Wa/2533/2021 Of R. Savithri Naidu v. Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE MR.JUSTICE T.S.SIVAGNANAMANDTHE HON'BLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP Savithri Naidu.. Appellant Income Tax Officer,Non Corporate Ward 15(4),Aayakar Bhawan, Wanapathy Building,Room No.207, 2[nd] Floor,NO.121, N.H.Road,Chennai – 600 034. .. Respondent Prayer: Appeal under Clause 15 of Letters Patent against the orderdated 23.06.2021 in W.P.No.3523 of 2021.Prayer in W.P.No.3523 of 2021: Writ Petition filed under Article 226 of the Constitutionof India, to issue a Writ of Certiorari, calling for the recordsof the impugned order dated 29.12.2017 passed by the respondentagainst the petitioner for Assessment Year 2015-16 bearingPAN.No.ANTPS3318P and quash the same. The appellant is the writ petitioner, who challenged anorder of assessment under Section 143(3) of the Income Tax Act,1961 ["the Act" for brevity] for the assessment year 2015-16. https://hcservices.ecourts.gov.in/hcservices/ The writ petition was filed during February 2018 and the Courthaving been convinced that the appellant has made out a primafacie case had granted an order of interim stay by order dated16.02.2018. The said order continued to remain in force tillthe disposal of the writ petition by the impugned order dated23.06.2021. 2.The appellant is before us challenging the order impugnedon several grounds. Firstly on the ground that the subjectmatter of challenge is without jurisdiction as the notice underSection 143(2) of the Act was issued only on 19.09.2017 muchafter the mandatory six months period prescribed under the Act.More importantly, the learned counsel for the appellant woulddraw our attention to the arbitration which took placeconcerning immovable property at Sholinganallur. Elaboratesubmissions were made on the said issue and the learned counselhas taken us through the relevant portions of the award of theArbitral Tribunal dated 14.09.2020. It is submitted that interms of the award, a sum of Rs.23,73,34,000/- was directed tobe paid to the appellant and the appellant is also entitled tore-claim the property and/or is entitled to receive the balancesale consideration and in such event, the question of capitalgains does not arise at all. This according to the learnedcounsel for the appellant is a very vital issue which was notconsidered by the learned Single Bench. Further, it issubmitted that the purchaser Company has gone into CorporateInsolvency Resolution process pursuant to the order dated29.04.2021 passed by the National Company Law Tribunal and as a result of which the execution of the proceedings cannotgo on as on date. Further, it is contended that capital gainswill not arise because the very transaction is under dispute andwas also earlier attached by the Income Tax authorities.Therefore, the order of assessment on presumption of capitalgains was challenged by the appellant by filing a writ petitionbefore this Court. Therefore, it is submitted that the learnedWrit Court ought to have considered the jurisdictional issuesand not relegated the appellant to avail the alternate remedybefore the Commissioner of Income Tax [Appeals][CIT(A)]. 3.Mr.A.P.Srinivas, learned Senior Standing Counsel appearingfor the revenue sought to sustain the order and direction issuedby the Court and submitted that all issues can very well beagitated by the appellant before the First Appellate Authorityand all the facts can be gone into and a finding can be renderedwhich may not be possible in a writ petition when disputedquestions of fact are to be considered. 4.We have elaborately heard Mr.Vaibhav R.Venkatesh, learnedcounsel appearing for the appellant and Mr.A.P.Srinivas, learned https://hcservices.ecourts.gov.in/hcservices/ Senior Standing Counsel appearing for the respondent. 3.Mr.A.P.Srinivas, learned Senior Standing Counsel appearingfor the revenue sought to sustain the order and direction issuedby the Court and submitted that all issues can very well beagitated by the appellant before the First Appellate Authorityand all the facts can be gone into and a finding can be renderedwhich may not be possible in a writ petition when disputedquestions of fact are to be considered. 4.We have elaborately heard Mr.Vaibhav R.Venkatesh, learnedcounsel appearing for the appellant and Mr.A.P.Srinivas, learned https://hcservices.ecourts.gov.in/hcservices/ Senior Standing Counsel appearing for the respondent. 5.It is true that the remedy of appeal before the CIT(A) asagainst the order of assessment dated 29.12.2017 is an effectiveand efficacious alternate remedy. Before the First AppellateAuthority the assessee would be entitled to agitate all issueson facts as well as on law which would include the pointregarding the assumption of jurisdiction by the respondent quathe period of limitation fixed under the statute. Therefore, weare of the view that it would be better for the assessee toavail the alternate remedy considering the complicated factualsituation which has arisen in this case. We say so becausethere was a parallel round of litigation concerning the propertywhich is the subject matter of the assessment, namely, withregard to the computation of capital gains. Therefore, the saidfactual issue qua the property is the substantial matter whichrequires to be considered, more particularly, when theassessee's stand is that in terms of the award of the ArbitralTribunal dated 14.09.2020, the assessee is entitled to be paid asum of Rs.23,78,34,000/- and she is entitled to re-claim theproperty and/or is entitled to receive the balance saleconsideration and in such an event, the capital gains would notarise. More importantly the award of the Arbitral Tribunaldated 14.09.2020 has not attained finality as not only theassessee has filed a petition under Section 34 of theArbitration and Conciliation Act, 1996, but the adversarial inthe arbitration proceedings, namely, M/s.Land Mark HousingProjects Chennai Private Limited has also filed a petition toset aside the award. That apart, the NCLT has also passedorders under the provisions of the Insolvency and BankruptcyCode and the purchaser Company has gone into CorporateInsolvency Resolution process. Therefore, we are of the clearview that the result of these proceedings would definitely havean impact on the assessment under the provisions of the Actwhich is required to be considered. However, such an exercisecannot be done by us in a petition under Article 226 of theConstitution of India. At this juncture, it would be worthwhileto note the results of the Arbitral Award dated 14.09.2020 whichreads as follows: “233.In the Result: a.There shall be an award against the 1[st] Respondentalone for a sum of Rs.28,48,34,000/- towards saleconsideration and Rs.25 Lakhs towards compensation(premium) and thus, the total award amount shall beRs.28,73,34,000 (Rupees Twenty Eight Crores SeventyThree Lakhs and Thirty Four Thousand Only). b.The above said award amount of Rs.28,73,34,000/-shall carry interest at the rate of 9% per annum from 01.04.2015 to till the date of award and atthe rate of 12% per annum from the date of awardtill the date of realisation payable by the 1[st]respondent. c.There shall be an order of attachment of theproperties covered under the Exs.A13 to A16 andthere shall be a charge against the said propertyfor the award amount with interest. d.There shall be an order of injunction restrainingthe 1[st] respondent from encumbering, alienating ordisposing of the properties covered under Exs.A13to A16 until the award is fully satisfied. e.All the other claims made by the Claimantsagainst the 1[st]respondent are dismissed asindicated above. b.The above said award amount of Rs.28,73,34,000/-shall carry interest at the rate of 9% per annum from 01.04.2015 to till the date of award and atthe rate of 12% per annum from the date of awardtill the date of realisation payable by the 1[st]respondent. c.There shall be an order of attachment of theproperties covered under the Exs.A13 to A16 andthere shall be a charge against the said propertyfor the award amount with interest. d.There shall be an order of injunction restrainingthe 1[st] respondent from encumbering, alienating ordisposing of the properties covered under Exs.A13to A16 until the award is fully satisfied. e.All the other claims made by the Claimantsagainst the 1[st]respondent are dismissed asindicated above. f.The claims made against the 2[nd] respondent aredismissed. g.The counter claim made by the 2[nd] respondent isdismissed. h.The Contempt Petition M.P.7/2018 stands disposedof as indicated above. i.Miscellaneous Petition Nos.1, 3, 4 and 5 standdismissed as infructuous. j.Considering the nature of the claims, the rivalcontentions and all other circumstances, theparties are directed to bear their own cost.” 6.In terms of the award, there is an order of attachment ofthe properties and there is a charge against the said propertyfor the award amount with interest. Apart from that, there isan order of injunction restraining the first respondent, namely,the purchaser Company from encumbering, alienating and disposingof the properties. As against the disallowed claims theappellant is before this Court under Section 34 of theArbitration and Conciliation Act. As against the award infavour of the appellant and as against the dismissal of thecounter claim by the respondent before the Arbitral Tribunal,those parties are also before this Court under Section 34 of theArbitration and Conciliation Act. Therefore, any orders to bepassed pursuant to the award of the Arbitral Tribunal would havea direct impact on the assessment proceedings under the Act.Thus, for the above reasons, we agree with the ultimateconclusion of the learned Single Bench that the appellant shouldavail the alternate remedy of appeal before the CIT(A) but notfor the reasons stated therein but for the reasons assigned by us in the preceding paragraphs. us in the preceding paragraphs. 7.We note that the order of assessment which was impugned inthe writ petition is dated 29.12.2017. The writ petition wasfiled well within the period of limitation prescribed under thestatute for filing a statutory appeal and the writ petition wasdisposed of on 23.06.2021. Therefore, the period during whichthe writ petition was pending, i.e. from February 2018 till thedate of order passed in the writ petition or receipt of thecertified copy of the order has to be necessarily excluded.That apart, since the writ petition was filed immediately afterthe assessment order was passed, the time taken for filing thewrit petition also needs to be excluded for computing thelimitation. Soon after the writ petition was dismissed, theappellant had filed the present appeal and there was a delay inthe appeal getting numbered on account of certain miscellaneouspetition which had to be filed by the appellant so as to enablethe Registry to number the appeal. Therefore, the period spentbefore this Court both before the learned Single Bench as wellas before us needs to be excluded while computing limitation.Therefore, there can be no difficulty for us to make anobservation that in the event the appellant files an appealbefore the CIT(A), the appeal shall be entertained withoutrejecting the same on the ground of limitation and we grantthirty days time from the date of receipt of a copy of thisjudgment within which time the appellant shall file the appealbefore the CIT(A). As observed by us earlier, the factualmatrix need to be gone into. The matter pertaining to theproperty in question is subject matter of an award by theArbitral Tribunal and there is a challenge to certain portionsof the award and there are proceedings before the NCLT whichwould all have a direct impact on the assessment as observed.Therefore, the appellant is granted liberty to file additionaldocuments and raise additional grounds before the CIT(A) as thismaterial was not available during the assessment proceedings.If such a request is made by the appellant, the CIT(A) shallpermit the appellant to raise those grounds and decide the samesubject to just objections by the revenue on merits and not onthe entitlement of the appellant to raise additional groundswhich we have permitted. In the said appeal, the appellant isgiven liberty to file a stay petition and seek for stay of theassessment proceedings on the ground which they have mentionedbefore us in this appeal as well as in the writ petition. Sincethe appellant had the benefit of interim order since February2018 till the disposal of the writ petition on 23.06.2021, theassessment order dated 29.12.2017 shall remain stayed for aperiod of sixty days from the date of receipt of a copy of thisorder or till the disposal of the stay petition that would befiled by the appellant before the CIT(A) whichever is earlier. 8.In the result, the writ appeal stands disposed of. Nocosts. Consequently, connected miscellaneous petitions areclosed. Sd/- Assistant Registrar(CS VII)//True Copy// Sub Assistant Registrar cseToIncome Tax Officer,Non Corporate Ward 15(4),Aayakar Bhawan, Wanapathy Building,Room No.207, 2[nd] Floor,NO.121, N.H.Road,Chennai – 600 034. +1cc to Mr.A.P.Srinivas, Advocate, S.R.No.52873 W.A.No.2533 of 2021 SSV(CO)PM/01/11/2021