Wp(C)/28693/2018 Of Mailakkattu Varghese Uthup v. The Principal Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 1 DAY OF APRIL 2022 / 11TH CHAITHRA, 1944 WP(C) NO. 28693 OF 2018 PETITIONER: MAILAKKATTU VARGHESE UTHUPAGED 50 YEARSMAILAKKATTU HOUSEPUTHUPPALLY P. OKOTTAYAMKOTTAYAMBY ADV PREETHA S.NAIR RESPONDENTS: 1THE PRINCIPAL COMMISSIONER OF INCOME TAXC. R. BUILDING, I. S. PRESS ROAD, KOCHIERNAKULAM, PIN - 6820182THE DEPUTY COMMISSIONEROF INCOME TAX, CENTRAL CIRCLE-2, ERNAKULAM, ALFA LIZA BUILDING, NEAR AMBADY CHAMBERS, CHITOOR ROAD, OPP. SRV LP SCHOOL, KOCHI-682011.3DIRECTOR GENERALOF INCOME TAX (INV), S.A. ROAD, KOCHI - 682 020.4BUREAU OF IMMIGRATION(MINISTRY OF HOME AFFAIRS), COCHIN INTERNATIONAL AIRPORT LTD., KOCHI-682311.5THE REGISTRAR OFCOMPANIES, KERALA, COMPANY LAW BHAVAN, B.M.C. ROAD, THRIKKAKARA, KOCHI-682021.BY ADVS.SRI.JOSE JOSEPH, SC, FOR INCOME TAXSMT.C.G.PREETHA, CGCMANU S., ASG OF INDIA OTHER PRESENT: SRI. JOSEPH MARKOSE THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON01.04.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: BECHU KURIAN THOMAS,J-------------------------------- W.P.(C). No.28693 of 2018------------------------------------ Dated this the 1[st] day of April, 2022 JUDGMENT Petitioner was proceeded against under Section 179 of the Income Tax Act, 1961 for the income taxdues of a Company by name M/s.Al Zarafa Travels andManpower Consultants Pvt.Ltd (for short the Company).Apart from the liability of the Company, petitioner wasimposed with a personal tax liability of Rs.22,66,718/-.On the basis of the aforesaid two liabilities, proceedingsunder Section 230 of the Income Tax Act, 1961 (forshort the ‘Act’) were initiated and an order was issuedas Ext.P20 by the 2[nd] respondent, directing thepetitioner not to leave the territory of India by land, seaor air, unless he furnishes a tax clearance certificateissued by the second respondent. The said order isimpugned in this writ petition. 3 2. During the pendency of the writ petition,certain events occurred, which has brought in a changeto the very basis of issuance of Ext.P20, contends thelearned Senior Counsel Sri.Joseph Markose appearingon behalf of the petitioner, as instructed bySmt.Preetha S Nair. 3. According to the learned Senior Counsel as held by this Court in W.P(C)No.28722 of 2018, due tothe order of the Appellate Tribunal in ITA 25/2021 to30/2021 & ITA No.88/2021 and ITA No.89/2021, thevery basis of tax liability imposed against the Companyhas eroded and therefore no tax liability remains, asagainst the said company. It was further contendedthat, as far as the individual liability of the petitionerwas concerned, in the appeal preferred against theorder of assessment, the Appellate Authority haddirected modification of the assessment, pursuant towhich the assessing officer by order dated 28-10-2021reduced the individual tax liability to Rs.3,99,656-/,pursuant to which, petitioner cleared the entire liability as against him individually. Thus, the liabilities whichwere the basis of Ext.P20 order issued under Section230 of the Act, became non-existent. 4. According to the learned Senior Counsel, since the two liabilities mentioned in Ext.P20 and made thebasis of imposing a restrictive order under Section 230of the Act having been wiped off, petitioner cannot beburdened by an order under the said provision. 5. Sri.Jose Joseph, the learned Standing Counselfor the Income Tax Department submitted that, thoughan order against the company has been set aside andremanded back to the assessing officer, the saidquestion is still open for reconsideration by theassessing officer. The learned Standing Counsel fairlyconceded that, as far as the individual liability wasconcerned petitioner had cleared the liability imposedby the modified assessment order, and that the saidpart of Ext.20 does not remain in force any longer. 4. According to the learned Senior Counsel, since the two liabilities mentioned in Ext.P20 and made thebasis of imposing a restrictive order under Section 230of the Act having been wiped off, petitioner cannot beburdened by an order under the said provision. 5. Sri.Jose Joseph, the learned Standing Counselfor the Income Tax Department submitted that, thoughan order against the company has been set aside andremanded back to the assessing officer, the saidquestion is still open for reconsideration by theassessing officer. The learned Standing Counsel fairlyconceded that, as far as the individual liability wasconcerned petitioner had cleared the liability imposedby the modified assessment order, and that the saidpart of Ext.20 does not remain in force any longer. 6. I have considered the rival contentions. In thejudgment in W.P(C)No.28722 of 2018 rendered today, I have already found that the basis tax liability due fromthe Company had been wiped off by the order of theAppellate Tribunal and the said proceedings are now tobe considered afresh by the assessing officer. As of nowthe Company cannot be stated to be liable to pay anyamount of tax, warranting imposition of any order,either under Section 179 of the Act or to be imposedwith a restrictive order against the Directors of theCompany or any other person under Section 230 of theAct. Therefore, the latter liability, referred to in Ext.P20,is no longer in existence. As far as, the individualliability made mention in Ext.P20 is concerned, bothCounsel pointed out and rightly too, that, petitioner hadcleared that liability on the basis of the modified ordersissued. Thus, it is explicit that both liabilities mademention in Ext.P20 is no longer in force, warranting theissuance of an order under Section 230 of the Act or itscontinuance for the time being. 7. In view of the above, Ext.P20 is liable to be set aside. Therefore the order dated 19.07.2018 issued under Section 230 of the Act is quashed. The writ Petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE AJM APPENDIX OF WP(C) 28693/2018 //TRUE COPY// PA TO JUDGE