Wp/14037/2019 Of Sri Deepak Dhanaraj v. The Income Tax Officer

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28 DAY OF MAY, 2019° BEFORE, THR HON’BLE MRS.JUSTICEK S.SUJATHA W.P.No.14037/2019 (TIT) BETWEEN : SRI DEEBEPAK DHANARA»/O LATE CAPT. R.J.DHANRAJ>AGED ABOUT 51 YEARS|R/AT No.963, 8[‘L]MAIN$[‘T]BLOCK, KORAMANGALA|BANGALORE-560034. .. PETITTIONER (BY SMT VANI.H., ADV.) AND : THE INCOME TAX OFFICKBRCIRCLE 4[3][1], BMTC BUILDING|80 FEET ROAD, 6[‘T]BLOCKKORAMANGALA>BBENGALURU-560095._. RESPONDENT. (BY SRI K.V.ARAVIND, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND22", OF THERE CONSTITULION OF INDIA PRAYING TOSET ASITHR ASSKBSSMBNT ORDEBR DATBRD 24.12.9018 FOR TASSESSMENT YEAR 2016-17 PASSED UNDER SECTION 148[3].OF THR ACT BY RBSPONDEBNT VIDEK ANNBXURE-K AND THCONSEQUENT DEMAND NOTICE DATED 24.12.2018 ISSUED|UNDER SECTION 156 VIDE ANNEXURE-L AND ETC., THIS PETITION HAVING BBEN HBARD AND RESERVED|ON|26.04.2019, COMING ON FOR PRONOUNCEMENT OF)ORDER THIS DAY,S.SUJATHA J..PASSBD THR FOLLOWING: | -9.- ORDER The petitioner has challenged the assessmentorder dated 24.12.2018 relating to the assessment year2016-17 passed under Section 143]/3]| of the Income TaAct, 1961 |'Act' for short] and the consequent demandnotice dated 24.12.2018 issued under Section 156 oftthe Act,inter altaChallenging the recovery notice dated23.02.2019 issued by the respondent to CorporationBank, Koramangala-PBB, Bengaluru. 2.The petitioner is an assessee borne on the)files of the respondent, has been subjected to tax onincome. It is submitted by the petitioner-assessee thathe has filed a return of income on 30.03.2018 relatingto the assessment year 2016-17, offering to tax thecapital gains along with other sources of income. Thesaid return is held to be a defective return. It 1s/submitted that the petitioner filed a revised return on18.09.2018 declaring the long term capital gains and -3- claiming deduction under Section 48 and exemptionunder Section o4F of the Act. It is the grievance of thepetitionerthat|the.respondentwithoutprovidingsufficient opportunity of hearing had proceeded to pass—the impugned assessment order under Section 143]/3] ofthe Act sans considering the return and the revisedreturn V1S-QA-VIStheclaimsmade.towardsdeduction/exemption under Sections 48 and 94F of theAct. 3.Learned counsel Smt.Vani.H, appearing forthe petitioner would contend that the order impugned isarbitrary and cannot be approved for lack of reasons.Non-considerationoT the.claimsmadetowardsdeduction/exemption by the petitioner-assessee depictsnon-application of mind by the respondent. Therectification application filed by the petitioner also hasremained unconsidered. On this ground, it was arguedthat the alternative remedy of statutory appeal is no bar -4- to invoke the writ jurisdiction. Reliance was placed onthe judgment of the Hon'ble Apex Court in the case ofAssistant.Commissioner,CommercialTaxDepartment, Works Contract and Leasing, Kota V/s.Shukla and Brothers[1], as well as on the DivisionBench Ruling of this Court inWipro Limited andOthers V/s. The Deputy Commissioner of Income Taxand Others[2] 4Learned counsel appearing for the Revenuewould contend that the two lapses committed by thepetitioner namely, filing the original return belatedly on30.03.2018 relating to the assessment in question beingnot a valid return under Section 139]/1] of the Act, thefiling of revised return would not arise. Even otherwise,the revised return filed on 18.09.2018 is time barred in terms of Section 139/95] of the Act. Such void returncannot be taken cognizance by the respondent in 1 [2010] 4 SCC 785pLAWS|KAR] 2015 3 497| -5- concluding the assessment under Section 143]/3] of theAct. Reliance is placed on the judgment of the Hon'bleApex Court in the case ofGoetze [India] Ltd., V/s.Commissioner of Income Tax[#]>? 5.|havecarefullyconsideredtherival submissions of the learned counsel appearing for theparties and perused the material on record. 1 [2010] 4 SCC 785pLAWS|KAR] 2015 3 497| -5- concluding the assessment under Section 143]/3] of theAct. Reliance is placed on the judgment of the Hon'bleApex Court in the case ofGoetze [India] Ltd., V/s.Commissioner of Income Tax[#]>? 5.|havecarefullyconsideredtherival submissions of the learned counsel appearing for theparties and perused the material on record. 6.Thesolequestionthat|arisesforconsiderationbeforethisCourt1S|whetherthe|assessment order impugned passed under Section143]3] of the Act is justifiable or warrants interferenceby this Court? T.Ordinarily, this Court would have relegatedthe petitioner-assessee to avail the statutory remedy ofappeal available under the Act provided the principles ofnatural justice are adhered to. AS could be seen fromthe order impugned, the respondent has not whispered#LAWS|SC]| 2006 3 116) -6- about the revised return filed by the assessee exceptobserving that the returns filed by the assessee wereinvalidated being defective returns. If that being theposition, no opportunity was provided to the petitionerunder Section 139]9]} of the Act to remove the detects inthe returns pointed out by the Assessing Officer nor anopportunity was provided to file a return pursuant tothe notice issued under Section 142]/1] of the Act. Evenassuming that the arguments of the learned counsel forthe Revenue that no revised returns could be acceptedenlarging the claim of deduction/exemption beyond thetime prescribed under the Act, it is sine-qua-non for theAssessingOfficer.TO consider.theclaimsoT|deduction/exemption made by the petitioner-assesseeand thereafter to return the said claims if the assessee|is not entitled to the same by assigning the reasons. Theimpugned assessment order prima-facie establishesthat the deduction claimed under Section 54F of the Actis not considered while computing the taxable turnover. -~Tf- This would certainly indicates the non-application ofmind by the respondent. 8.At this juncture, it is desirable to refer to therelevant passages of the Hon'ble Apex Court in the case oT|Shukla and Brothers, supra, and the same areextracted hereunder: “10. The increasing institution of casesin all Courts in India and its resultant burden|upon the Courts has invited attention of all|concerned.in thejusticeadministrationsystem. Despite heavy quantum of cases inCourts, in our view, it would neither be|permissible nor possible to state as a|principle of law, that while exercising powerof judicial review on administrative action|and more particularly judgment of courts in|appeal before the higher Court, providing ofreasons can never be dispensed with. The.doctrine of audi alteram partem has three|basic essentials. Firstly, a person againstwhom an order is required to be passed or|whose rights are likely to be affected|adversely must be granted an opportunity ofbeingheard.secondly,the|concerned|authorityShouldprovide(Ofairandtransparentprocedureandlastly,the|authority concerned must apply its mind and|dispose of the matter by a reasoned or|speaking order. This has been untformly.applied by courts in India and abroad. 12. In exercise of the power of Judicialreview,theconceptof|reasonedorders/actions has been enforced equally by the foreign courts as by the courts in India.|The administrative authority and tribunals|are obliged to give reasons, absence whereofcould render the order liable to judicialchastise. Thus, it will not be farfrom absolute|principle of law that the Courts should recordreasons for its conclusions to enable the|appellate or higher Courts to exercise thelirjurisdiction appropriately and in accordancewith law. It is the reasoning alone, that can|enable a higher or an appellate court to|appreciate the controversy in issue in its|correct perspective and to hold whether the|reasoning recorded by the Court whose order|is impugned, is sustainable in law and|whether it has adopted the correct legal|approach. To sub-serve the purpose ofjustice|delivery system, therefore, it is essential that|the Courts should record reasons for its|conclusions, whether disposing of the case at|admission stage or after regular hearing. 13. At the cost of repetition, we maynotice, that this Court has consistently taken|the view that recording of reasons 1s an|essential feature of dispensation ofJustice. A|litigant who approaches the Court with any|grievance in accordance with law is entitledto know the reasons for grant or rejection ofhis prayer. Reasons are the soul of orders.|Non-recording of reasons could lead to dualinfirmities; firstly, it may cause prejudice to|the|affectedpartyand|secondly,INorc particularly,hamperthe|properadministration ofJustice. These principles are|not only applicable to administrative or|executive actions, but they apply with equal|force and, in fact, with a greater degree ofprecisiontojudicialpronouncements.Ajudgment without reasons causes prejudice tothe person against whom it is pronounced, as|that litigant is unable to know the ground|which weighed with the Court in rejecting his|claim and also causes impediments in his.taking adequate and appropriate grounds|before the higher Court in the event of|challenge to that judgment. Now, we may|refer to certain judgments of this Court as|well as of the High Courts which have taken|this view. 14, The principle of natural justice hastwin ingredients; firstly, the person who 1Sslikely to be adversely affected by the action ofthe authorities should be given notice to show|cause thereof and granted an opportunity ofhearing and secondly, the orders so passed|by the authorities should give reason for|arriving at any conclusion showing proper|application of mind. Violation of either of them|could in the given facts and circumstances ofthe case, vitiate the order itself. Such rule|being applicableto.theadministrativeauthorities|certainlyrequiresthatthejudgment of the Court should meet with this.requirement withhigherdegreeof|satisfaction. The order of an administrative|authority may not provide reasons like a|judgment but the order must be supported bythe reasons of rationality. The distinction| -10 - | betweenpassingof|an.orderby|anadministrative or quasi-judicial authority has|practically extinguished and both are requiredto pass reasoned orders.” QOThus, it is clear that recording of “reasons” is sine-qua-non for arriving at a conclusion by the quasi-judicial authority and it is essential to adopt, to sub-serve the purposes of justice delivery system. Thereasons are the soul and heartbeat of the orders withoutwhich the order is lifeless and void. Where the reasons|are not recorded in the orders it would be difficult for|the Courts to ascertain the minds of the authorities|while exercising the power of judicial review. 10,It is well settled legal principle that there isno bar to invoke the writ jurisdiction against a palpableillegal order passed by the Assessing Authority incontravention of the principles of audi alteram partem.On this ground alone, the order impugned cannot beapproved. There is no cavil with the arguments of thelearned counsel for the respondent placing reliance on -|]]-| sine-qua-non for arriving at a conclusion by the quasi-judicial authority and it is essential to adopt, to sub-serve the purposes of justice delivery system. Thereasons are the soul and heartbeat of the orders withoutwhich the order is lifeless and void. Where the reasons|are not recorded in the orders it would be difficult for|the Courts to ascertain the minds of the authorities|while exercising the power of judicial review. 10,It is well settled legal principle that there isno bar to invoke the writ jurisdiction against a palpableillegal order passed by the Assessing Authority incontravention of the principles of audi alteram partem.On this ground alone, the order impugned cannot beapproved. There is no cavil with the arguments of thelearned counsel for the respondent placing reliance on -|]]-| the judgment of the Hon'ble Apex Court in|Goetze|[India] Ltd., supra, that no claim for deductionotherwise than, by filing a revised return can beconsidered but not in the absence of Assessing Officeranalyzing, adjudicating and arriving at a decision byrecording the reasons. It is apparent that no reasonsare torthcoming for rejecting the revised returns as wellas the claims made under Section 54 F ot the Act. Sucha perfunctory order passed by the assessing officercannot be held to be justifiable. — 11.Hence, for the aforegoing reasons, without.expressing any opinion on the merits or demerits of theCasc,theOrder|impugneddated24.179 9018altAnnexure-K and the consequent demand notice dated24.12.9018 issued under Section 156 oft the Act at!Annexure-L as well as the recovery notice dated22.02.2019 at Annexure-N issued by the respondent arequashed. The proceedings are restored to the file of the respondent to re-consider the matter and to arrive at adecision aiter providing an opportunity of hearing to thepetitioner, assigning valid reasons as aforementioned. 12)The petitioner shall appear before the|respondent-Assessing Officer on 06.06.2019 withoutexpecting any notice. The respondent shall provide anopportunity of hearing and conclude the assessment inan expedite manner preferably within a period of fourweeks from the date of appearance of the petitioner, asaforesaid. All rights and contentions of the parties are leit.open. Writ petition stands disposed of in terms of the. above. NC. Sd/-.JUDGE.