T.krishnamurt v. The Income Tax Officer,Non-Corporate Ward – 16(4)

IN HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON: 13.12.2019DELIVERED ON : 18.12.2019CORAM THE HONOURABLE MR.JUSTICE C.SARAVANAN and M.P.Nos.1 & 1 of 2015 T.Krishnamurt ... Petitioner in both W.Ps. vs The Income Tax Officer,Non-Corporate Ward – 16(4),142, MG Road, Chennai – 34. ... Respondent in both W.Ps. Prayer in W.P.No.29005 of 2015:Writ Petition filed under Article226 of Constitution of India, to issue a writ of CertiorarifiedMandamus, calling for the records of the respondent and quashthe notice u/s.148 of the Act in PAN/GIR : dated17.03.2015 and the consequential Order in PAN/GIR : /2015-16 dated 16.07.2015 and direct the respondent todrop the reassessment proceedings for the assessment year 2008-09. Prayer in W.P.No.29006 of 2015:Writ Petition filed under Article226 of Constitution of India, to issue a writ of CertiorarifiedMandamus, calling for the records of the respondent and quashthe notice u/s.148 of the Act in PAN/GIR : dated17.03.2015 and the consequential Order in PAN/GIR : /2015-16 dated 16.07.2015 and direct the respondent todrop the reassessment proceedings for the assessment year 2009-10. For Petitioner:Mr.Vikram Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan ( in both cases) For Respondents:M/s.Hema Murali Krishnan Senior Standing Counsel ( in both Cases) Heard learned counsel for the petitioner Mr VikramVijayaraghavan and Mrs.HemaMurali Krishnan for the respondent. 2. By this common order, both the writ petitions are beingdisposed. 3. In these writ petitions, the petitioner has challengedboth the impugned notices dated 17.3.2015 issued under section148 of the Income Tax Act, 1961 for the assessment year 2008-09and assessment year 2009-10 and the consequential orders dated16.7.2015 rejecting the petitioner’s objection to the impugnednotices. 4. The petitioner had filed returns under section 139 of theIncome Tax Act, 1961 for the respective assessment years. Thesereturns were assessed under section 143 of the Act. Later, twoseparate notices dated 7.3.2011 were issued to the petitionerunder section 148 of the Income Tax Act, 1961 based on datacaptured in Assets Information Report (AIR). 5. Thereafter, on 31.12.2011, two separate assessment orderswere passed by the respondent under section 147 read with section144 of the Income Tax Act, 1961 for the respective assessmentyears and accordingly intimations were also issued to thepetitioner to pay the revised tax assessment. 6. The petitioner took up the issue before the Commissionerof Income Tax (Appeals). By two separate orders dated 12.11.2013,the Commissioner of Income Tax (Appeals) had set aside therespective assessment orders under section 250(6) of the IncomeTax Act, 1961 on the ground that the respondent had failed tofollow the mandatory requirement of section 143(2) of the IncomeTax Act, 1961. 7.The Commissioner of Income Tax (Appeals) followed thedecision of the Gujarat High Court in CIT versus K.M.Raviji videorder dated 18.7.2011 in Appeal No. 771 or 2010 and the decisionof this court rendered in Sapthagiri Finance and investmentversus ITO rendered on 17.7.2012 [2012] 25 Taxmann.com 341 (Mad)following the decision of the Honourable Supreme Court in ACITversus Hotel Blue Moon [2012] 321 ITR 362. 8. In a purported compliance of these two orders of theCommissioner of Income Tax(Appeals), the respondent also passedtwo separate orders dated 27.11.2013 to give effect to theabove orders dated 12.11.2013 of the Commissioner of Income Tax(Appeals) for the respective assessment years. 9. Further appeals by the revenue were also dismissed by acommon order dated 26.9.2014 of the Income Tax AppellateTribunal, Chennai. Under these circumstances, the respondentAssessing Officer/ITO issued the impugned notices dated17.3.2013 which read identity. 8. In a purported compliance of these two orders of theCommissioner of Income Tax(Appeals), the respondent also passedtwo separate orders dated 27.11.2013 to give effect to theabove orders dated 12.11.2013 of the Commissioner of Income Tax(Appeals) for the respective assessment years. 9. Further appeals by the revenue were also dismissed by acommon order dated 26.9.2014 of the Income Tax AppellateTribunal, Chennai. Under these circumstances, the respondentAssessing Officer/ITO issued the impugned notices dated17.3.2013 which read identity. Sample notice for the assessment year 2008-09 reads asunder:- To, 17.3.2015 Shri T Krishnamoorthy,Flat No. A-3, “Temple Tree” RPADNo. 37, Venkata Narayana Road,Chennai-6000 17 Sir, Whereas I have reasons to believe that yourincome chargeable to tax for the assessment year2008-09 has escaped assessment within the meaningof section 147 Of the Income Tax Act, 1961. 2. I, therefore, propose to assess the incomefor the said assessment year and I herebyrequire you to deliver to me within 30 days fromthe service of this notice, a return in theprescribed form of your income for the saidassessment year. 3. This notice is being issued after obtainingthe necessary satisfaction of the Commissionerof Income Tax-5, Chennai-600034./The CentralBoard of Direct Taxes. (B. Baladandayutham)AssessingOfficer/IncomeTaxOfficer Non-Corporate Ward-16 (4), Chennai-600034. 10. The petitioner sent separate replies dated 16.4.2015 tothe respective notice for the respective assessment years andrequested the returns originally filed by the petitioner for therespective assessment years on 31.7. 2008 and on 29.7.2009 asreturns filed in response to the impugned notices dated17.3.2015. 11. The petitioner further submitted that he had disclosedall these facts, fully and truly which were considered whilepassing the 1[st] assessment order under section 147 read withsection 144 of the Act and therefore requested the respondent tofurnish the reasons recorded for reopening the assessment forthe respective assessment years for the second time. 12. The respondent later furnished the reasons recorded forreopening of the respective assessment years vide two separatecommunications dated 15.5.2015 which more or less reiterated thereasons given for reopening of the assessment years earlier videa communication dated 13.6.2011. 13. Under these circumstances, the petitioner filed both hisobjections dated 19.6.2015 against reopening of the assessmentfor the 2[nd] time. After setting out the entire history, it wassubmitted that the assessment having been reopened on an earlieroccasion based on AIR information relating to investment in theshares and immovable property and the issue having attainedfinality on an earlier occasion, it was not open for therespondent to reopen the assessment for the second time inabsence of any tangible material and it would amount to changeof opinion which was impermissible. It was submitted that forinvocation of section 148 to assess the income escapingassessment under section 147, there has to be reason to believethat the income had escaped assessment and the jurisdiction isconferred on the assessing officer. However, reassessment has tobe based on fulfillment of certain precondition and AssessingOfficer cannot reopen the assessment for mere change of opinion.It is submitted that there was no tangible material for invokingSection 148 for the 2[nd] time. 14. It was further submitted that the assessment having beenoriginally completed, the 1[st] proviso to section 147 wasattracted. The petitioner submits that where the assessment hasbeen completed under section 143(3) or under section 147, nonotice under section 148 can be issued beyond the period of 4years from the end of the assessment year unless there was afailure on the part of the assessee to disclose fully and trulyall material facts for making the assessment. 14. It was further submitted that the assessment having beenoriginally completed, the 1[st] proviso to section 147 wasattracted. The petitioner submits that where the assessment hasbeen completed under section 143(3) or under section 147, nonotice under section 148 can be issued beyond the period of 4years from the end of the assessment year unless there was afailure on the part of the assessee to disclose fully and trulyall material facts for making the assessment. 15. Since the assessment was reopened on 17.3.2015,reopening of the assessment once again was barred as per wellsettled principles of law. The petitioner further submits thattwo impugned orders dated 16.7.2015 rejecting the objections ofthe petitioner against reopening of the assessment under the twoimpugned notices dated 17.3.2015 under Section 148 of the Actwere liable to be quashed. 16. The learned counsel for the petitioner primarily arguedthat there were no new materials available for invoking Section148 of the Income Tax Act, 1961 for the 2[nd] time and thereforethe impugned notices and the consequential orders rejecting theobjections of the petitioner against invocation of Section 148were bad and were liable to be set aside and quashed. 17. He further submits that the earlier round of proceedingsculminated in two separate re-assessment orders dated 31.12.2011which were eventually set aside by the Commissioner of Income Tax(Appeals) vide two separate orders dated 12.11.2013 and weregiven effect to by two separate orders dated 27.11.2013. 18. In this connection, the learned counsel for thepetitioner relied on the decision of the Punjab and Haryana inSmt Anchi Devi Vs Commissioner of Income Tax (2008)218 CT 011.There the court held that though the proceedings were initiatedby the officer within the prescribed period of limitation, yetthe same was initiated only to circumvent the earlier order ofthe Tribunal which held that the invocation of Section 148 wastime barred. It was held that an Assessing Officer cannot beallowed to initiate fresh proceedings on identical facts as the1[st] assessment proceeding had failed to result in a valid re-assessment due to lapse on the part of the IT authority. 19. The learned counsel for the petitioner further relied onthe decision of the Delhi High Court in Commissioner of IncomeTax versus Vishal Gupta (2012) 210 Taxmann 65 wherein it washeld that Section 148 of the Income Tax Act, 1961 can be invokedonly where there is fresh materials available and that suchnotice should stand on its own legs. The learned counsel for thepetitioner further submits that as per the decision of theHonourable Supreme Court in Commissioner of Income Tax versusRao Thakur Narayan Singh (1965) 65 ITR 234, even if the Tribunalhad erroneously set aside the assessment order, such order wouldbe binding unless it is set aside by an appellate authority inthe hierarchy. The learned counsel for the petitioner submitsthat rightly or wrongly the orders dated 12.11.2013 of theAppellate Commissioner had been complied by the respondent bygiving effect to it on 27.11.2013 and therefore as long as that order giving effect to the said order of the AppellateCommissioner had remained unchallenged, it was not open for therevenue to reopen the assessment once again. 20.Per contra, the learned counsel for the Income TaxDepartment submits that the impugned notices in the consequentialorders were in accordance with law and these two writ petitionswere liable to be dismissed. 21. The learned counsel for the Income Tax Department relieson the decision of the Punjab and Haryana High Court in R.Kakkar Glass And Crockery House versus CIT (2002) 254 ITR 0273.She submits that unless the notice itself is set aside orquashed mere setting aside of the re-assessment order is notsufficient to bar invocation of section 148 for the 2[nd] time. order giving effect to the said order of the AppellateCommissioner had remained unchallenged, it was not open for therevenue to reopen the assessment once again. 20.Per contra, the learned counsel for the Income TaxDepartment submits that the impugned notices in the consequentialorders were in accordance with law and these two writ petitionswere liable to be dismissed. 21. The learned counsel for the Income Tax Department relieson the decision of the Punjab and Haryana High Court in R.Kakkar Glass And Crockery House versus CIT (2002) 254 ITR 0273.She submits that unless the notice itself is set aside orquashed mere setting aside of the re-assessment order is notsufficient to bar invocation of section 148 for the 2[nd] time. 22.She submits that in the said case it was observed thatwhen the notices quashed on some technical ground, and nofindings were recorded on merits of the additional incomeassessed as a stable income, it would be in order to issue afresh notice under section 148 of the Income Tax Act, 1961provided all the other legal requirements of law have beencomplied. In the above case the court observed that, “ Forinstance, if notice under section 148 is quashed on the groundthat no reasons had been recorded, 2[nd] notice shall be in orderafter recording the reasons. Similarly, if a notice is quashed onthe ground that it has been issued without requisite sanction ofthe higher authority, fresh notice can be issued after obtainingnecessary sanction. Such instance can be multiplied. However, ifa notice under section 148 is quashed after examination ofmaterial relied on by the AO and after recording of finding thatthe basis of such material the additional income cannot be saidto have escaped assessment, then it shall not be permissible forthe AO to issue a fresh notice on the basis of material inrespect of the same item of income.” 23. She further submits that that the invocation of Section148 read with Section 147 of the Income Tax Act, 1961 was in anyevent within the period of limitation inasmuch as there was amaterial failure on the part of the petitioner to disclose fullyand truly all material facts necessary for his assessment forthe respective assessment years. 24. I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned counsel for theIncome Tax Department. 25. This is a case where details of investment in shares andimmovable property were not originally disclosed by the https://hcservices.ecourts.gov.in/hcservices/ petitioner at the time of filing of the original returns underSection 139 of the Income Tax Act, 1961 for the respectiveassessment years. Therefore, two notices under Section 148 ofthe Income Tax Act, 1961 were issued on 7.3.2011 for therespective assessment years. 26. Reassessment were thereafter completed however withoutcomplying with the mandatory requirement of Section 143 (2) ofthe Income Tax Act, 1961 by invoking Section 144 of the IncomeTax Act, 1961. Thus, The Commissioner of Income Tax (Appeals)allowed two appeals filed by the petitioner and set aside therespective orders of re-assessment made by the respondent on31.12.2011 vide orders dated 12.11.2013. Re-assessments made on31.12.2011 were set aside on a technical ground of failure tocomply with the mandatory requirement of Section 143 (2) of theAct in terms of the decision of the Hon'ble Supreme Court in ACIT versus Hotel Blue Moon (2012) 321 ITR 362 and that of thedecision of this court rendered in Sapathagiri Finance andInvestment versus ITO (2012) 25 Taxmann.com 341. The assessmentwas not set aside on merits. 27. Notices dated 07.03.2011 issued under Section 148 of theIncome Tax Act for the respective assessment years were not setaside. For invoking Section 148 of the Income Tax Act, 1961, theLimitation is prescribed under Section 149 of the Income TaxAct. It reads as under :- 27. Notices dated 07.03.2011 issued under Section 148 of theIncome Tax Act for the respective assessment years were not setaside. For invoking Section 148 of the Income Tax Act, 1961, theLimitation is prescribed under Section 149 of the Income TaxAct. It reads as under :- Section 149 : Time Limit for notice :- (1)No notice under section 148 shall be issuedfor the relevant assessment year,- (a) if four years have elapsed from the end ofthe relevant assessment year, unless the casefalls under sub- clause (a) or clause (c); (ii) if four years, but not more than sixyears, have elapsed from the end of therelevant assessment year unless the incomechargeable to tax which has escaped assessmentamounts to or is likely to amount to one lakhrupees or more (for that year) (iii) if seven years, but not more than sixteenyears, have elapsed from the end of therelevant assessment year, unless the income inrelation to any asset (including financialinterest in any entity) located outside India,chargeable to tax has escaped assessment ) Explanation - In determining income chargeableto tax which has escaped assessment for thepurposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply asthey apply for the purposes of that section) (2) The provisions of sub-section (1) as to theissue of notice shall be subject to theprovisions of Section 151. (3) If the person on whom a notice underSection 148 is to be served is a person treatedas the agent of a non-resident under Section163 and the assessment, reassessment orrecomputation to be made in pursuance of thenotice is to be made on him as the agent ofsuch non-resident, the notice shall not beissued after the expiry of a period of (six)years from the end of the relevant assessmentyear. 28. Last date for invoking Section 148 forthe Assessment Year 2008-09 express only on31/03.2015 and for the Assessment Year 2009-10on 31.03.2016 since the impugned notice aredated 17.03.2013, they are well within time. 29. Had there been a finding given on merits that there wasno case for escaped assessment for the respective assessmentyears in response to Section 148 notice issued for the 1[st] timeon 7.3.2011, it can be said that the 2[nd] notice dated 17.5.2015under Section 148 would have been barred and therefore therewere no reasons for invoking Section 148 again. 30.Therefore, the respondents are not precluded frominvoking Section 148 of the Income Tax Act, 1961 for the 2[nd] timeas the issue as to whether income had escaped assessment or notwas decided by the Commissioner of Income Tax (Appeals) onmerits. It was pointed out that there a mandatory failure by theand further re-assessment orders dated 31.12.2011 were set aside. 31. Therefore, the impugned notices were not only in timebut also in accordance with law. Therefore, the consequentialimpugned orders passed by the respondent are sustainable andcannot be quashed. Therefore these writ petitions are liable tobe dismissed. 32.It is noticed that the dispute pertains to the assessmentyear 2008-09 and assessment year 2009-10. The re-assessmentproceedings have been considerably delayed partly due to thelapse on the part of the respondents on an earlier occasion https://hcservices.ecourts.gov.in/hcservices/ which resulted in the orders of the Commissioner of Income Tax(Appeals) on 12.11.2013 and partly on account of the petitionerdue to pendency of the present writ petitions. 33. In view of the above, the respondent is directed tocomplete the proceedings within a period of 3 months from thedate of receipt of a copy of this order in accordance with law.The writ petition stands dismissed with the above observation.No costs. Consequently connected miscellaneous petitions areclosed. 32.It is noticed that the dispute pertains to the assessmentyear 2008-09 and assessment year 2009-10. The re-assessmentproceedings have been considerably delayed partly due to thelapse on the part of the respondents on an earlier occasion https://hcservices.ecourts.gov.in/hcservices/ which resulted in the orders of the Commissioner of Income Tax(Appeals) on 12.11.2013 and partly on account of the petitionerdue to pendency of the present writ petitions. 33. In view of the above, the respondent is directed tocomplete the proceedings within a period of 3 months from thedate of receipt of a copy of this order in accordance with law.The writ petition stands dismissed with the above observation.No costs. Consequently connected miscellaneous petitions areclosed. Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant RegistrarkkdTo1.The Income Tax Officer, Non-Corporate Ward – 16(4), 142, MG Road, Chennai – 34.2.The Commissioner of Income Tax Appeals-IV(4), 5[th] Floor, New Block No.121, Mahatma Gandhi Road, Chennai. -34.+1cc to M/s.Hema Muralikrishann, Advocate Sr.105130W.P.Nos.29005 & 29006 of 2015and M.P.Nos.1 & 1 of 2015 ppa[co]srg 06/02/2020 https://hcservices.ecourts.gov.in/hcservices/