Wp(C)/11199/2013 Of K.r.sreekumar v. Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN THURSDAY, THE 19TH DAY OF DECEMBER 2019 / 28TH AGRAHAYANA, 1941WP(C).No.11199 OF 2013(Y) PETITIONERS: 1K.R.SREEKUMAR AGED 52, S/O.RAMAKRISHNA PILLAI, KANNAMPALLIL VALIYATHU, S.V.MARKET P.O., KARUNAGAPPALLY, KOLLAM DISTRICT. VALIYATHU, S.V.MARKET P.O., KARUNAGAPPALLY, KOLLAM DISTRICT. 2MAYA SREEKUMARAGED 46 YEARSAGED 46 YEARS W/O.LATE K.R.SREEKUMAR, R/AT KANNAMPILLIL VALIATHU,S.V.MARKET PO., KARUNAGAPALLY.S.V.MARKET PO., KARUNAGAPALLY. 3MEERA M.SAGED 28 YEARSAGED 28 YEARS D/O.SREEKUMAR, R/AT KANNAMPILLIL VALIATHU, S.V.MARKET PO., KARUNAGAPALLY.S.V.MARKET PO., KARUNAGAPALLY. 4GANGARAMAGED 20 YEARSAGED 20 YEARS S/O.SREEKUMAR, R/AT KANNAMPILLIL VALIATHU, S.V.MARKET PO., KARUNAGAPALLY.Impleaded as per order dated 8.10.2015Impleaded as per order dated 8.10.2015 BY ADVS. SRI.D.S.SREEKUMARANSMT.T.S.MAYA RESPONDENTS: 1INCOME TAX OFFICERWARD IV, INCOME TAX OFFICE, ALAPPUZHA PIN - 688 001WARD IV, INCOME TAX OFFICE, ALAPPUZHA PIN - 688 001 2THE TAX RECOVERY OFFICER ROOM NO.7 FIRST FLOORPUBLIC LIBRARY BUILDING, SASTRI ROAD, KOTTAYAM 686 001. PUBLIC LIBRARY BUILDING, SASTRI ROAD, KOTTAYAM 686 001. R1 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON,3.12.2019, THE COURT ON 19.12.2019 DELIVERED THE FOLLOWING: JUDGMENT Dated this the 19[th] day of December 2019 1.This writ petition is filed seeking the following prayers:- “i) to issue a writ of certiorari and quash Exhibit P5(a) AssessmentOrder dated 28.12.2006 and Exhibit P5(b) Demand Notice attachedwith Exhibit P5(a) dated 28.12.2006 as illegal and arbitrary. ii) to issue a writ of certiorari and quash Exhibit P6 saleproclamation notice dated 30.3.2013 as it is highly illegal, arbitraryand against the principle of natural justice. iii) to issue a writ of mandamus or any other appropriate writ, orderor direction to the respondents to reassess and make a freshassessment as directed by the Commissioner of Income Tax,Kottayam in his Exhibit P3 order after hearing the petitioner givinghim sufficient opportunity to explain his case.“ 2.Heard the learned counsel for the petitioner and the learnedcounsel appearing for the respondents. 3.It is submitted by the learned counsel for the petitioner that the original petitioner, who has since passed away was undertreatment of schizoaffective disorder and Schizophrenia tillhis death on 14.12.2014. It stated that he was afflicted bydelusions and hallucinations and that he had made certainstatements during the course of enquiry with regard to W.P.(C).No.11199/13 assessment to Income Tax, which resulted in heavy tax liabilitybeing inflicted on him. It is stated that there was an aidedschool by name 'John F Kenedy School' established by thepetitioner's father Ramakrishna Pillai in 1965 atKarunagapally. The petitioner and his siblings inherited theschool and were managing the affairs of the school in rotation.It is stated that the shares of the petitioner's brothers werepurchased by the petitioner by sale deeds dated 27.10.1998and 22.02.1999. The apparent consideration of the sale of theshares was Rs.3 lakhs. An enquiry was conducted into thetransaction and in a sworn statement given under Section 131of the Income Tax Act on 12.2.2000, the petitioner admittedthat he had purchased 2/3[rd] of shares for a total considerationof Rs.60 lakhs against the apparent consideration of Rs.3 lakhsand that he had raised personal loans from several persons forthe said purpose. It is stated that the assessment wascompleted on 19.3.2004 on the basis of the sworn statement.A revision petition was filed by the petitioner under Section264 of the Income Tax Act. The grounds raised were that thecash flow statement prepared by the assessing officer was not W.P.(C).No.11199/13 W.P.(C).No.11199/13 given to the petitioner and his contentions with regard to thesame were not considered and that he was not given copies ofthe statements relied on and that the opportunity to cross-examine the creditors. On these grounds, the assessment wasset aside by Exhibit P3. The assessing officer was directed topass a fresh assessment order after giving copies of the cashflow statement and the statements recorded from the loancreditors of the assessee and allowing for cross- examinationof the creditors, if so desired by the petitioner. The assesseewas permitted to adduce fresh evidence, if any. The assessingauthority was directed to examine the same before passingfresh assessment order. 4.It is stated that nothing was done thereafter. The petitionerhad submitted Exhibit P4 letter dated 29.11.2011, stating thathe had not received any copy of the assessment order and thatopportunity had not been granted to adduce evidence.Thereafter, Exhibit P5 letter was received by the petitionerforwarding the copy of the assessment order and demandnotice. The petitioner was further informed that the W.P.(C).No.11199/13 assessment order had been despatched on 29.12.2006. ExhibitP5 is the assessment order, which is challenged by thepetitioner primarily on the ground that it had not been servedon him. 5.A counter affidavit has been filed by the respondents statingthat re-assessment proceedings were initiated pursuant toExhibit P3 on 24.4.2006. Copies of cash flow statements,sworn statements recorded from assessee and from creditorswere forwarded to the petitioner and by letter dated24.4.2007, the petitioner was given an opportunity to cross-examine the loan creditors and to produce fresh evidence ifany. It is stated that the petitioner failed to respond to theabove letter. It is stated that on 19.12.2006 the petitioner hadappeared before the assessing officer pursuant to a furthernotice and had sought adjournment of the assessmentproceedings for two months. However, since the time limit forcompletion of assessment was expiring on 31.12.2006, theassessment was completed by Exhibit P5(a) and a copy of theorder along with demand notice was sent to the petitioner by W.P.(C).No.11199/13 registered post. It is stated that Exhibit R1(a) receipt wouldshow that the postal articles were duly received by thepetitioner. 6. Faced with the said contentions, the learned counsel for thepetitioner submits that the challenge to the impugned order onthe ground that it was not received and that no noticepreceeded it are withdrawn. The only surviving question is withregard to legality of Exhibit P5(a), which is an appealable order.The learned counsel for the petitioner would then submit thatExhibit P5(a) was not preceded by any pre-assessment notice. Itis further submitted that the letter issued to the petitioner afterExhibit P3 proceedings did not contain a fresh cash flowstatement, but only referred to the cash flow statement ascontained in Exhibit P1 original order of assessment which hadbeen set aside in Exhibit P5(a). It is stated that no freshevidence is relied on by the assessing officer and the assessingofficer did not consider the contentions of the petitioner as hadbeen directed in Exhibit P3. W.P.(C).No.11199/13 7 W.P.(C).No.11199/13 7 7.I have considered the contentions advanced. The contentionthat the order of assessment has not been served on thepetitioner cannot be believed in view of Exhibit R1(A) whichcontains the admitted signature of the petitioner affixed on3.1.2007. In the above view of the matter, the writ petitionwhich has been filed only on 19.4.2013 is obviously belated.The surviving issue which requires consideration is the legalityof the assessment. It is seen from Exhibit P3 that theassessment carried out had been set aside by the revisionalauthority on three grounds. The first was that the AssessingOfficer did not prepare and give the cash flow statement to theassessee before the assessment was completed. Secondly, itwas found that the records do not show that copies of thestatements recorded from the creditors were given to theassessee. Thirdly, it was found that no opportunity was givento the assessee to cross-examine the creditors who hadcontradicted the assessee regarding the payments. It is not indispute that Exhibit P2 order of assessment contained a cashflow statement at paragraph 5 thereof. The contention of theassessee was that the said statements had not been put to him W.P.(C).No.11199/13 and his contentions were not considered before theassessment order was passed. It is seen from Exhibit P5(a)proceedings that copy of the cash flow statement prepared bythe assessing officer, copy of the sworn statement recordedfrom the assessee and copies of the sworn statement recordedfrom the loan creditors were issued to the assessee and theassessee was required to be present on 8.5.2006 to offercomments on the cash flow statement and to produce evidencein support of his case and if he so requires, to produce andcross-examine the loan creditors. It is stated that on13.12.2006, another letter was issued posting the case on19.12.2006. It is submitted that the assessee appeared on19.12.2006, but did not adduce any fresh evidence or makeavailable the loan creditors for cross-examination. He onlysought time. It is in the above circumstances that Exhibit P5(a)assessment order had been issued. 8.It is clear that the assessee had obtained Exhibit P3 orderrequiring a fresh assessment and opportunity to place hiscontentions on record or to adduce further evidence. Howeverrequiring a fresh assessment and opportunity to place hiscontentions on record or to adduce further evidence. However W.P.(C).No.11199/13 it is clear from the narration in Exhibit P5(a) that suchopportunity was not availed by the assessee. The assessmenthad to be completed before 31.12.2006. It was in the aboveview of the matter that Exhibit P5(a) assessment order hadbeen issued. Having considered the contentions advanced, I find noillegality or perversity vitiating the order of assessmentjustifying an interference in the same in exercise of thejurisdiction of judicial review, that too, in an obviously belatedproceedings. The assessee who did not avail of theopportunity to substantiate his case in spite of issuance ofnotice and grant of opportunity cannot be heard to contendthat the order is bad for want of consideration of hiscontention. No further notice was required to be issued in amatter of this nature where the opportunity is grantedpursuant to Exhibit P3 order in revision. The writ petition,therefore, fails and the same is accordingly dismissed. Sd/-Anu Sivaraman, Judge APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1TRUE COPIES OF THE MEDICAL CERTIFICATES WITH RESPECT TO THE PETITIONER ISSUED BYDOCTOR LATE M.R.R.MENONWITH RESPECT TO THE PETITIONER ISSUED BYDOCTOR LATE M.R.R.MENON EXHIBIT P1(A)TRUE COPY OF THE MEDICAL CERTIFICATE ISSUED BY DR.SUBHASHISSUED BY DR.SUBHASH EXHIBIT P2TRUE COPY OF THE ORDER DATED 19.3.2004 ISSUED BY THE 1ST RESPONDENTISSUED BY THE 1ST RESPONDENT Sd/-Anu Sivaraman, Judge APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1TRUE COPIES OF THE MEDICAL CERTIFICATES WITH RESPECT TO THE PETITIONER ISSUED BYDOCTOR LATE M.R.R.MENONWITH RESPECT TO THE PETITIONER ISSUED BYDOCTOR LATE M.R.R.MENON EXHIBIT P1(A)TRUE COPY OF THE MEDICAL CERTIFICATE ISSUED BY DR.SUBHASHISSUED BY DR.SUBHASH EXHIBIT P2TRUE COPY OF THE ORDER DATED 19.3.2004 ISSUED BY THE 1ST RESPONDENTISSUED BY THE 1ST RESPONDENT EXHIBIT P3TRUE COPY OF THE REVISION ORDER C.NO.308(C)/56/264/CIT-KTM/2004-05 DATED29.3.2006C.NO.308(C)/56/264/CIT-KTM/2004-05 DATED29.3.2006 EXHIBIT P4TRUE COPY OF THE PETITIONERS LETTER DATED 29.11.2011DATED 29.11.2011 EXHIBIT P5TRUE COPY OF THE COVERING LETTER DATED 29.11.2011 BY THE 2ND RESPONDENT.29.11.2011 BY THE 2ND RESPONDENT. EXHIBIT P5(A)TRUE COPY OF THE ASSESSMENT ORDER DATED 28.12.200628.12.2006 EXHIBIT P5(B)TRUE COPY OF THE DEMAND NOTICE ATTACHED WITH EXHIBIT P5 DATED 28.12.2006.WITH EXHIBIT P5 DATED 28.12.2006. EXHIBIT P6TRUE COPY OF THE NOTICE DATED 30.3.2013. RESPONDENTS EXHIBITS EXHIBIT R1(A)TRUE COPY OF THE POSTAL ACKNOWLEDGMENT. True copy PS to Judge