Wa/219/2015 Of M/S. Vardhman Metals v. Income Tax Officer

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26 DAY OF OCTOBER 2016) PRESENT THE HON’BLE MR.JUSTICE JAYANT PATEL ANT) THR HON’BLE MR.JUSTICK ARAVIND KUMAR| ;WRIT APPEAL NO.219 OF 2015(TIT) BETWEEN: M/S. VARDHMAN METALS—OMKAR HOUSE, NO. 8/1.4TH CROSS, KALASIPALYAM NEW EXTENSION,BANGALORE-560 OO?|RBEPRBSEBNTBD BY ITS PROPRIBTOMR. DEVI CHAND KOTHARI»/O SHA POONAMCHAND GALBAJIAGED ABOUT 44 YEARS _ APPELLANT| (BY SRI.LHARISH V 8, ADVOCATE) AND: INCOME TAX OFFICERWARD 1(4), HMT BHAVAN,BANGALORE-560 032| _ RBSPONDENT (BY SRI.K V ARAVIND, ADVOCATE) THIS WRIT APPEAL IS FILED U/S 4 OF THEKARNATAKA HIGH COURT ACT PRAYING TO SBT!ASIDE THERE ORDER PASSED IN THE WRIT PRTITIONO.14671/2014 DATED 11/12/2014. | THIS APPBAL COMING ON FOR PRELIMINARY|HEARING THIS DAY,JAYANT PATEL J., PASSED THE|KHOLLOWING: ORDER Admit. 2. Mr.K.V.Aravind, learned Counsel waives noticeof admission. 3.|Withthe.consent.OT learnedAdvocatesappearing for both the sides, the appeal is finally heard. 4. The present appeal is directed against the orderdated 11.12.2014 passed by the learned Single Judge ofthis Court in W.P.No.14671/2014 whereby the learnedsingle Judge for the reasons recorded in the order hasdirected the petitioner to approach before the Appellate Authority within two months as per the provisions ofsection 146(a) of the Income Tax Act. 5. We have heard Mr.V.S.Harish, learned Counselappearing for the appellant and Mr.K.V.Aravind, learnedCounsel appearing for the respondent. 6. As such the learned Counsel appearing for theappellant has brought to our notice that the presentmatter is covered by the decision of the Division Benchof this Court dated 14.08.2015 in W.A.No.218/2015,.whereby the Division Bench of this Court, for thereasons recorded in the order has allowed the appealand he prays that similar order may be passed by thisCourt. /. Whereas Mr.K.V.Aravind, learned Counselappearing for the respondent submitted that he has no.objection if similar order is passed. However, hesubmitted that the observations made at paragraph-9 in the earlier order dated 14.08.2015 be modified byobserving that the matter is remanded, since it was acase of breach of principles of natural justice and.therefore he submitted that this Court may take adifferent view. 8. We may record that this Court in the abovereferred W.A.No.218/2015 has observed thus: “This is an appeal filed by the assessee against|the judgment and order dated 11.12.2014)passedby|thelearnedsingleJudge1nNW.P.No.14670/2014whereby|thepetitionchallenging the notice under Section 148 of the)Income Tax Act, 1961 (for short ‘the Act’) has)been dismissed on the ground of availability of|alternative remedy. D |The briet facts of this case are that|for the assessment year 2006-07 the appellant|had filed its return of income, which was/accepted under Section 143(1) of the Income Tax|Act, 1961 (for short ‘the Act) on 14.06.2007. subsequently, on 28.03.2013, notice under)section 148 of the Act was issued for re-opening |of the assessment. In response to the same, the |appellant requested the respondent to treat the)earlier return filed as the return filed in response|to the notice issued under Section 148 of the.Act. The appellant also prayed for furnishing the |reasons for issuance of notice under Section 148.of the Act. Bven when no reason for the.issuance of the notice was furnished to the.appellant, the Assessing Officer commenced|proceedings for re-assessment of the income of)the assessee/appellant for the said assessment)year and issued questionnaire under Section|142(1) of the Act. 3.From the questionnaire issued to theassessee, it appears that re-opening of the,assessment was on the basis ot statement.recorded by the Income Tax authorities of someother person,which statement was never.furnished to the appellant. The appellant, thus,|contends that besides the non-furnishing of the)TEeEaSONforre-opening the.assessment, 3.From the questionnaire issued to theassessee, it appears that re-opening of the,assessment was on the basis ot statement.recorded by the Income Tax authorities of someother person,which statement was never.furnished to the appellant. The appellant, thus,|contends that besides the non-furnishing of the)TEeEaSONforre-opening the.assessment, principles of natural justice were also not,complied in the present case in as much as the)appellant was not even furnished the statement, which was required to be explained by the.appellant before the Assessing Officer. 4SrK.V.Aravind,learnedcounsel|appearing for the respondent has, however,|submitted that since the re-assessment order.has now been passed on 31.01.2014, the same)can be challenged in appeal and, as such)dismissal of the writ petition on the ground of)availability of alternative remedy is perfectly|justified. 5We have heard learned counsel for|the parties and perused the record. 6. The question of non-furnishing the)reasons for re-opening an already concludedassessment goes to the very root of the matter.After filing of the return in response to the noticeissued under Section 148 of the Act or on.request of the assessee requesting that the, return of income initially filed be treated as a.return of income filed in response to such notice,|the assessee is entitled to be furnished the.reasons for such re-opening, which can also be)challenged independently. Since such reasons)had not been furnished to the appellant, even|though a request for the same had been made,|we are of the opinion that proceedings for the re-assessment could not have been taken further.on this ground alone. TS|Besides this, it is not disputed that,the statement of some other person which wasrecorded and the appellant was asked to explain|the same, was itself not furnished to the|appellant-assessee. As such, besides non-furnishing of reasons for re-opening, there was)also gross violation of principles of natural)justice and in view of the aforesaid, we are of the opinion that writ petition against the _ rassessment order dated 31.01.2014 ought to)have been entertained and that dismissal of the.writ petition on the ground of availability of) alternative remedy was not justified in the facts|of the present case. | 8.|since we are of the opinion that the)re-opening of assessment under Section 143 of)the Act was itself bad in law, we set-aside theorder passed by the writ Court and as well as there-assessmentorderdated31.01.2014.Accordingly,|this appeal as well as the writpetition stand allowed. QO.However, it may be observed that the respondent shall be at liberty to proceed in thematter, in accordance with law, after furnishingreasons for issuance of notice under Section148 of the Act, if law so permits. No order as to)costs. All pending applications stand consignedto file.” 9. Two relevant aspects are worth recording. One is that in the above referred order, the impugned order of the learned Single Judge was dated 11.12.2014 thatis the same date and the number of the writ petitionwas 14670/2014, whereas in the present case, numberof the writ petition is 14671/2014. Further theassessment year was 2006-2007 and the notice underSection 148 of the Act issued in the said case was on|28.03.2013, whereas in the present case it has beenissued on 27.03.2013. £=xAs the fact situation are thsame, we are not inclined to take a different view as.contended by learned Counsel for the respondent, sincethe above referred decision of the Division Bench of thisCourt dated 14.08.2015 is binding on us.| 10. In view of the aforesaid, following order:| The re-opening of the assessment under Section143 of the Income Tax Act was itself bad in law. Hence,we set aside the order passed by the learned SingleJudge as well as the reassessment order dated 31.01.2014. Accordingly the appeal as well as the writpetition shall stand allowed. 10. In view of the aforesaid, following order:| The re-opening of the assessment under Section143 of the Income Tax Act was itself bad in law. Hence,we set aside the order passed by the learned SingleJudge as well as the reassessment order dated 31.01.2014. Accordingly the appeal as well as the writpetition shall stand allowed. 11. However it may be observed that therespondent shall be at the liberty to proceed in thematter in accordance with law, aiter furnishing reasonsfor issuance of the notice under Section 148 of the!Income Tax Act, if law permits. No order as to costs. 12. In view of the disposal of the main appeal, IA 1/2015 would not survive and shall stand disposed of. Sd/-.JU DGE Sd/-.JU DGE