Wp/21948/2011 Of M/S.satyam Computer Services Limited v. Additional Commissioner Of Income Tax

HON’BLE SRI JUSTICE GODA RAGHURAMandHON’BLE SRI JUSTICE N. RAVI SHANKAR WRIT PETITION Nos.21948 and 21950 of 2011 COMMON ORDER:- (Per HON’BLE SRI JUSTICE N. RAVI SHANKAR) The parties to both these writ petitions are same and havingregard to the similar points raised in both, they can be disposed ofby this common order. 2. Both these writ petitions pertain to grant of further time forcompletion of income tax assessments of a software companycalled Satyam Computer Services Limited in respect of twoassessment years (AY). W.P.No.21950 of 2011 pertains to AY2002-2003 and W.P.No.21948 of 2011 pertains to AY 2007-2008. The relief claimed in W.P.No.21950 of 2011 is as follows. “a. extend the time limit prescribed in S.153 of the Income Tax Act, 1961 for completion of assessment for AY 2002-03 i.e.19-08-2011 by 6 months from the date of Petitioner obtainingaccess to the documents in the custody of the Central Bureauof Investigation (CBI); b. direct the Assessing Officer to pass an Assessment Orderonly after giving sufficient opportunity to the Petitioner tofurnish all the necessary information and detailed explanationscalled for by the Assessing Officer after the Petitioner obtainsdocuments under the custody of Central Bureau ofInvestigation (CBI) and a reasonable time thereafter. c. pass such other order(s) as this Hon’ble Court deems fitand proper in the extraordinary circumstances of the case inthe interests of justice.” A similar relief is claimed in W.P.No.21948 of 2011 also in respectof AY 2007-2008. Satyam Computers company subsequentlywent into trouble and it is represented that it was taken over byanother company called Mahindra and it is now known asMahindra Satyam. This latter company is said to be the petitionerin both these writ petitions. 3. The case of the petitioner is this. For the AY 2002-2003 andalso for the AY 2007-2008 Satyam Computers filed its returnsunder the provisions of the Income Tax Act, 1961 (for short Act). The assessing authority reopened the assessments for both theyears on certain grounds and called for additional information inrespect of deductions and other claims made by SatyamComputers. It is the version of the petitioner that withoutcompleting the assessments or reassessments within the timeprescribed under the Act, the assessing authority also ordered aspecial audit of accounts for both the assessment years withoutany basis. 4. It is then stated that the petitioner also challenged the actionof the assessing authority in ordering special audits for the abovetwo years by filing W.P.No.17526 of 2011 in respect of AY 2002-2003 and W.P.No.17518 of 2011 in respect of AY 2007-2008 andthey are pending in this court. It is also brought to our notice thatthe petitioner also filed W.P.No.19622 of 2011 and W.P.No.23255of 2011 challenging the assessment of fictitious income and onother points and they are also pending in this court. Sri K.VivekReddy the learned counsel for the petitioner and Sri J.V.Prasadthe learned Standing Counsel for the Income Tax Department haveargued these two writ petitions with the plea that they can bedisposed of independently notwithstanding the pendency of theaforesaid four other writ petitions. 5. The grievance of the petitioner is that after reopening of theassessments and after receipt of the special audit reports, theassessments in respect of both the assessment years were to becompleted by 19.08.2011 but without doing that the assessingauthority sent further letters dated 23.06.2011, 24.06.2011,04.07.2011 and 27.07.2011 separately to the petitioner calling upon it to furnish certain additional information in respect of both theassessment years in question. 5. The grievance of the petitioner is that after reopening of theassessments and after receipt of the special audit reports, theassessments in respect of both the assessment years were to becompleted by 19.08.2011 but without doing that the assessingauthority sent further letters dated 23.06.2011, 24.06.2011,04.07.2011 and 27.07.2011 separately to the petitioner calling upon it to furnish certain additional information in respect of both theassessment years in question. 6. It must be noted here now that following detection of somealleged fraud in fudging of accounts and embezzlement by theprevious management of Satyam Computers, the Central Bureauof investigation (CBI) investigated the matter and filed chargesheet against some of the persons who were then in managementof the said company in a special court at Hyderabad for variousoffences. It is the plea of the petitioner that the CBI has seizedthe material records which contain the information called for by theassessing authority for both the assessment years and they havebeen deposited by the said agency in the said court trying thecriminal case while some of the documents are with it. It is thefurther plea of the petitioner that some of the records have beenseized by the Directorate of Intelligence also, and the CentralBoard of Direct Taxes has also dealt with the matter and passedcertain orders regarding the assessments of Satyam Computersand the assessing authority is acting in violation of those ordersbut it is not necessary to go into the same having regard to thereliefs claimed. 7. The main plea of the petitioner i.e. the presentmanagement of Mahindra Satyam is that it is not in a position toget the information sought for by the assessing authority andproduce the same before it as the entire record containing thatinformation has been seized by the CBI and produced before thecriminal court and also a part of it is with the CBI itself. Ittherefore says it requires considerable time to get the materialrecords from the court and the CBI to furnish the informationcalled for by the assessing authority and it cannot furnish theinformation overnight. Its grievance is that if it is not given anopportunity to get that record and file the necessary information before the assessing authority the latter may pass orders ofassessment or reassessments and that would result in prejudiceto it. 8. The petitioner says that since the time for completion of theassessments for both the AYs 2002-2003 and 2007-2008 expiresby 19.08.2011, the time limit for the assessing authority tocomplete the assessments for both the years should be extendedby this court by six months from the date on which the petitionerobtains access to the documents in the custody of the CBI/specialcourt and other agencies mentioned by the petitioner. The otherconsequential relief claimed is that the assessing authority shouldbe directed to pass the assessment orders only after givingsufficient opportunity to the petitioner to produce the information/record called for by the assessing authority. These are the tworeliefs claimed in each of these writ petitions and they are alreadyset out in para-2 of this order. 8. The petitioner says that since the time for completion of theassessments for both the AYs 2002-2003 and 2007-2008 expiresby 19.08.2011, the time limit for the assessing authority tocomplete the assessments for both the years should be extendedby this court by six months from the date on which the petitionerobtains access to the documents in the custody of the CBI/specialcourt and other agencies mentioned by the petitioner. The otherconsequential relief claimed is that the assessing authority shouldbe directed to pass the assessment orders only after givingsufficient opportunity to the petitioner to produce the information/record called for by the assessing authority. These are the tworeliefs claimed in each of these writ petitions and they are alreadyset out in para-2 of this order. 9. The respondent filed separate counter affidavits resistingboth the writ petitions. It did not dispute the facts stated by thepetitioner regarding reopening of the assessments and ordering ofspecial audits and the letters said to have been sent by theassessing authority to Satyam Computers or the petitioner callingfor information for both the assessment years and also the specialaudit reports. The respondent however justified reopening of theassessments, ordering of the special audits and also the sendingof communications calling for additional information. Sri J.V.Prasad basing on the pleas of the respondent pointed outthat in respect of AY 2002-2003 the assessing authority originallyissued the letter dated 27.03.2009 calling for certain additionalinformation and the Satyam Computers already furnished it andlater on certain clarifications were called for through subsequent letters. 10. The version of the respondent is that it initially issuednotices dated 27.03.2009 in respect of both the assessment year2007-2008 also calling for additional information and the petitionercompany gave the information and therefore the petitionercompany’s present plea that it requires the records from the CBIand the special court to give clarifications is an invented one andcannot be accepted. The respondent in its counters stated thatthe petitioner company gave information in part and in piecemealon various dates from 26.08.2009 to 02.08.2011 in respect of boththe assessment years and gave their details also and the presentwrit petitions are filed only to drag on the matter. It is also urgedthat in a case like this there is no provision under the Act toextend time for completion of the assessment which is fixed by thestatute and this court cannot under Article 226 of the Constitutionextend the time for giving opportunity to the petitioner. 11. Subsequently Sri K.Vivek Reddy filed certain additionaldocuments in both the matters to support his contention or showjustification for grant of the reliefs claimed. 12. In the light of the rival contentions it has now to be seenwhether this court can grant the relief claimed by the petitioner inboth the writ petitions and extend the time for completion ofassessments as urged by it and that is the point in both thematters. 13. We have at length set out the pleas of the petitionercompany as Sri Vivek Reddy tried to persuade us to see thejustification for grant of reliefs prayed for by the petitioner. Now togo into this aspect of justification or merits we have to first seewhether this court has got the power under the Act to grant such an extension. Sri Vivek Reddy says that this Court has got suchpower under the Act and he also pointed out that this court has gotinherent powers under Article 226 of the Constitution to extend thetime. We have now to first see whether the said contentionsregarding power or jurisdiction of this court can be accepted. 13. We have at length set out the pleas of the petitionercompany as Sri Vivek Reddy tried to persuade us to see thejustification for grant of reliefs prayed for by the petitioner. Now togo into this aspect of justification or merits we have to first seewhether this court has got the power under the Act to grant such an extension. Sri Vivek Reddy says that this Court has got suchpower under the Act and he also pointed out that this court has gotinherent powers under Article 226 of the Constitution to extend thetime. We have now to first see whether the said contentionsregarding power or jurisdiction of this court can be accepted. 14. In the course of arguments Sri Vivek Reddy relied uponSection 153 of the Act which deals with time limit for completion ofassessments and reassessments and the extension of time limitand argued that the said provision empowers this court to extendthe time for completion of assessments. He placed reliance uponSection 153(3)(ii) of the Act to show that in the circumstancespleaded by the petitioner this court under that provision can extend the time. That provision reads as follows. “Section 153(3)(ii): The provisions of sub-sections (1), (1A),(1B) and (2) shall not apply to the following classes ofassessments, reassessments and recomputations whichmay, subject to the provisions of sub-section (2A), becompleted at any time— (i) Omitted by the Finance Act, 2001, w.e.f. 1-6-2001. (ii) where the assessment, reassessment or recomputation ismade on the assessee or any person in consequence of or togive effect to any finding or direction contained in an orderunder section 250, 254, 260, 262, 263, or 264 or in an order ofany court in a proceeding otherwise than by way of appeal orreference under this Act; 15. It may be noted that the first part of clause (ii) of Section153(3) says that where reassessment is to be carried out inconsequence of or to give effect to any finding or directioncontained in an order under Sections 250, 254, 260, 262, 263 or264 of the Act the assessment can be completed at any time. Sections 250, 254, 260, 262, 263 and 264 of the Act deal withappellate and revisional remedies provided under the Act. We arenot concerned with this first part as it is not applicable here. Thenthe second part of Section 153(3)(ii) says that an assessment or reassessment can be completed at any time to give effect to anyfinding or direction contained in an order of any court in aproceeding otherwise than by way of appeal or reference underthis Act(emphasis supplied). 16. The contention of Sri Vivek Reddy is that the present twowrit petitions can be said to be proceedings under theaforementioned second part of Section 153(3)(ii) of the Act andtherefore this court having regard to the pleas of the petitioner canextend the time and grant the reliefs prayed for as there is,according to him, every justification for extension of time. On theother hand, the contention of Sri J.V.Prasad is that these writpetitions are filed only for the relief of extension of time andtherefore they cannot fall under the above provision unless theyraise some question or questions regarding the assessments andthe court gives a finding or direction as to how the saidassessments are to be carried on or effected. He also pointed outthat no relief is claimed in the writ petitions challenging theassessments or reopening of assessments on any ground exceptseeking extension of time and that is a minus point for thepetitioner. 17. Sri J.V. Prasad relied upon two decisions of Supreme Courtin support of his contention. The first is the one given in RajinderNath v. CIT[[1]]and the second is the decision given in HopeTextiles Ltd. v. Union of India[[2]]. This second decision is directlyon the point. In this second decision an order of assessment wasmade on 27.03.1974 for the AY 1971-1972 of that assessee. On21.02.1976 a reassessment notice was issued under Section 148of the Act and pursuant to the same the assessee filed a returndisclosing further losses but no orders were passed by theassessing authority till September 1981. The assessee filed a writ petition in the concerned High Court for a mandamus to theassessing authority to pass orders in pursuance of its notice butthe High Court dismissed the writ petition holding that nomandamus could be issued compelling the assessing authority tomake an order of assessment beyond the period of limitationprescribed by Section 153(3). On appeal by the assessee, theSupreme Court confirmed that order observing that sub-clause (ii)of Section 153(3) could not be understood as empowering the HighCourt to give a direction to the authority under the Act to ignore theperiod of limitation prescribed under it. 18. In the first decision, the Supreme Court held that certainfindings or observations recorded by the Appellate AssistantCommissioner could not be regarded as directions to be giveneffect to under the first part of Section 153(3)(ii) of the Act and thisis not on the point. The second decision cited by Sri J.V.Prasadwhich is on the point fully supports his contention and even a plainreading of the language of Section 153(3)(ii) of the Act supportshis contention and that stands fortified by the said decision. 19. It is true that in Hope Textiles case (2 supra) the writ petitionwas filed only for a direction to the assessing authority tocomplete the assessment beyond time and no ground was raisedexpressing about the difficulty of assessee in furnishing theadditional information called for as in the present case. TheSupreme Court had no occasion in the above case to deal with thisaspect. It is settled position that a court cannot extend the timelimit prescribed by a statute for doing of a certain act or thingunder the said statute unless some provision is made forextension of time in the statute itself and the authority which isgiven that power has wrongly refused to extend the time. In viewof this legal position, the fact that an assessee may havedifficulties of his own in furnishing information called for by the assessing authority cannot therefore be made a ground forextending the time by this court under Article 226. The merejustification for extending the time cannot also be a ground toextend the time for completion of assessment when the statutedoes not provide for it. Thus the contention of Sri J.V.Prasad based on the second decision cited by him andwhich is on the scope of Section 153(3)(ii) of the Act has to beaccepted. 20. On the other hand, Sri Vivek Reddy relied upon anotherdecision of Supreme Court given in the Director of Inspection v.Pooran Mal and Sons[[3]]in support of his contention. Thisdecision pertains to the time limit prescribed under the thenexisting Section 132(5) of the Act within which the income taxofficer has to estimate the undisclosed income relatable to theseized property and also the amount of tax payable on it plus theperson from whom it is recoverable. This decision did not pertainto extension of time for completing the assessment and it does notcover a case like this and it is distinguishable on facts. Extensionof time for completion of assessments or reassessments isprovided for under Section 153(3)(ii) of the Act and it does notcover a situation like this where the writ petition is merely filed forthe relief of extension of time. Hence Sri Vivek Reddy’scontention on this aspect cannot be accepted. 21. Then coming to the contention of Sri Vivek Reddy basedupon inherent power of this court, it may be noted that a perusal ofArticle 226 would show that though it is empowered to issuecertain prerogative writs or directions or other orders, the saidArticle nowhere says that this court has any inherent power orpass any order in the interests of justice. Thus the wording usedin Article 226, in our opinion, would show that this court is boundto act only within the four corners of the law when there is a law or statute governing a field and that even otherwise this court cannotdo anything which is not permitted by law even though there is noexpress prohibition for doing it. Hence the said contention of SriVivek Reddy is also rejected. In view of the above legal positionwe refrain from going into the merits of the matter as we cannot gointo the same. 22. It may be noted that the petitioner company has also gotremedies under the Act itself if it is aggrieved by the assessmentor reassessment orders and it can pursue those remedies. Thisapart the other four writ petitions referred to supra are stated to bepending regarding the merits of the matter. The petitioner canwork out its remedies in the said proceedings. 23. Hence both the writ petitions are dismissed as nomandamus or any other writ in the nature of mandamus can beissued to direct a statutory authority to violate a statutoryprovision or act beyond its scope and do something which is notpermitted by it. No costs. ______________________________ JUSTICE GODA RAGHURAM 23[rd] August 2011CVRK _____________________________ JUSTICE N.RAVI SHANKAR [1](1979) 4 SCC 282[2]1995 Supp (3) SCC 199[3](1975) 4 SCC 568