Karti P.Chidambaram vs The Additional Commissioner Of ...
2021 Latest Caselaw 15054 Mad

                                                                             W.P.Nos.15125, 15129, 15695,
                                                                             15713, 15717 & 15720 of 2021

                                     IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                     DATED :28.07.2021

                                                           CORAM

                               THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM
                                   W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021
                                                             and
                                     W.M.P.Nos.16028, 16031, 16594, 16595, 16616, 16617,
                                             16613, 16615, 16621 & 16622 of 2021

                     W.P.No.15125 of 2021

                     Karti P.Chidambaram                                                 ...Petitioner

                                                              Vs

                     1.The Additional Commissioner of Income Tax,
                       Central Range – 2,
                       No.46, (Old No.108), Mahatma Gandhi Road,
                       Nungambakkam, Chennai – 600 034.

                     2.The Deputy Commissioner of Income Tax,
                       Office of the Deputy Commissioner of Income Tax,
                       Central Circle 2 (1)
                       Investigation Wing, Room No.B3, Ground Floor,
                       New No.46, Mahatma Gandhi Road,
                       Nungambakkam, Chennai – 600 034.

                     3.Mr.M.Vivekanandan, IRS,
                       Deputy Commissioner of Income Tax,
                       Central Circle 2(1),
                       Investigation Wing, Room No.B3, Ground Floor,
                       New No.46, Mahatma Gandhi Road,
                       Nungambakkam, Chennai – 600 034.                               ... Respondents

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

Prayer : Writ Petition filed Under Article 226 of the Constitution of India to issue of Writ of Certiorari, calling for the records of the 2nd respondent relating to the Assessment order dated 15.07.2021 having Ref.No.ITBA/AST/M/153C/2021-22/1034237897 (1) for the assessment year 2014-15 issued under Section 153C of the Income Tax Act in the case of the petitioner and quash the same as arbitrary, in gross violation of the principles of natural justice, illegal and violative of the fundamental rights of the petitioner under Articles 14 and 21 of the Constitution of India. For Petitioner:

In W.P.Nos.15125, 15695, 15713, 15717 & 15720 of 2021 : Dr.Abhishek Singhvi Senior Counsel For Mr.N.R.R.Arun Natarajan and Mr.Amith Bhandari

In W.P.No.15129 of 2021 : Mr.Kapil Sibal Senior Counsel and Mr.AR.L.Sundaresan Senior Counsel For Mr.N.R.R.Arun Natarajan and Mr.Adith Pujari For Respondents:

For Respondents : Mr.R.Sankaranarayanan [in all W.Ps] Additional Solicitor General of India Assisted by Mr.A.P.Srinivas Senior Standing counsel [For Income Tax]

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

COMMON ORDER

The orders of assessment dated 15.07.2021 passed under Section

153C of the Income Tax Act, 1961 [hereinafter after referred to as the 'Act']

are under challenge in the present writ petitions.

2. Admittedly, the Show Cause Notices initially issued by the Income

Tax Department was challenged by the petitioners/assessees and this Court

delivered a judgment on 05.07.2021. The writ petitions filed by the

petitioners/assessees were dismissed and consequently, this Court issued

directions to the Assessing Authority to proceed with the

assessment/reassessment by affording opportunity to the writ

petitioners/assessees.

3. The present writ petitions filed by the petitioners/assessees

emerged from and out of the opportunity to be afforded to the assessees

pursuant to the directions issued by this Court.

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

4. The respective learned Senior counsels appearing on behalf of the

petitioners, Dr.Abhishek Singhvi, Mr.Kapil Sibal and Mr.AR.L.Sundaresan

made their respective submissions mainly on the ground that the directions

issued by this Court to afford opportunities to the petitioners had not been

complied with by the respondent Assessing Authority. The respondents

have taken action in a hurried manner, denying reasonable opportunities to

the petitioners and passed the assessment orders, which is to be construed as

an order in nullity in the eye of law.

5. It is contended that it is a classic case of violation of Principles of

Natural Justice as the authorities competent, who is exercising the quasi-

judicial power, failed in their duty to provide reasonable opportunity to the

assessees in the manner known to law. Thus, the orders impugned are non-

est and cannot have its legs to stand under the scrutiny of law. Several

judgments of the Hon'ble Apex Court are cited and it is not in dispute that

the Principles of Natural justice is an inherent part of Article 14 and

therefore, there cannot be any other opinion regarding the opportunity to be

granted to the aggrieved persons. The Principles of violation of Natural

Justice is well established and this Court has to consider the facts and

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

circumstances to form an opinion, whether the Principles of Natural Justice

has been followed or not.

6. The learned Additional Solicitor General of India rebutted the

contentions by stating that opportunities were granted to the writ

petitioners/assessees. However, they have not utilized the said opportunities

in a proper manner and therefore, they have no reason to complain before

this Court by stating that the Assessing Officer has passed the orders of

assessment hurriedly. The sequence of events would establish that the

assessees were granted complete opportunity as contemplated under the

provisions of the Income Tax Act. Therefore, the writ petitions are devoid

of merits.

7. The earlier writ petitions were filed, challenging the Show Cause

Notices issued under Section 153C of the Income Tax Act to the petitioners.

The interim order of Status quo was granted by this Court on 07.12.2020

and the final order was passed by this Court on 05.07.2021. Thereafter, on

07.07.2021, the Assessing authority provided final opportunity to the writ

petitioners/assessees. Again on 07.07.2021, another letter was

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

communicated to the petitioners/assessees, stating that "one final

opportunity to file your replies to establish your case along with complete

details and evidences on or before 09.07.2021, failing which, the

assessments should be completed based on the materials available on

record, without any further opportunity."

8. In response to the said letters issued by the Assessing authority, the

representative / Chartered accountants of the petitioners submitted a letter

on 09.07.2021, stating that the assessee is required to furnish his detailed

response and further, they want to cross-examine the deponents of the

statements, which were relied upon for the purpose of initiating action under

Section 153C of the Act. The assessees requested for reasonable time to

respond on merits with reference to the allegations raised against the

assessees in the show cause notices issued by the authority competent. They

have specifically stated that two days time is not at all sufficient for them to

defend their case as the allegations involves certain intricacies and they

require cross-examination of the persons, who have given statements. In the

concluding paragraph, the assessees have contended that they require atleast

two weeks time, enable them to engage a counsel / authorized representative

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

to prepare and submit a reply on merits and to appear on the assessee's

behalf and orally argue the case. Further, they have demanded for a fair

opportunity to cross-examine the three persons, who allegedly made

statements relied upon as well as the alleged author or authors of the three

pages of three small note books.

9. This apart, a request for personal hearing and to argue the case

orally is also sought for.

10. In this backdrop, the respective learned Senior counsels

contended that none of the request made by the assessees was considered.

Per contra, the Assessing authority had hurriedly proceeded with the

assessment and issued the impugned orders of assessment on 15.07.2021.

11. At the outset, it is contended that this Court delivered the

judgment on 05.07.2021 and two letters were sent by the Assessing

Authority to the assessees on 07.07.2021 and on 09.07.2021 and the

assessees requested to grant atleast two weeks time to defend their case

properly through their counsel/representative and further, requested for a

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

personal hearing as well as to cross-examine persons, who have given

statement against the assessees. However, without any reply to such request

made by the assessees, the respondent/Assessing Authority passed the final

order of assessment on 15.07.2021.

12. The manner, in which, the orders of assessment were passed by

the Assessing Authority itself would establish that reasonable opportunity

had not been granted to the petitioners/assessees. Opportunity to be granted

is not a mere opportunity and it must be meaningful and reasonable. The

assessees must have time to put forth their defense statements, examine the

witnesses by engaging a counsel or for personal hearing. Undoubtedly, the

allegations against the assessees emanated from and out of a search

conducted in the premises of M/s.Agni Estates and Foundations Private

Limited. The assessees are the 'other persons' and therefore, they require

opportunity to rebut the contentions raised against them from and out of the

materials collected from the premises of the 'searched person'.

13. This being the factum, the respondent could not able to establish

that reasonable opportunity has been afforded to the petitioners/assessees to

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

defend their case in the manner known to law. However, the allegations

made against the Assessing Authority is not substantiated and became

unnecessary. Therefore, such allegations made in the affidavits require no

consideration. Though such an allegation is made, the respective learned

Senior counsels fairly have not insisted the same. The Learned Senior

counsels for the petitioners have reiterated that the petitioners are ready and

willing to defend their case and reasonable opportunity is to be given.

14. This being the factum, the Assessing Authority is bound to afford

reasonable opportunity, enabling the petitioners/assessees to defend their

case in the manner prescribed. This being the factum established, this Court

is inclined to pass following orders:

(1) (a) W.P.No.15125 of 2021: The assessment order passed by the second respondent dated 15.07.2021 having Ref.No.ITBA/AST/M/153C/2021-22/1034237897 (1) for the assessment year 2014-15 is quashed.

(b) W.P.No.15129 of 2021: The assessment order passed by the second respondent dated 15.07.2021 having Ref.No.ITBA/AST/S/153C/2021-22/1034247502 (1) for the assessment year 2015-16 is quashed.

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

(c) W.P.No.15695 of 2021: The assessment order passed by the second respondent dated 15.07.2021 having Ref.No.ITBA/AST/S/143(3)/2021-22/1034241359(1) for the assessment year 2019-20, the Consequential notice of demand having Ref.No.ITBA/AST/S/156/2021-22/1034241423(1) and Show Cause Notice having Ref.No.ITBA/PNL/S/271AAC(1)/2021-22/1034244002(1) are quashed.

(d) W.P.No.15713 of 2021: The assessment order passed by the second respondent dated 15.07.2021 having Ref.No.ITBA/AST/S/153C/2021-22/1034241239(1) for the assessment year 2017-18, the Consequential notice of demand having Ref.No.ITBA/AST/S/156/2021-22/1034241312(1) and Show Cause Notice having Ref.No.ITBA/PNL/S/271AAC(1)//2021-22/1034243356(1) are quashed.

(e) W.P.No.15717 of 2021: The assessment order passed by the second respondent dated 15.07.2021 having Ref.No.ITBA/AST/S/153C/2021-22/1034241413(1) for the assessment year 2018-19, the Consequential notice of demand having Ref.No.ITBA/AST/S/156/2021-22/1034241504(1) and Show Cause Notice having Ref.No.ITBA/PNL/S/271AAC(1)/2021-22/1034243830(1) are quashed.

(f) W.P.No.15720 of 2021: The assessment order passed by the second respondent 15.07.2021 having Ref.No.ITBA/AST/S/153C/2021- 22/1034239868(1) for the assessment year 2015-16, the Consequential notice of demand having Ref.No.ITBA/AST/S/156/2021-22/1034239946(1)

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

and Show Cause Notice having Ref.No.ITBA/PNL/S/271(1)(c)/2021- 22/1034240001(1) are quashed.

(2) The matters are remanded back to the Assessing Authority /

second respondent for fresh consideration and for providing reasonable

opportunity to the writ petitioners/assessees and thereafter pass order of

assessment(s) on merits and in accordance with law.

(3) Regarding the opportunity to be granted, the Assessing authority

is directed to permit the petitioners/assessees/counsel/the authorised

representative to represent the case of the petitioners/assessees and an

opportunity to cross-examine the persons, who have given statement against

the assessees is to be provided. The Assessing Authority is also entitled to

have the assistance of legally trained departmental representative, if

required.

(4) The petitioners/assessees are directed not to seek any unnecessary

adjournments and to co-operate for the early disposal of the

assessment/reassessment proceedings. In the event of any such unnecessary

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

adjournment, the same shall be recorded by the Assessing Authority in the

proceedings and proceed accordingly.

(5) The said exercise is directed to be completed by the Assessing

Authority / second respondent and pass assessment / reassessment orders

within a period of four weeks from the date of receipt of a copy of this

order. If the petitioners are aggrieved thereafter, they are at liberty to

approach the appellate authority under the Act.

15. With these directions, all the writ petitions stand allowed. No

costs. Consequently, connected miscellaneous petitions are closed.

28.07.2021

Speaking order/Non-speaking order Internet:Yes/No Index : Yes/No Kak

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

To

1.The Additional Commissioner of Income Tax, Central Range – 2, No.46, (Old No.108), Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.

2.The Deputy Commissioner of Income Tax, Office of the Deputy Commissioner of Income Tax, Central Circle 2 (1) Investigation Wing, Room No.B3, Ground Floor, New No.46, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.

3.Mr.M.Vivekanandan, IRS, Deputy Commissioner of Income Tax, Central Circle 2(1), Investigation Wing, Room No.B3, Ground Floor, New No.46, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.

https://www.mhc.tn.gov.in/judis/ W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

S.M.SUBRAMANIAM, J.

Kak

W.P.Nos.15125, 15129, 15695, 15713, 15717 & 15720 of 2021

28.07.2021

https://www.mhc.tn.gov.in/judis/