Wp/39379/2014 Of Smt. Jayashree Devi Kothari v. Income Tax Officer

IN THER HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THRE 2 DAY OF FEBRUARY, 2015 BEFORE THE HON’BLE MR.JUSTICE B.S.PATILW.P.No.39379/2014 (TIT)BETWEENSmt. Jayashree Devi Kothari, |W/o Suresh Kumar Kothari,Aged about 38 years,R/at No.1, Omkar Vihar,Shardhanand Bhawan Road,V.V Puram,Bangalore-560 O04. —.. PETITIONER|(By Srt Harish.V.S., Adv.)ANDIncome Tax OfficerWard 9 (3), 3[*1]floor,Jeevan Sampige, LIC Building, sampige Road, Malleshwaram,Bangalore-560 O03. —.. RESPONDENT (By Sri. K.V. Aravind, Adv.) THIS WRIT PETITION IS FILED UNDER ARTICLES|226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING|TO QUASH THE IMPUGNED ASSESSMENT ORDER)PASSED BY THE RESPONDENT U/S.143(3) R.W SECTION:147 OF THE INCOME TAXACT, 1961, DATED 30.06.2014 FOR| THE ASSESSMENT YEAR 2007-08 LE., ANNX-C AND)CONSEQUENTIAL NOTICE OF DEMAND ISSUED BY THERESPONDENT, DTD 30.06.2014 FOR THE ASSESSMENT|YEAR 2007-08 I.E.,; ANNX-D. THIS PEHRTITION COMING ON FOR PRELIMINARHERARINGTHISDAY,THE,COURTMADETHE,FOLLOWING: ORDER 1,Learned Counsel Mr. Jeevan J.Neeralgi takes notice for the|respondent. D2Petitioner is calling in question assessment order dated|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’), for the assessment year|2007-08 vide Annexure-C and the consequential demand notice|dated 30.06.2014 issued vide Annexure-l. 4)Facts leading to this writ petition briefly stated are, that|petitioner submitted his return of income for the assessment year|2007-08 on 14.09.2008 declaring his income at Rs.1,76,920/-. Thesaid return was accepted. Subsequently, notice under Section 148 of|the Act was issued on 30.06.2014 for re-opening the assessment. In| response, petitioner requested the respondent that the return filed|earlier could be treated as return in tresponse to the notice.Thereafter, respondent concluded the assessment on 30.06.2014 by adding a sum of Rs.6,34,475/- which is stated to be the amount)pettaining to certain shares purchased by the petitioner out of the|income that had allegedly escaped assessment. Accordingly, tax and|interest has been levied by the respondent. It is this order that 1s challenged in this writ petition. A Learned Counsel for the petitioner invites the attention of thecourt to the representation/application filed by him on 31.01.2014betore the respondent requesting to issue copy of the sworn|statement of one Mr. Mukesh Chokst on the basis whereof,|proceedings were re-opened. It transpires that a search had been)conducted by the income tax authorities at Mumbai on M/s.Mahasagar Securities and Mukesh Choksi Group. At that time, Mr.|Mukesh Choksi had admitted to have made accommodation entries|in his books to enable the clients to declare speculation profit/loss,shorter gains, etc., and had identified the petitioner herein and certain|othersaSSOTMEot|the.beneficiaries ot|the.fraudulent. entries/transactions by giving a sworn statement in that regard and it is based on the said sworn statement of Mukesh Choksi, respondent|has re-opened the proceedings. It is in this background, petitioner|had made a request to the respondent on 31.01.2014 to provide acopy of the sworn statement, so that petitioner could take further|course of action. 5)It 1s not in dispute that petitioner was not furnished with the|copy of the statement said to have been made by Mukesh Choksi.Petitioner was not aware ot the contents of the said statement.However, he filed objections contending inter alia that 1t was not)known how a statement made by thitd party could be madeapplicable and made basis tor the proceedings that were sought to beinitiated. He also points out by way of objection that in the absenceot specific allegations made against the petitioner in the so-called|sworn statement, the same could not have been made basis to passthe assessment order against the petitioner. | :"Despite such objections raised, respondent has proceeded to 5)It 1s not in dispute that petitioner was not furnished with the|copy of the statement said to have been made by Mukesh Choksi.Petitioner was not aware ot the contents of the said statement.However, he filed objections contending inter alia that 1t was not)known how a statement made by thitd party could be madeapplicable and made basis tor the proceedings that were sought to beinitiated. He also points out by way of objection that in the absenceot specific allegations made against the petitioner in the so-called|sworn statement, the same could not have been made basis to passthe assessment order against the petitioner. | :"Despite such objections raised, respondent has proceeded to pass the impugned order holding that an amount of Rs.6,34,475/- which reflected the sale proceeds of shares was required to bebrought to tax under the head ‘Other Sources of Income’. It is thisamount which according to the findings recorded by the respondent|was attributed to the petitioner in the so-called sworn statement|stven by Mukesh Chokst1. T Thus, it is apparent that without furnishing a copy of the|statement stated to have been given by Mukesh Chokst and without|notifying the petitioner regarding basis of the transaction that)petitioner is said to have entered into with Mukesh Choksi,|respondent has passed the impugned order. The entire basis for the|impugned order is the sworn statement of Mukesh Chokst. Unless|petitioner is given opportunity to have his say in the mater with|regatd to the said statement and its contents, it cannot be said thatpetitioner was given an opportunity of being heard in the matter.|Hence, it has to be held that the impugned order 1s passed without|providing any fair and reasonable opportunity of being heard to the|petitioner. 6 WP 39379 /201 3"In fact, learned Counsel for the petitioner places reliance on|the judgment of the Division Bench of the Delhi High Court in thecase of Mr. Ashok Mittal Vs Assistant Commissioner of Income Tax.and another in WP(C) No.1452/2013, wherein also petitioner therein:had specitically objected for the assessment proceedings stating that|he had no transaction with either Mukesh Choksi or any other relatedcompanies, but the Assessing Officer had solely proceeded on the)basis of the statement and the list provided without there being any|other information or details furnished to the petitioner thoughpetitioner therein had sought for such details. The High Court ofDelhi has held that there was absence of fair and reasonable.Opportunity and such an assessment order could not be sustainedand could be interfered with under Article 226 of the Constitution of|India. Q In the light of the facts and circumstances as adverted to above and as the petitioner has been denied an opportunity of fairhearing by providing copy of the statement and related details|regarding the alleged share amount, I am of the view that the matterrequires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing|the details/copy of the statement based on which the impugned|assessment order has been passed. 10.In the result, this writ petition is allowed. The impugned orderis quashed. The matter is remitted for fresh consideration inaccotdance with law and in the light of the observations made above. 11,Learned Counsel Mr. Jeevan |.Neerale1 is permitted to file|memo of appearance within three weeks. KK. SD/-|JUDGE