Wp(C)/6718/2019 Of Travancore Diagnostics Private Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGHTUESDAY, THE 21 DAY OF NOVEMBER 2023 / 30TH KARTHIKA, 1945WP(C) NO. 6552 OF 2019 PETITIONER/S: M/S.TRAVANCORE DIAGNOSTICS PRIVATE LTD.,KAILAS ARCADE, DISTRICT HOSPITAL ROAD, CHAMAKADA, KOLLAM-691 001, REPRESENTED BY MANAGING DIRECTOR, C.CHERIAN,S/O. LATE ABRAHAM, AGED 56 YEARS, RESIDING AT INCHAPPARAYIL, NALANCHIRA, TRIVANDRUM-695 015 BY ADVS.D.S.SREEKUMARANSMT.T.S.MAYA (THIYADIL)SHRI.RAMAKRISHNAN PSHRI.MAHESH A RESPONDENT/S: THE ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1,KOLLAM-691 001BY ADV SRI.CHRISTOPHER ABRAHAM, SC FOR INCOME TAX DEPARTMENT OTHER PRESENT: SRI.CHRISTOPHER ABRAHAM-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FORADMISSION ON 21.11.2023, ALONG WITH WP(C).6718/2019, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) Nos.6552 & 6718/19. IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGHTUESDAY, THE 21 DAY OF NOVEMBER 2023 / 30TH KARTHIKA, 1945WP(C) NO. 6718 OF 2019 PETITIONER/S: TRAVANCORE DIAGNOSTICS PRIVATE LTDKAILAS ARCADE, DISTRICT HOSPITAL ROAD, CHAMAKADA, KOLLAM 691 001, REPRESENTED BY MANAGING DIRECTOR, C.CHERIAN, S/O LATE ABRAHAM, AGED 56 YEARS, RESIDING AT INCHAPPARAYIL, NALANCHIRA, TRIVANDRUM-695 015.BY ADVS.D.S.SREEKUMARANSMT.T.S.MAYA (THIYADIL)SHRI.RAMAKRISHNAN PSHRI.MAHESH A RESPONDENT/S: THE ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1, KOLLAM-691 001.BY ADV SRI.CHRISTOPHER ABRAHAM, SC FOR INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FORADMISSION ON 21.11.2023, ALONG WITH WP(C).6552/2019, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) Nos.6552 & 6718/19. J U D G M E N T [WP(C) Nos.6552 and 6718 of 2019] The very same petitioner has approached thisCourt with WP(C) Nos.6552 and 6718 of 2019impugning the assessment orders, Exts.P8, andconsequent demand notices, Exts.P9, in respect ofthe assessment years 2007-08 and 2008-09,respectively. 2.The petitioner is a Private LimitedCompany registered under the Companies Act, 1956,having diagnostics lab at Kollam and a branch atKottarakkara. It provides medical diagnostics,including MRI Scan, CT Scan, Ultrasound Scan, X-rayand laboratory test services, in both the labs tothe patients. The petitioner-assessee had filedreturn of its income in respect of the assessmentyears 2007-08 and 2008-09 on 31.10.2007 and30.11.2008, declaring total income of Rs.2,09,670/-and Rs.1,10,710/-, respectively. A survey under Section 133A of the Income Tax Act, 1961 (“Act”,for short) was conducted on 24.9.2009 in thepremises of the petitioner. During the course ofthe survey, it was found that it had suppressedreceipts for conducting MRI, CT Scans etc. It hadalso paid commission and interpretation charges(professional fees) to the Doctors without TDS. Asit was noticed that the income chargeable to taxhad escaped assessment due to suppression ofreceipts, notices under Section 148 of the Act wereissued to the petitioner on 21.3.2013 and 28.3.2014for the assessment years 2008-09 and 2007-08,respectively. In response to the said notices, thepetitioner had filed revised return showing thevery same income, on 5.2.2014 and 13.10.2014,respectively. The cases were posted for hearingand Sri.D.Sreekumar, the authorised representativeof the assessee, had appeared on the dates fixedand produced necessary details. 3.The assessments for the years 2009-10 and2010-11 were completed by taking gross receipts at261.194% of the declared receipts. The same wasarrived at by relying on the materials found at thetime of survey under Section 133A of the Act.During the assessment years 2007-08 and 2008-09also, it was proposed to adopt the gross receiptsbased on the same lines adopted for the assessmentyears 2009-10 and 2010-11. A pre-assessment letterwas issued to the petitioner-assessee on 21.3.2014proposing to adopt gross collection ofRs.2,18,65,905/- for the assessment year 2008-09,and after deduction of the expenses claimed in theProfit and Loss Account, the rest of the income wastreated to be as the escaped assessment. Similarly,the gross collection for the assessment year 2007-08 was assessed at Rs.2,39,88,872/-, and afterdeduction of the expenses claimed in the Profit andLoss Account, the rest of the income was treated tobe the escaped assessment. Assessments for both WP(C) Nos.6552 & 6718/19. these assessment years were completed under Section143(3) read with Section 147 of the Act, andthereafter notices for payment of the tax andpenalty were issued, which have been challenged inthese writ petitions. 4.The petitioner had filed appeals againstthese assessment orders before the Commissioner ofIncome Tax (Appeals) [CIT(A)]. When these appealswere pending before the CIT(A), the petitioner hadapproached this Court by filing WP(C) Nos.3788/2019and 3867/2019. However, this Court permitted thepetitioner to withdraw those writ petitions to curetechnical defects and file afresh, vide itsjudgment dated 5.3.2019, which reads as under: “J U D G M E N T The petitioner's counsel seeks permissionto withdraw the writ petitions to cure, what hecalls, the technical defects, and file afresh. Permission granted. The writ petitions aredismissed as withdrawn” Thereafter, the petitioner filed these two writpetitions. However, in the meantime, thepetitioner had withdrawn the appeals filed againstthe impugned assessment orders, before the CIT(A).Paragraph No.10 of WP(C) No.6552/2019, which isrelevant in respect of withdrawal of the appealspending before the CIT(A), would read as under: “10. The petitioner filed first appealbefore the Commissioner of Income-tax(Appeals), Trivandrum on 5.5.2015 against theExhibit P8 assessment order, which is withdrawnfor the sake of pursuing the writ petition toavoid parallel proceedings as directed. Thepetitioner had made request to the Commissionerof income-tax (Appeals) so many times to hearthe appeal. (No opportunity has been offeredfor hearing the case to the petitioner).” Paragraph No.10 of WP(C) No.6718/2019 is also withthe same lines as afore. The petitioner has notmentioned that this Court had granted anypermission or direction to withdraw the appealsbefore the CIT(A) to pursue the writ petitionsfiled before this Court. The petitioner had on its own volition withdrawn the appeals filed before theCIT(A) and approached this Court with these writpetitions. On this sole ground alone, these writpetitions are liable to be dismissed. However,this Court obliges to deal with the othercontentions raised by the learned counsel for thepetitioner. 5.The next submission advanced on behalf ofthe learned counsel for the petitioner is that thepetitioner was not issued notice under Section143(2) of the Act before proceeding to finalise theassessments under Section 143(3) read with Section147 of the Act. The submission is that in theabsence of valid notice under Section 143(2) of theAct, the subsequent proceedings and assessmentorders passed under Section 143(3) read withSection 147 are in nullity and, therefore, areliable to be quashed. Learned counsel for thepetitioner has placed reliance on the decision ofthe Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax & Another v. Hotel BlueMoon [(2010) 3 SCC 259 : 321 ITR 362]. 5.The next submission advanced on behalf ofthe learned counsel for the petitioner is that thepetitioner was not issued notice under Section143(2) of the Act before proceeding to finalise theassessments under Section 143(3) read with Section147 of the Act. The submission is that in theabsence of valid notice under Section 143(2) of theAct, the subsequent proceedings and assessmentorders passed under Section 143(3) read withSection 147 are in nullity and, therefore, areliable to be quashed. Learned counsel for thepetitioner has placed reliance on the decision ofthe Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax & Another v. Hotel BlueMoon [(2010) 3 SCC 259 : 321 ITR 362]. 6.On the other hand, Sri.ChristopherAbraham, learned Standing Counsel for the IncomeTax Department, has raised objection with regard tomaintainability of these writ petitions. He hasstated that once the petitioner has challenged theassessment orders in appeals before the CIT(A)under Section 246 of the Act, there was no occasionfor him to approach this Court challenging the verysame assessment orders. It is further submittedthat the petitioner had withdrawn the appealswithout there being any order/direction from thisCourt to pursue the writ petitions. He, therefore,submits that these writ petitions are notmaintainable and are liable to be dismissed. 7.Learned Standing Counsel for the Revenuehas further submitted that the petitioner had beenserved with notices, Annexures-R(a) and R(b), andthe petitioner had participated in the proceedings, which is evident from the order sheet before theassessing officer [Annexure-R(c)]. He submits thatwhat is relevant is the substance of the notice andnot the format. In Annexure-R(a), the provision ofSection 143(2) of the Act is not mentioned, butthat itself would not invalidate the notice. Thepetitioner had received the notice and participatedin the proceedings and, therefore, under theprovisions of Sections 292B and 292BB of the Act,neither the notice nor the assessment orders can besaid to be in violation of the provisions ofSection 143(2) or any other provisions of the Actand the Rules framed thereunder. Once thepetitioner had participated in the proceedings andnever raised an objection for non-service of thenotice of assessments, it cannot contend beforethis Court that the impugned assessment orders arein violation of the statutory prescription or badin law, in any manner. 8.Learned Standing Counsel for the Revenuehas also stated that the facts of these cases aredistinguishable from the facts of the case in HotelBlue Moon (supra), wherein notice was not served onthe assessee. But, here, the petitioner was servedwith notice, which has not been disputed. What isbeing disputed is the format of the notice and notthe substance of the notice. It is also not indispute that after issuance of notice in Annexure-R(a), the petitioner had participated in theproceedings. 9.Learned Standing Counsel for the Revenuehas placed reliance of the Division Bench judgmentof this Court in the case of PadinjarekkaraAgencies Pvt. Ltd. v. Commissioner of Income Tax[398 ITR 381 (Ker.)], in which it has been saidthat if the assessee was aware of the issue to beanswered and sufficient opportunity of hearing wasafforded, even non-issuance of notice underSection 143(2) of the Act would become immaterial WP(C) Nos.6552 & 6718/19. and the assessment order issued in such casescannot be said to be in violation of the statutoryprovisions. 10. I have considered the submissions of bothsides and perused the writ petitions/records. 9.Learned Standing Counsel for the Revenuehas placed reliance of the Division Bench judgmentof this Court in the case of PadinjarekkaraAgencies Pvt. Ltd. v. Commissioner of Income Tax[398 ITR 381 (Ker.)], in which it has been saidthat if the assessee was aware of the issue to beanswered and sufficient opportunity of hearing wasafforded, even non-issuance of notice underSection 143(2) of the Act would become immaterial WP(C) Nos.6552 & 6718/19. and the assessment order issued in such casescannot be said to be in violation of the statutoryprovisions. 10. I have considered the submissions of bothsides and perused the writ petitions/records. 11. The first question which falls forconsideration is whether these writ petitions aremaintainable. From the facts of the present case,it appears that the petitioner had filed appealsbefore the CIT(A) against the impugned assessmentorders and also filed writ petitions against thesame, as mentioned above. Later on the petitionerwithdrew those writ petitions on the ground ofcuring “technical defects”. This Court hadpermitted only to cure the technical defects, ifany, and to file writ petitions afresh. However,this Court had not granted any liberty to thepetitioner to withdraw the appeals filed before theCIT(A). I am of the view that withdrawal of theappeals by the petitioner filed before the CIT(A) against the assessment orders, was not because ofthe liberty granted by this Court, but on his ownvolition. The petitioner could have challenged theassessment orders on merits, but it wanted toadvantage of some technical issues and, therefore,instead of contesting the assessment orders onmerits, the petitioner approached this Court.Hence, I do not find that these writ petitions aremaintainable. 12. Be that as it may, the next contention ofthe petitioner regarding non-service of noticeunder Section 143(2) of the Act is also liable tobe rejected. In as much as the petitioner wasissued notice in Annexure-R(a) and in pursuance tothe said notice, the petitioner had participated inthe proceedings for re-opening of the assessmentorders, which is evident from the order sheetmaintainedbeforetheassessingofficer.Therefore, if the notice, Annexure-R(a) did notmention the provision under Section 143(2) of the WP(C) Nos.6552 & 6718/19. Act, the same would not become invalid because ofnon-mentioning of the provision of Section 143(2).What is relevant is notice of hearing and thepetitioner was issued notice of hearing. Insubstance, the notice in Annexure-R(a) was a noticeunder Section 143(2). Therefore, I find nosubstance in the submission of the learned counselfor the petitioner that the petitioner was notserved with notice under Section 143(2) of the Act,and therefore, the subsequent proceedings andassessment orders had become bad in law and areliable to be set aside. The judgment cited by thelearned counsel for the petitioner in the case ofHotel Blue Moon (supra) is distinguishable on thefacts of the present case. The technical issueraised by the petitioner is also not present in thefacts of these cases. Therefore, these writpetitions are not maintainable and are liable to bedismissed. WP(C) Nos.6552 & 6718/19. 13. Considering the provisions of Sections292B and 292BB of the Act, when the petitioner hadparticipated in the proceedings in pursuance to thenotice issued in Annexure-R(a), the petitioner,after finalisation of the assessment orders, cannottake the plea that the assessment orders areincorrect on the ground of non-mentioning of theprovision of Section 142(3) in the notice. Theassessment orders cannot be challenged on justtechnical ground, in view of the express provisionof Sections 292B and 292BB of the Act. WP(C) Nos.6552 & 6718/19. 13. Considering the provisions of Sections292B and 292BB of the Act, when the petitioner hadparticipated in the proceedings in pursuance to thenotice issued in Annexure-R(a), the petitioner,after finalisation of the assessment orders, cannottake the plea that the assessment orders areincorrect on the ground of non-mentioning of theprovision of Section 142(3) in the notice. Theassessment orders cannot be challenged on justtechnical ground, in view of the express provisionof Sections 292B and 292BB of the Act. 14. In view of the above, I find no substancein these writ petitions, which are herebydismissed. The appeals filed before the CIT(A),which were withdrawn by the petitioner to pursuethese writ petitions, are directed to be restored.If the records of those appeals are not availablebefore the CIT(A), the petitioner can file copiesof the earlier appeals within a period of fifteen(15) days from today and pursue the appeals, in WP(C) Nos.6552 & 6718/19. 16 accordance with law. If the petitioner re-filesappeals as directed above, the CIT(A) should decidethe same, in accordance with law, on merits,without entering into the question of limitation.All the grounds raised herein are open to thepetitioner to be agitated in the appeals before theappellate authority. However, the appellateauthority should decide the appeals, on merits,uninfluenced by any of the observations made hereinby this Court. Pending interlocutory application, if any, inthese writ petitions stands dismissed. Sd/- DINESH KUMAR SINGH JUDGE APPENDIX OF WP(C) 6718/2019 PETITIONER EXHIBITS EXHIBIT P1TRUE COPY OF LEASE DEED DATED 28.3.2008 EXHIBIT P1TRUE COPY OF FORM NO 16A DATED 23.6.2009 EXHIBIT P2TRUE COPY OF CIT (A) ORDER IN ITA NO 15/CIT(A) TVM/ 13-14 DATED 25.3.2014 FOR THE AY 2009-1015/CIT(A) TVM/ 13-14 DATED 25.3.2014 FOR THE AY 2009-10 EXHIBIT P3TRUE COPY OF CIT (A) ORDER IN ITA NO 14/CIT(A) TVM/ 13-14 DATED 25.3.2014 FOR THE AY 2010-1114/CIT(A) TVM/ 13-14 DATED 25.3.2014 FOR THE AY 2010-11 EXHIBIT P4TRUE COPY OF ITAT'S ORDER IN ITA NOS.289 AND 290/COCH/2014 DATED 12.2.2015 FOR THE AY 2009-10 & 2010-11290/COCH/2014 DATED 12.2.2015 FOR THE AY 2009-10 & 2010-11 EXHIBIT P5TRUE COPY OF JUDGMENT IN ITA NO 221/2015 DATED 19.10.2016DATED 19.10.2016 EXHIBIT P6TRUE COPY OF NOTICE U/S 148 DATED 21.3.2013 ISSUED BY THE RESPONDENTISSUED BY THE RESPONDENT EXHIBIT P7TRUE COPY OF LETTER DATED 5.2.2014 OF THE PETITIONERPETITIONER EXHIBIT P8TRUE COPY OF ASSESSMENT ORDER DATED 31.3.2014 EXHIBIT P9TRUE COPY OF DEMAND NOTICE DATED 31.3.2014EXHIBIT P10TRUE COPY OF REMAND REPORT OF THE RESPONDENT DATED 6.10.2015EXHIBIT P10TRUE COPY OF REMAND REPORT OF THE RESPONDENT DATED 6.10.2015 EXHIBIT P11TRUE COPY OF NOTICE OF RESPONDENT DATED 23.1.2019 RESPONDENT'S EXHIBITS EXHIBIT R(a)TRUE COPY OF NOTICE DATED 04-10-2013 EXHIBIT R(b)TRUE COPY OF NOTICE DATED 28-11-2013 EXHIBIT R(c)TRUE COPY OF THE PRE-ASSESSMENT NOTICE DATED 21-03-2014. EXHIBIT R(d)TRUE COPY OF THE ORDER SHEET CONTAINING ENTRIES REGARDING APPEARANCES BY THE AUTHORISED REPRESENTATIVE. APPENDIX OF WP(C) 6552/2019 PETITIONER EXHIBITS EXHIBIT P1TRUE COPY OF LEASE DEED DATED 28.03.2008 EXHIBIT P1(a) TRUE COPY OF FORM NO.16A DATED 23.06.2009 EXHIBIT P2TRUE COPY OF CIT (A) ORDER IN ITA NO.15/CIT (A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2009-10(A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2009-10 EXHIBIT P3TRUE COPY OF CIT (A) ORDER IN ITA NO.14/CIT (A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2010-11(A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2010-11 EXHIBIT P4TRUE COPY OF ITAT'S ORDER IN ITA NOS.289 AND 290/COCH/2014 DATED 12.02.2015 FOR THE AY 2009-10 & 2010-11290/COCH/2014 DATED 12.02.2015 FOR THE AY 2009-10 & 2010-11 EXHIBIT P5TRUE COPY OF JUDGMENT IN ITA NO.221/2015 DATED 19.10.2016 OF THIS HON'BLE COURTDATED 19.10.2016 OF THIS HON'BLE COURT EXHIBIT P6TRUE COPY OF NOTICE U/S 148 DATED 28.03.2014 ISSUED BY THE RESPONDENTISSUED BY THE RESPONDENT EXHIBIT P1(a) TRUE COPY OF FORM NO.16A DATED 23.06.2009 EXHIBIT P2TRUE COPY OF CIT (A) ORDER IN ITA NO.15/CIT (A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2009-10(A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2009-10 EXHIBIT P3TRUE COPY OF CIT (A) ORDER IN ITA NO.14/CIT (A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2010-11(A)/TVM/13-14 DATED 25.03.2014 FOR THE AY-2010-11 EXHIBIT P4TRUE COPY OF ITAT'S ORDER IN ITA NOS.289 AND 290/COCH/2014 DATED 12.02.2015 FOR THE AY 2009-10 & 2010-11290/COCH/2014 DATED 12.02.2015 FOR THE AY 2009-10 & 2010-11 EXHIBIT P5TRUE COPY OF JUDGMENT IN ITA NO.221/2015 DATED 19.10.2016 OF THIS HON'BLE COURTDATED 19.10.2016 OF THIS HON'BLE COURT EXHIBIT P6TRUE COPY OF NOTICE U/S 148 DATED 28.03.2014 ISSUED BY THE RESPONDENTISSUED BY THE RESPONDENT EXHIBIT P7TRUE COPY OF LETTER DATED 13.10.2014 OF THE PETITIONERPETITIONER EXHIBIT P8TRUE COPY OF ASSESSMENT ORDER DATED 31.03.201531.03.2015 EXHIBIT P9TRUE COPY OF DEMAND NOTICE DATED 31.03.2015EXHIBIT P10TRUE COPY OF REMAND REPORT OF THE RESPONDENT DATED 06.10.2015EXHIBIT P10TRUE COPY OF REMAND REPORT OF THE RESPONDENT DATED 06.10.2015 EXHIBIT P11TRUE COPY OF NOTICE OF RESPONDENT DATED 23.01.2019 RESPONDENT'S EXHIBITS EXHIBIT-R(A)TRUE COPY OF THE LETTER DATED 04.02.2015EXHIBIT-R(B)TRUE COPY OF NOTICE U/S 143(2) DATED 18-03-2015 EXHIBIT-R(C)TRUE COPY OF THE ORDER SHEET CONTAINING ENTRIES REGARDING APPEARANCES BY THE AUTHORISED REPRESETATIVE.