Wp/39371/2014 Of Mrs Chandra Devi Kothari v. Income Tax Officer

1 IN THR HIGH COURT OF KARNATAKA AT BBNGALURU DATED THIS THE 4[‘T]DAY OF FEBRUARY, 20109 BRHRORE THR HON’BLE MR.JUSTICE B.S.PATIL ;W.P.No.39371/2014 (TIT) BRBETIT MRS CHANDRA DEVI KOTHARI.W/O. DEVICHAND KOTHARI,AGED ABOUT 42 YEARS,R/AT NO.1, OMKAR VIHAR,SHARDHANAND BHAWAN ROAD,V.V.PURAM,BANGALORE -560 O04. ... PETITIONER (By Sri. HARISH V.S., ADV.) AND INCOME TAX OFFICKRWARD 9(3), 3 FLOOR,JEEVAN SAMPIGE, LIC BUILDING,SAMPIGE ROAD, MALLESHWARAM,|BANGALORE-560 003. _.. RESPONDENT (By Sri. JEEVAN J.NEERALGI, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227|OF THERE CONSTITUTION OF INDIA, PRAYING TO QUASH THIMPUGNEBED ASSBSSMENT ORDER PASSED BY THR RBSPONDENU/S.143(8) R.W. SECTION 147 OF THE INCOME TAX ACT, 1961,|DATED 30.06.2014 FOR THE ASSESSMENT YEAR 2008-09 L.E.,.ANNX-D AND CONSEQUENTIAL NOTICE OF DEMAND ISSUED BY.THE RESPONDENT, DATED 30.06.2014 FOR THE ASSESSMENT.YEAR 2009-09 I.B., ANNX-E. THIS PETITION COMING ON FOR PRELIMINARY HBARING|THIS DAY, THE COURT MADE THE FOLLOWING: ORDER 1.ori Jeevan J.Neeralgi, learned counsel is directed to takenotice for the respondent. — oD.Learned counsel for both parties submit that the matteris covered by the judgment rendered by this Court in the)connected W.P.No.39373/2014 disposed of on 29.01.2015.Hence, the matter is taken up for final disposal. 3.Petitioner is calling in question the Assessment Orderdated 30.06.2014 passed by the respondent — Income Tax)Officer exercising powers under Section 143(3) read with)section 147 of the Income Tax Act, 1961 (for short, ‘the Act’) forthe assessment year 2008-09 vide Annexure-D. Petitioner is_also challenging the consequential demand notice dated30.06.2014 produced at Annexure-E. 4Facts relevant for the purpose of this case stated in briefare that the assessee has filed her return of income for theAssessment Year 2008-09 on 14.09.2008 declaring her total|income asL2,02,390/-. The said return was accepted.| subsequently, notice under Section 148 of the Act was issued|on 30.06.2014 purporting to reopen the assessment. Inresponse, petitioner requested the respondent that the return|filed earlier could be treated as return filed in response to the|said notice. Thereafter, respondent concluded the assessment|adding a sum ofe6,91,370/- as income under the head ‘othersources’ stating that the said amount pertained to certain|shares purchased by the petitioner that had allegedly escaped|the assessment. Accordingly, tax and interest has been leviedby the respondent on the said amount. It is this order that is_challenged in the writ petition. 5.Learned Counsel for the petitioner invites the attention ofthe court to the representation/application filed by him on.31.01.2014 betore the respondent requesting to issue copy ofthe sworn statement of one Mr. Mukesh Choksi on the basis|whereof, proceedings were re-opened. It transpires that asearch had been conducted by the income tax authorities atMumbai on M/s. Mahasagar Securities and Mukesh ChoksiGroup. At that time, Mr. Mukesh Choksi had admitted to havemade accommodation entries in his books to enable the clientsto declare speculation profit/loss, shorter gains, etc., and had identified the petitioner herein and certain others as some of!the beneficiaries of the fraudulent entries/transactions byeiving a sworn statement in that regard and it is based on thesaid sworn statement of Mukesh Choksi, respondent has re-opened the proceedings. It is in this background, petitioner hadmade a request to the respondent on 31.01.2014 to provide a/copy of the sworn statement, so that petitioner could take)further course of action. identified the petitioner herein and certain others as some of!the beneficiaries of the fraudulent entries/transactions byeiving a sworn statement in that regard and it is based on thesaid sworn statement of Mukesh Choksi, respondent has re-opened the proceedings. It is in this background, petitioner hadmade a request to the respondent on 31.01.2014 to provide a/copy of the sworn statement, so that petitioner could take)further course of action. 6.It is not in dispute that petitioner was not furnished withthe copy of the statement said to have been made by Mukesh|Choksi. Petitioner was not aware of the contents of the saidstatement. However, she filed objections contending inter alia|that it was not known how a statement made by third partycould be made applicable and made basis for the proceedings|that were sought to be initiated. Petitioner also points out byway of objection that in the absence of specific allegations madeagainst her in the so-called sworn statement, the same could|not have been made basis to pass the assessment order againsther. | T.Despite such objections raised, respondent has proceededto pass the impugned order holding that an amount ofe6,51,370/- which reflected the sale proceeds of shares wasrequired to be brought to tax under the head “Other Sources ofIncome’. It is this amount which according to the findings.recorded by the respondent was attributed to the petitioner inthe so-called sworn statement given by Mukesh Choksi. 8.Thus, it is apparent that without furnishing a copy of thestatement stated to have been given by Mukesh Choksi and.without notifying the petitioner regarding basis of the)transaction that petitioner is said to have entered into withMukesh Choksi, respondent has passed the impugned order.The entire basis for the impugned order is the sworn statementof Mukesh Choksi. Unless petitioner is given opportunity tohave her say in the mater with regard to the said statement andits contents, it cannot be said that petitioner was given anopportunity of being heard in the matter. Hence, it has to beheld that the impugned order is passed without providing anyfair and reasonable opportunity of being heard to the petitioner. OQ In fact, learned Counsel for the petitioner places relianceon the judgment of the Division Bench of the Delhi High Court in the case otMR. ASHOK MITTAL VS ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER1NWP(C) No.1452/2013, wherein also|petitioner therein had specifically objected for the assessment|proceedings stating that he had no transaction with eitherMukesh Choksi or any other related companies, but the)Assessing Officer had solely proceeded on the basis of thestatement and the list provided without there being any otherinformation or details furnished to the petitioner thoughpetitioner therein had sought for such details. The High Court|of Delhi has held that there was absence of fair and reasonableopportunity and such an assessment order could not be.sustained and could be interfered with under Article 226 of theConstitution of India. 10.In the light of the facts and circumstances as adverted toabove and as the petitioner has been denied an opportunity offair hearing by providing copy of the statement and related|details regarding the alleged share amount, I am of the view)that the matter requires to be re-considered by the respondent|by providing fair and reasonable opportunity of hearing to thepetitioner and by furnishing the details/copy of the statement. based on which the impugned assessment order has been)passed. 11.|In the result, this writ petition is allowed. The impugnedorder is quashed. The matter is remitted for fresh considerationin accordance with law and in the light of the observations|made above. Learned counsel for the respondent is permitted to filevakalath within three weeks from today. PKS| Sd/-.JUDGE|