Wp/17229/2018 Of Jakka Srinivasulu Reddy v. The Principal Commissioner Of Income Tax - 4

1 IN THE HIGH COURT OF KARNATAKA AT BBNGALURU DATEBD THIS THE 3 DAY OF MAY, 2018 BBKREFO THR HON'BLE Mr. JUSTICE B.VBBRAPPA ;WRIT PETITION No.17229 OF 2018 (TIT) BETWEEN: JAKKA SRINIVASULU REDDY,AGED ABOUT 74 YEARS,NO.318, SRI SOUDHA, 100 FEET ROAD, INDIRANAGAR, BENGALURU —- 560 038. .. PKETITIONBR (BY SRI G.VENKATESH, ADVOCATE FORSRI SHANKAR.A., ADVOCATE) AND: 1.THE PRINCIPAL COMMISSIONEROF INCOME TAX-4,.OF INCOME TAX-4,. BMTC DEPOT BUILDING, 80 FEET ROAD, KORAMANGALA, BBENGALURU-Db60 O95 2 |THE JOINT COMMISSIONER OFINCOME TAX (OSD),INCOME TAX (OSD), CIRCLE 4(1)(1), ROOM NO.229, P FLOOR, BMTC DEPOT BUILDING,80 FEET ROAD, KORAMANGALA,BRHNGALURU — 560 O95.80 FEET ROAD, KORAMANGALA,BRHNGALURU — 560 O95. RESPONDENTS| (BY SRI K.V.ARAVIND, ADVOCATE) THIS WRIT PRTITION IS FILED UNDER ARTICLES296 AND B27 OF THRE CONSTITUIION OF INDIAPRAYING TO QUASH THE IMPUGNED ORDER GIVING:BRRRFBCT TO THE ORDER OF THERE COMMISIONBRINCOME-TAX (APPEALS) UNDER THE INCOME-TAX,ACT, 1961 FOR THE ASSESSMENT YEAR 2009-10.DATED 30.03.2018 IN ANNBXUREB-A PASSED BY THERESPONDENT NO.2 WITHOUT AFFORDING ADEQUATEOPPORTUNITY OR REPRESENTATION AND BBING|HBARD TO THR PRTITIONBER. ‘THIS PETITION COMING ON FOR PRELIMINARY|HEARING,THISDAY,THE.COURTMADETHE.FOLLOWING °: ORDER The petitioner has filed the present writ petitionseeking for writ of certiorari to quash the order dated30.03.2018 made in No.OGE/AFKPSO8&88K/A.Y.2009 10/JCIT(OSD) /C-4(1)(1)/17-18 passed by the secondRespondent-Joint Commissioner of Income-Tax (OSD)for the year 2009-10 as per Annexure-A and also thedemand notice issued under Section 156 of the Income.Tax Act, 1961 in Form No.7 dated 30.03.2018 as perAnnexure-B issued by the second respondent and writof mandamus directing the second respondent toprovide reasonable opportunity to the petitioner before passing fresh order, giving effect to the order of theCommissioner of Income-Tax (Appeals) under theIncome-Tax Act, 1961 for the assessment year 2009-10.| Do It is the case of the petitioner that thepetitioner is an individual Income-tax assessee and isa senior citizen, aged about 74 years. In respect of theassessment year 2009-10, an assessment order cameto be passed by the Assistant Commissioner ofIncome-tax, Circle 4(1)(1), Bengaluru on 28.12.2010under Section 143(3) read with Section 147 of theIncome-tax Act, 1961 (for short, the ‘Act’). In the said|assessment order, a sum of Rs.6,25,000/- wasbrought to tax in the hands of the petitioner asdeemed dividend under Section 2(22)(e) of the Act, onthe pretext that the said sum was paid by M/s.JSRConstructionsPrivateLimitedTO|M/s.SamanthuBusiness Forms Private Limited and that the petitionerhad substantial interest in both of these companies. | The total demand of tax along with interest as per thesaid assessment order was Rs.12,58,350/-. 3.)Being aggrieved by the said order, thepetitioner|preferred|statutoryappealbeforetheCommissioner of Income-tax (Appeals)-4, Bengaluruon 27.01.2017. The Appellate Authority exercisedpowers under Section 250 of the Act and passed theorder on 30.11.2017 allowing the appeal in part andrejected the ground of the petitioner on the challenge|to the legality of the re-opening of the assessment butheld that in view of the fact that the petitioner hadrunning credit balances in the books of account ofM/s.JSR Constructions Private Limited, the samecould not be treated as deemed dividend. Theassessing officer was directed to take appropriaterectificatory action in re-working the deemed dividendunder Section 2(22)(e) after verification and after givingdue opportunity to the appellant during the appeal- effect process. The order of the Commissioner ofIncome-tax (Appeals)-4, Bengaluru was served on thepetitioner on 27.12.2017. effect process. The order of the Commissioner ofIncome-tax (Appeals)-4, Bengaluru was served on thepetitioner on 27.12.2017. 4Thereafter, the petitioner received a noticedated 26.03.2018 from the second respondent statingthat the petitioner is given an opportunity of beingheard and was directed to submit the details tosubstantiate the claim as per the order of theCommissioner of Income-tax (Appeals). The notice ofthe second respondent was received by the petitioneron 28.03.2018 and by that time, the time for hearinghad already lapsed. Thereafter, the petitioner broughtto the attention of the second respondent in the letterdated 28.03.2018 filed on 29.03.2018 that the notice|itself was received only on 28.03.2018 and thepetitioner could not appear due to this reason andsoughtanotheropportunityoT beingheard.Thereafter, the petitioner was shocked to receive on 02.04.2018, the impugned order giving effect to theorder of the Commissioner of Income-tax (Appeals)dated 30.03.2018 in which the second respondent hasstated that the assessee was given an opportunity ofbeing heard vide letter dated 26.03.2018 but theassessee failed to appear on that date. Being aggrievedby the same, the petitioner is before this Court. 5.Il have heard the learned counsel for theparties to thelis 6.Sri.G.Venkatesh, learned counsel for thepetitioner contended that the impugned order passedby the second respondent is in utter violation ofprinciples of natural justice and without giving an|opportunity of being heard, the same is liable to be setAside. T.Percontra,|Sri.K.V.Aravind,|learnedstanding Counsel fairly submits that though notice ! was issued individually, opportunity of hearing wasnot given. 3S.The submission of the learned counsel forthe respondent is placed on record. Without advertingto the merits and de-merits of the case urged by thelearned counsel for the parties, it is suffice to set asidethe impugned order passed by the Authorities,remanding the matter to provide an opportunity ofhearing to the petitioner before passing the order. | QO In view of the above, the writ petition isallowed. 1)The impugned order dated 30.03.2018made in No.OGE/AFKPSO0888K/A.Y.2009-10/ JCIT(OSD) /C-4(1)(1)/17-18passedbythesecondRespondent-Joint Commissioner of Income-Tax (OSD)for the year 2009-10 as per Annexure-A is herebyquashed. 11)Consequently, the demand notice issuedunder Section 156 of the Income Tax Act, 1961 in)Form No.7 dated 30.03.2018 as per Annexure-Bissued by the second respondent is also quashed. | 111) The matter is remanded to the secondrespondent for fresh consideration after giving noticeand opportunity of being heard and pass order inaccordance with law. Iv) The petitioner is directed to appear beforethe second respondent on 11.06.2018 and the secondrespondent is directed to pass orders strictly inaccordance with law. Sd/- JUDGE dh|