Wp(Md)/3999/2020 Of Nadimuthupathar Sundarapandian Elavarman v. The Assistant Commissioner Of Income Tax

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 09.12.2020 CORAM: THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE W.P.(MD)No.3999 of 2020and W.M.P.(MD).Nos.3394 & 3395 of 2020 (Through the Video Conferencing) Nadimuthupathar Sundarapandian Elavarman... Petitioner The Assistant Commissioner of Income Tax,Circle 2(1), Trichy,O/o. the Assistant Commissioner of Income Tax,3[rd] Floor, Main Building,Williams Road, Cantonment,Tiruchirapalli-620 001. ... Respondent PRAYER:Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari, to call for the records of therespondent in PAN vide order No.ITBA/AST/S/144/2019-20/1022908268(1) dated 23.12.2019 and the consequential demand madein PAN AA0PE0729L vide Order No.ITBA/AST/S/156/2019-20/1022908349(1)dated 23.12.2019 and quash the same as ex-facie, illegal, arbitrarywithout jurisdiction and against the principles of natural justice. ORDER This writ petition has been filed challenging the re-assesment made by the respondent under the impugned assessment orderdated 23.12.2019 for the assessment year 2017-2018 under Section 144of the Income Tax Act, 1961. 2. Heard Mr.K.Soundararajan, learned counsel for thepetitioner and Mr.N.Dilip Kumar, learned Standing counsel for therespondent. https://hcservices.ecourts.gov.in/hcservices/ 3. The petitioner has challenged the impugned assessment orderon the following grounds:- (a). The respondent has violated the principles of naturaljustice by not affording sufficient opportunity to the petitionerwhile passing the impugned re-assessment order.(b). No personal hearing was granted to the petitioner asstipulated under Section 144 of the Income Tax Act, 1961. (c). The respondent has failed to take note of the factthat on receipt of the notice dated 02.03.2017 from the respondent,the petitioner has opted to take the benefit of the Pradhan MantriGarib Kalyan Yojana Scheme, 2016, on 31.03.2017 itself. Therefore,the impugned re-assessment proceedings for taking the cash depositas an unexplained money under Section 69A of the Income Tax Act,1961, is void abnitio, illegal and also arbitrary. (d). The respondent has not applied its mind to the recordsavailable with him before treating the cash deposits as unexplainedmoney. (e). The respondent has failed to take note of the factthat an amendment to Section 115BBE of the Act, was made by theTaxation Laws (2[nd] Amendment Act 2016), which came into effect on01.04.2017 and not in the assessment year 2017-18. Therefore, therespondent do not have the authority to pass the impugnedproceedings under Section 144 of the Income Tax Act, 1961, for theassessment year 2017-2018. (f). The increase in the rate of tax, as seen from theimpugned assessment order, is not permissible as the amendment cameinto force only on 01.04.2017. (g). The respondent has initiated reassessment proceedingsunder Section 144 of the Income Tax Act, 1961, without authorityunder law, since the amendment to Section 143 (3A) of the Income TaxAct, 1961, was proposed only in the Budget 2020 to include Section144 proceedings also. Therefore, for the assessment year 2017-2018,the amendment to Section 143 (3A) of the Act, made in the year 2020shall not apply. 4. The learned counsel for the petitioner in hissubmissions reiterated the grounds raised in this Writ Petition. 5. In the counter affidavit filed by the respondent, theyhave stated as follows:- (a). The petitioner has admitted the cash deposit of asum of Rs.82,29,000/- made during the specified period (i.e.,09.11.2016 to 31.12.2016) under the Pradhan Mantri Garib KalyanYojana Scheme 2016, dated 31.12.2016 and paid taxes thereof. https://hcservices.ecourts.gov.in/hcservices/ 4. The learned counsel for the petitioner in hissubmissions reiterated the grounds raised in this Writ Petition. 5. In the counter affidavit filed by the respondent, theyhave stated as follows:- (a). The petitioner has admitted the cash deposit of asum of Rs.82,29,000/- made during the specified period (i.e.,09.11.2016 to 31.12.2016) under the Pradhan Mantri Garib KalyanYojana Scheme 2016, dated 31.12.2016 and paid taxes thereof. https://hcservices.ecourts.gov.in/hcservices/ (b). However, as per the details available with theDepartment, the total cash deposit made by the petitioner during theperiod from 01.04.2016 to 31.03.2017, is for a sum ofRs.1,20,34,000/-, for which, no explanation has been offered by thepetitioner. (c). The details of claims of declaration made under thePradhan Mantri Garib Kalyan Yojana Scheme, 2016, on 31.03.2017 inForm-I, depositing tax, surcharge, penalty of a sum ofRs.41,06,271/- was not furnished by the petitioner during theassessment proceedings. (d). Notice under Section 142 (1) of the Income Tax Act,1961, dated 23.09.2019 was issued to the petitioner. But, despitereceipt of the same, the petitioner has failed to respond to thesame. It is also the case of the respondent that further show causenotice was issued on 09.12.2019 stating that the entire cash depositmade during the year amounting to Rs.1,20,34,000/- would be added tothe total income in the absence of explanation and to file a replyon or before 12.12.2019. (e). According to the respondent, no reply was sent by thepetitioner to the said show cause notice also. It is the case ofthe respondent that since no explanation was given by thepetitioner, they were constrained to pass the impugned assessmentorder under Section 144 of the Income Tax Act, 1961. According tothe respondent, the amendment to Section 115BBE of the Income TaxAct, 1961, has to be applied retrospectively and therefore, thecontention of the petitioner that for the assessment year 2017-2018the same cannot be applied, is not correct. (f). It is also the contention of the respondent thatinsertion of Section 143 (3A) under the Income Tax Act, 1961, is forfaceless assessment and it does not have any connection with Section144 Assessment made under e-proceedings which is conducted as perInstruction No.8 of 2017, dated 29.09.2017, issued under Section 119of the Income Tax Act, 1961. 6. The learned Standing counsel for the respondent in hisarguments has reiterated the contents of the counter affidavit filedby the respondent before this Court. 7. Admittedly, as seen from the impugned assessment orderpassed under Section 144 of the Income Tax Act, 1961, the petitionerhas not participated in the said proceedings and the order is in thenature of ex parte assessment order. The grounds raised by thepetitioner, namely, the cash amount of a sumofRs.82,29,000/- deposited under the Pradhan Mantri Garib KalyanYojana Scheme, 2016, on 31.03.2017 has not been taken intoconsideration under the impugned assessment order. It is thehttps://hcservices.ecourts.gov.in/hcservices/ contention of the petitioner that since he has has availed thebenefit of Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, the cashamount cannot be treated as an unexplained money under Section 69(A) of the Income Tax Act, 1961. As seen from the impugnedassessment order, the contention of the petitioner has not beenconsidered by the respondent in accordance with law. contention of the petitioner that since he has has availed thebenefit of Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, the cashamount cannot be treated as an unexplained money under Section 69(A) of the Income Tax Act, 1961. As seen from the impugnedassessment order, the contention of the petitioner has not beenconsidered by the respondent in accordance with law. 8. Similarly, the contention of the petitioner thatamendment made to Section 115BBE in the year 2020, will not apply tothe assessment year 2017-2018, has also not been considered by therespondent in the impugned assessment order. The respondent hasalso not considered the petitioner's contention in this WritPetition that the amendment to Section 143 (3A) of the Income TaxAct, 1961, was proposed only in the Budget 2020 to include Section144 proceedings also under the e-proceedings and therefore, for theassessment year 2017-2018, the same is not attracted. 9. Though in the counter affidavit, the respondent hasgiven reasons for each and every contention of the petitioner inthis writ petition, the same is not reflected in the impugnedassessment order. Further, as seen from the impugned proceedings,no personal hearing has been afforded to the petitioner. It is alsonot clear that whether such an opportunity was given by therespondent to the petitioner or not. All these aforementionedfactors will clearly indicate that the respondent has violated theprinciples of natural justice while passing the impugned assessmentorder by not affording sufficient opportunity to the petitioner toraise all his contentions available to him under law. 10. For the foregoing reasons, the impugned assessmentorder dated 23.12.2019 is hereby quashed and the matter is remandedback to the respondent for fresh consideration and the respondentshall pass final orders on merits and in accordance with law aftergiving sufficient opportunity to the petitioner to raise all hiscontentions and also affording him the right of personal hearingwithin a period of twelve weeks from the date of receipt of a copyof this order. 11. With the aforesaid direction, the Writ Petition standsdisposed of. No costs. Consequently, connected miscellaneouspetitions are closed. // True Copy // Sd/-Assistant Registrar () https://hcservices.ecourts.gov.in/hcservices/ / /2020Sub Assistant Registrar(CS) Tsg Note:In view of the present lock down owing to COVID-19pandemic, a web copy of the order may be utilized forofficial purposes, but, ensuring that the copy of theorder that is presented is the correct copy, shall bethe responsibility of the Advocate/litigant concerned.+1 CC to Mr.N.DILIP KUMAR, Advocate ( SR-25001[F] dated10/12/2020 )+1 CC to Mr.K.SOUNDARARAJAN, Advocate ( SR-25071[F]dated 11/12/2020 ) W.P.(MD)No.3999 of 202009.12.2020 VB (23.12.2020) 5P 3C