any incomechargeable to tax has escaped assessment?Change of Opinion:- (vi) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in holding that therewas no change of opinion even though the reopeningof assessment was merely based on the PartitionDeed which was available even at the time ofscrutiny assessment?Interest u/s.234B:- (vii) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in upholding the levy ofinterest u/s.234B(3) of the Income Tax Act, 1961,in the reopened assessment for the first time? (viii) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in not holding that oncethe Assessing Officer gives credit for the advancetax paid against the tax demand in the originalassessment, the advance tax ceases its characteras advance tax and anything subsequent proceedingsit can only be treated as tax already collectedand not as advance tax and therefore provisions ofsection 234B will not apply? (ix) Whether on the facts and in thecircumstances of the case the Income Tax AppellateTribunal was right in law in not holding that sincethe regular assessment u/s.143(3) was made withoutcharging interest u/s.234B, charging the same whilecompleting the reassessment u/s.147 for the entireperiod from 1[st] of April next following such financialyear to the date of completion of reassessment wouldnot be warranted, since no credit for payment ofadvance tax is involved in the reassessment u/s.147contrasted to a first assessment made u/s.143(3) ofthe Act?(x) Whether on the facts and in thecircumstances of the case the reassessmentproceedings without issuing notice u/s.143(2) ofIncome Tax Act, 1961 in respect of return filed inresponse to notice u/s.148 of the Income Tax Act,1961, is valid in law?” 2. We have heard Mr.M.P.Senthil Kumar, learned counselappearing for the appellant/assessee and Mr.Karthik Ranganathan, learned Senior Standing counsel for the respondent/Revenue. 3. The learned counsel for the appellant / assessee, oninstructions, submitted that the appellant / assessee intends toavail the benefit of Vivad Se Vishwas Scheme ('VVS Scheme' forbrevity) and in this regard, the assessee is taking steps tofile the application / declaration in Form No.I. 4. It may not be necessary for this Court to decide theSubstantial Questions of Law framed for consideration on accountof certain subsequent developments. The Government of Indiaenacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of2020) to provide for resolution of disputed tax and for mattersconnected therewith or incidental thereto. The Act of theParliament received the assent of the President on 17[th] March2020 and published in the Gazette of India on 17[th] March 2020. 4. It may not be necessary for this Court to decide theSubstantial Questions of Law framed for consideration on accountof certain subsequent developments. The Government of Indiaenacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of2020) to provide for resolution of disputed tax and for mattersconnected therewith or incidental thereto. The Act of theParliament received the assent of the President on 17[th] March2020 and published in the Gazette of India on 17[th] March 2020. 5. In terms of the said Act, the assessee has been given anoption to put an end to the tax disputes, which may be pendingat different levels either before the First Appellate Authorityor before the Tribunal or before the High Court or before theHon'ble Supreme Court of India. Under Section 2(j) “disputedtax” has been defined. In terms of Section 3, where a declarantmeans a person, who files a declaration under Section 4 on orbefore the last date files a declaration to the designatedauthority in accordance with the provisions of Section 4 inrespect of tax arrears, then, notwithstanding anythingcontained in the Income Tax Act or any other law for the timebeing in force, the amount payable by the declarant shall bedetermined in terms of Section 3(a-c) thereunder. 6. The First Proviso to Section 3 states that in case, wherean Appeal or Writ Petition or Special Leave Petition is filed bythe Income Tax authority on any issue before the AppellateForum, the amount payable shall be one-half of the amount in thetable stipulated in Section 3 calculated on such issue, in sucha manner as may be prescribed. The second proviso deals with thecases, where the matter is before the Commissioner (Appeals) orbefore the Dispute Resolution Panel. The third proviso dealswith cases, where the issue is pending before the Income TaxAppellate Tribunal. The filing of the declaration is as perSection 4 of the Act and the particulars to be furnished arealso mentioned in the Sub Sections of Section 4. Section 5 ofthe Act deals with the time and manner of the payment andSection 6 deals with Immunity from initiation of proceedings inrespect of offence and imposition of penalty in certain cases.Section 9 of the Act deals with cases, where the Act 3 of 2020will not be applicable. 7. As observed, the assessee is given liberty to restorethis appeal in the event the ultimate decision to be taken onthe declaration to be filed by the assessee under Section 4 ofthe said Act is not in favour of the assessee. If such a prayeris made, the Registry shall entertain the prayer withoutinsisting upon any application to be filed for condonation ofdelay in restoration of the appeal and on such request made bythe assessee by filing a Miscellaneous Petition for Restoration,the Registry shall place such petition before the Division Benchfor orders. 8. In the light of the above, We direct the appellant /assessee to file the Form No.I on or before 09.11.2020 and thecompetent authority shall process the application / declarationin accordance with the Act and pass appropriate orders asexpeditiously as possible preferably within a period of six (6)weeks from the date on which the declaration is filed in theproper form. 9. With this direction, the Tax Case Appeal stands disposedof with the aforementioned liberty and Consequently, theSubstantial Questions of Law are left open. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant RegistrarKakTo 1.The Income Tax Appellate Tribunal,'C' Bench, Chennai. 2.The Income Tax Officer,Non- Corporate ward-8(4), Annexe Building 5[th] Floor, No.121, Nungambakkam High Road, Nungambakkam,Chennai- 600 034. 3.The Commissioner of Income Tax (Appeals)-9,Chennai-600 034. LN(CO)RMP(08/12/2020) T.C.A.No.752 of 2018