M/S.Aban Offshore Ltd vs The Deputy Commissioner Of Income ...
2021 Latest Caselaw 12023 Mad

                                                                                    W.P.No.10855 of 2014

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                   Dated : 21.06.2021

                                                        CORAM

                                   THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM

                                                 W.P.No.10855 of 2014
                                                         and
                                                  M.P.No.1 of 2014

                     M/s.Aban Offshore Ltd.,
                     Represented by its Vice President-Finance,
                     Mr.Vijay Saheta,
                     113, Janpriya Crest,
                     Pantheon Road, Egmore,
                     Chennai-600 008.                                   ...    Petitioner
                                                         - Vs -

                     The Deputy Commissioner of Income Tax,
                     Company Circle I (1),
                     VI Floor, New Block,
                     No.121, Mahatma Gandhi Road,
                     Nungambakkam,
                     Chennai-600 034.                                   ... Respondent


                     Prayer : Writ Petition filed under Article 226 of the Constitution of India

                     praying to issue a Writ of Certiorari, calling for the records in GIR/PAN AX-

                     2017 AAACA3012H dated 21.03.2014 relating to the Assessment Year 2006-

                     07 on the file of the Respondent, quash the same with costs.


                     1/12


https://www.mhc.tn.gov.in/judis/
                                                                                    W.P.No.10855 of 2014




                                     For Petitioner   : Mr.G.Baskar

                                     For Respondent : Mrs.Hema Muralikrishnan
                                                      Senior Standing Counsel for Income Tax

                                                          ORDER

The assessment order dated 21.03.2014 passed under Section 144 read

with Section 147 of Income Tax Act, 1961 with reference to the assessment

year 2006-07 is under challenge in the present Writ Petition.

2. The petitioner is the company, engaged in the business of provision of

oil field services to various oil majors for off shore exploration and production

of hydrocarbons in India and abroad. The petitioner renders drilling services to

oil majors including Oil and Natural Gas Corporation Ltd., and others. In

addition, the petitioner is engaged in infrastructure development and operates

wind mills for the generation and distribution of power.

3. The petitioner filed Return of income for the Assessment Year 2006-

07 on 11.09.2006. The Return was processed under Section 143(1) and

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

selected for scrutiny by issue of notice under Section 143(2) of the Act dated

04.10.2007. The petitioner appeared before the Assessing Authority and

furnished all details sought for. The Assessing Authority completed the process

and passed an order of assessment on 30.12.2008 under Section 143(3) of the

Act. Subsequently, the re-opening proceedings were initiated under Section

147 of the Act and a notice under Section 148 was issued on 30.03.2013. The

petitioner responded to the notice in letter dated 15.04.2013 and the reasons for

re-opening of assessment for the said assessment year was passed on

10.02.2014. The petitioner submitted their objections for reopening of the

assessment and the said objections were rejected and thereafter, an order of

assessment was passed in the impugned proceedings dated 21.03.2014 under

Section 144 read with Section 147 of the Act.

4. The learned counsel for the petitioner strenuously contended that the

reason for reopening itself is absurd and not in consonance with the ingredients

contemplated under Section 147 itself. The reasons furnished is that the

assessee has not furnished any TRC Certificate during the scrutiny proceedings

of the Assessment Year 2006-07. However, such a Certificate during the

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

relevant point of time were not required to be produced under law. The

amended provisions of the Income Tax Act sought to be applied with

retrospective effect by insisting the petitioner to produce the Certificate by

reopening the assessment proceedings, which is impermissible and in violation

of the principles of law. Thus, the very reason for reopening of assessment is

not only untenable and the final order of reassessment is to be set aside on the

said ground.

5. The learned counsel for the petitioner made a reference regarding the

reasons furnished in proceedings dated 10.02.2014 and compared with the

objections raised by the petitioner in letter dated 15.04.2013. The petitioner has

categorically explained that the amendment made for production of the TRC

Certificate is prospective and therefore, the very reason for reopening of

assessment is untenable. However, the Assessing Officer without providing any

opportunity, hurriedly proceeded with the assessment and passed an impugned

order. Thus, the petitioner is constrained to file the present writ petition.

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

6. The learned counsel for the petitioner is of an opinion that when there

is a patent irregularity or illegality in the matter of reopening of assessment,

preferring an appeal is a choice and the High Court is empowered to entertain a

writ petition on the ground of patent illegality and in the cases, wherein

principles of natural justice had been violated. In this regard, the petitioner

cited the judgment of the Apex Court and Bombay High Court as well as the

Madras High Court and the details of the case laws are extracted as under:

In the case of GKN Driveshafts (India) Ltd.., Vs. ITO – SC – 259 ITR

19, Procedure for reopening of assessments under Section 147 has elaborated

by the Apex Court. In the case of Fisher Xomox Sanmar India Ltd., Vs. ACIT

– Mad – 271 ITR 393, Madras High Court held that on request from assessee,

reasons for reopening must be furnished within a reasonable period of time.

Inordinate delay on behalf of the Assessing Officer cannot be approved off, as

it is not the intention of the Apex Court. The petitioner further referred the

cases of Asian Paints Ltd., Vs.DCIT-Bom-296 ITR 90, wherein the Court and

in the case of Smt.Kamala Ojha Vs. ITO-Bom-88 taxmann.com 468, the

Bombay High Court held that there should be a minimum gap of 4 weeks

between the disposal of the objections on the reopening and the passing of the

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

re-assessment order. Undue haste in passing the order of reassessment without

giving sufficient time to the assessee to challenge the order rejecting objections

is an attempt to overreach the court and to thwart the petitioner's challenge to

the order rejecting preliminary objections. In the case of CCIT Vs. Prashanth

M.Timbolo – SC – 103 CCH 0195 – Bom-414 ITR 0507, the Court held that

when there is no requirement in law to provide TRC at the time of completion

of original assessment, subsequent enactment of the same cannot be a reason

for reopening.

7. Relying on the said judgments, the learned counsel for the petitioner

has emphasized that when production of certain certificate is not mandatory

and applying the subsequent amendment with retrospective effect by reopening

the assessment is not only bad in law, shows the non-application of mind on the

part of the respondent. Thus, the writ petition is to be allowed.

8. The learned Senior Standing Counsel appearing on behalf of the

respondent objected the contentions raised on behalf of the learned counsel for

the petitioner in entirety by stating that it is not as if the respondent has not

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

given any opportunity to the petitioner. The procedures contemplated under the

statute and the precedent laid down by the Apex Court are scrupulously

followed in the case of the petitioner. The petitioner was provided with an

opportunity to participate in all the proceedings and he sought for an

adjournment on more than one occasion and thereafter, not turned down for

participation. Thus, the petitioner is not entitled for any relief as such sought

for in this writ petition.

9. The learned Senior Standing Counsel solicited the attention of this

Court with reference to the reasoning given for reopening assessment

proceedings dated 10.02.2014 and made a submission that this is the case not

only reopened on the basis of the non-production of TRC Certificate. The other

reasons are also elaborated in the proceedings dated 10.02.2014 and therefore,

the reasons furnished are convincing and based on the reasonings, the

Assessing Authority passed the final order on 21.03.2014. Under these

circumstances, the petitioner if at all aggrieved, has to approach the Appellate

Authority under the provisions of the Act and admittedly, the petitioner has not

exhausted the appellate remedy as contemplated under the Act and thus, this

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

writ petition is liable to be rejected.

10. This Court is of the considered opinion that an attempt is made by the

petitioner to set aside the original Assessment Order on the ground that there

was violation of principles of natural justice and the TRC Certificate is not

necessary with reference to the Assessment Year 2006-07. This Court is of the

considered opinion that the reasons furnished for reopening of assessment in

proceedings dated 10.02.2014 reveals that beyond the production of TRC

Certificate there are other aspects, which requires an adjudication, which was

done by the Assessing Officer and the final order of Assessment was passed in

the impugned proceedings dated 21.03.2014.

11. Even in case of violation of principles of natural justice, in all

circumstances such cases need not be entertained by the High Court under

Article 226 of the Constitution of India by dispensing with the appellate

provisions contemplated under the statute. Undoubtedly, every writ petition is

filed on one or the other ground, more specifically, violation of the principles

of natural justice, discrimination, equality of law or otherwise in violation of

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

statutory provisions. On all these grounds, if the appeal provision is dispensed

with, then the High Court is diluting the importance of the appellate provisions

contemplated under the Act.

12. Filing an appeal is the Rule. Entertaining a writ petition is an

exception. Dispensing with an appeal is an exceptional one, wherein, the High

Court could be able to form an opinion that there is an imminent threat or

damage, which cannot be compensated or gross injustice, warranting an urgent

relief but not otherwise. Therefore, filing of an appeal may be dispensed with

by the High Court, only if the urgency and imminency is established and in all

other circumstances, the aggrieved persons shall prefer an appeal for the

purpose of redressing their grievances by following the procedures

contemplated.

13. The Appellate Authorities are the final fact finding Authority. The

Appellate Authority are empowered to call for the original records, re-

adjudicate the facts and rectify the omissions and commissions and errors, if

any committed by the original Authority. Such an adjudication is a paramount

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

importance for the High Court to exercise the power of review under Article

226 of the Constitution of India. The power of review under Article 226 of the

Constitution of India is limited and the High Court is empowered to scrutinize

the procedures and reasons for arriving a decision by an Authority by following

the procedures contemplated under the Statute but not in the decision itself.

Thus, the importance attached to the appellate remedy at no point of time can

be undermined by the higher Courts. The finding of the Appellate Authority

would provide a valuable assistance for the High Court to exercise the power of

judicial review under Article 226 of the Constitution of India effectively and

efficiently. Therefore, the legislative intention to redress the grievances by

providing an appeal at no point can be thwarted by the High Court. The

institutional hierarchy and its respect sought to be not only be protected, the

High Court is not expected to usurp the powers of the Appellate Authority by

venturing into the fact finding aspects with reference to mixed question of fact

and law. The Appellate Authority would be the best persons to appreciate the

documents and evidences as they are possessing an expertise in the field of

Income Tax in the present case. Therefore, this Court is of the opinion that in

all circumstances, the parties aggrieved have to approach the Appellate

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

Authority even in respect of violation of the statutory provisions and violations

of the principles of natural justice or otherwise with reference to the facts and

circumstances.

14. This being the principles to be followed, this Court is of the

considered opinion that the legal grounds as well as the factual discrepancies,

which all are disputed, shall be adjudicated by the Appellate Authority and the

petitioner is at liberty to approach the Appellate Authority by following the

procedures contemplated and in the event of preferring any such appeal, the

Appellate Authority shall entertain the appeal without reference to the delay

and adjudicate the same on merits in accordance with law by affording an

opportunity to the writ petitioner and dispose of the same as expeditiously as

possible.

https://www.mhc.tn.gov.in/judis/ W.P.No.10855 of 2014

S.M.SUBRAMANIAM, J.,

ssn

15. With these directions, this writ petition is disposed of. No costs.

Consequently, connected miscellaneous petition is closed.

21.06.2021 Index:Yes Internet:Yes Speaking Order ssn

To

The Deputy Commissioner of Income Tax, Company Circle I (1), VI Floor, New Block, No.121, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034.

W.P.No.10855 of 2014 and M.P.No.1 of 2014

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