Madras High Court
Savithri Naidu vs Income Tax Officer on 7 October, 2021
W.A.No.2533 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 07.10.2021
CORAM
THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HON'BLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP
Writ Appeal No.2533 of 2021
and C.M.P.Nos.16492 & 16496 of 2021
Savithri Naidu .. Appellant
-vs-
Income Tax Officer,
Non Corporate Ward 15(4),
Aayakar Bhawan, Wanapathy Building,
Room No.207, 2nd Floor,
NO.121, N.H.Road,
Chennai – 600 034. .. Respondent
Appeal under Clause 15 of Letters Patent against the order dated
23.06.2021 in W.P.No.3523 of 2021.
For Appellant : Mr.Vaibhav R.Venkatesh
For Respondent : Mr.A.P.Srinivas
Senior Standing Counsel
_________
Page 1 of 12
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
JUDGMENT
(Delivered by T.S.Sivagnanam, J.)
The appellant is the writ petitioner, who challenged an order of
assessment under Section 143(3) of the Income Tax Act, 1961 ["the Act"
for brevity] for the assessment year 2015-16. The writ petition was filed
during February 2018 and the Court having been convinced that the
appellant has made out a prima facie case had granted an order of interim
stay by order dated 16.02.2018. The said order continued to remain in force
till the disposal of the writ petition by the impugned order dated 23.06.2021.
2.The appellant is before us challenging the order impugned on
several grounds. Firstly on the ground that the subject matter of challenge
is without jurisdiction as the notice under Section 143(2) of the Act was
issued only on 19.09.2017 much after the mandatory six months period
prescribed under the Act. More importantly, the learned counsel for the
appellant would draw our attention to the arbitration which took place
concerning immovable property at Sholinganallur. Elaborate submissions
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
were made on the said issue and the learned counsel has taken us through
the relevant portions of the award of the Arbitral Tribunal dated 14.09.2020.
It is submitted that in terms of the award, a sum of Rs.23,73,34,000/- was
directed to be paid to the appellant and the appellant is also entitled to
re-claim the property and/or is entitled to receive the balance sale
consideration and in such event, the question of capital gains does not arise
at all. This according to the learned counsel for the appellant is a very vital
issue which was not considered by the learned Single Bench. Further, it is
submitted that the purchaser Company has gone into Corporate Insolvency
Resolution process pursuant to the order dated 29.04.2021 passed by the
National Company Law Tribunal [NCLT] and as a result of which the
execution of the proceedings cannot go on as on date. Further, it is
contended that capital gains will not arise because the very transaction is
under dispute and was also earlier attached by the Income Tax authorities.
Therefore, the order of assessment on presumption of capital gains was
challenged by the appellant by filing a writ petition before this Court.
Therefore, it is submitted that the learned Writ Court ought to have
considered the jurisdictional issues and not relegated the appellant to avail
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
the alternate remedy before the Commissioner of Income Tax
[Appeals][CIT(A)].
3.Mr.A.P.Srinivas, learned Senior Standing Counsel appearing for the
revenue sought to sustain the order and direction issued by the Court and
submitted that all issues can very well be agitated by the appellant before
the First Appellate Authority and all the facts can be gone into and a finding
can be rendered which may not be possible in a writ petition when disputed
questions of fact are to be considered.
4.We have elaborately heard Mr.Vaibhav R.Venkatesh, learned
counsel appearing for the appellant and Mr.A.P.Srinivas, learned Senior
Standing Counsel appearing for the respondent.
5.It is true that the remedy of appeal before the CIT(A) as against the
order of assessment dated 29.12.2017 is an effective and efficacious
alternate remedy. Before the First Appellate Authority the assessee would
be entitled to agitate all issues on facts as well as on law which would
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
include the point regarding the assumption of jurisdiction by the respondent
qua the period of limitation fixed under the statute. Therefore, we are of the
view that it would be better for the assessee to avail the alternate remedy
considering the complicated factual situation which has arisen in this case.
We say so because there was a parallel round of litigation concerning the
property which is the subject matter of the assessment, namely, with regard
to the computation of capital gains. Therefore, the said factual issue qua the
property is the substantial matter which requires to be considered, more
particularly, when the assessee's stand is that in terms of the award of the
Arbitral Tribunal dated 14.09.2020, the assessee is entitled to be paid a sum
of Rs.23,78,34,000/- and she is entitled to re-claim the property and/or is
entitled to receive the balance sale consideration and in such an event, the
capital gains would not arise. More importantly the award of the Arbitral
Tribunal dated 14.09.2020 has not attained finality as not only the assessee
has filed a petition under Section 34 of the Arbitration and Conciliation Act,
1996, but the adversarial in the arbitration proceedings, namely, M/s.Land
Mark Housing Projects Chennai Private Limited has also filed a petition to
set aside the award. That apart, the NCLT has also passed orders under the
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
provisions of the Insolvency and Bankruptcy Code and the purchaser
Company has gone into Corporate Insolvency Resolution process.
Therefore, we are of the clear view that the result of these proceedings
would definitely have an impact on the assessment under the provisions of
the Act which is required to be considered. However, such an exercise
cannot be done by us in a petition under Article 226 of the Constitution of
India. At this juncture, it would be worthwhile to note the results of the
Arbitral Award dated 14.09.2020 which reads as follows:
“233.In the Result:
a.There shall be an award against the 1st Respondent alone
for a sum of Rs.28,48,34,000/- towards sale consideration
and Rs.25 Lakhs towards compensation (premium) and
thus, the total award amount shall be Rs.28,73,34,000
(Rupees Twenty Eight Crores Seventy Three Lakhs and
Thirty Four Thousand Only).
b.The above said award amount of Rs.28,73,34,000/- shall
carry interest at the rate of 9% per annum from 01.04.2015
to till the date of award and at the rate of 12% per annum
from the date of award till the date of realisation payable
by the 1st respondent.
c.There shall be an order of attachment of the properties
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
covered under the Exs.A13 to A16 and there shall be a
charge against the said property for the award amount with
interest.
d.There shall be an order of injunction restraining the 1st
respondent from encumbering, alienating or disposing of
the properties covered under Exs.A13 to A16 until the
award is fully satisfied.
e.All the other claims made by the Claimants against the
1st respondent are dismissed as indicated above.
f.The claims made against the 2nd respondent are
dismissed.
g.The counter claim made by the 2nd respondent is
dismissed.
h.The Contempt Petition M.P.7/2018 stands disposed of as
indicated above.
i.Miscellaneous Petition Nos.1, 3, 4 and 5 stand dismissed
as infructuous.
j.Considering the nature of the claims, the rival
contentions and all other circumstances, the parties are
directed to bear their own cost.”
6.In terms of the award, there is an order of attachment of the
properties and there is a charge against the said property for the award
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
amount with interest. Apart from that, there is an order of injunction
restraining the first respondent, namely, the purchaser Company from
encumbering, alienating and disposing of the properties. As against the
disallowed claims the appellant is before this Court under Section 34 of the
Arbitration and Conciliation Act. As against the award in favour of the
appellant and as against the dismissal of the counter claim by the respondent
before the Arbitral Tribunal, those parties are also before this Court under
Section 34 of the Arbitration and Conciliation Act. Therefore, any orders to
be passed pursuant to the award of the Arbitral Tribunal would have a direct
impact on the assessment proceedings under the Act. Thus, for the above
reasons, we agree with the ultimate conclusion of the learned Single Bench
that the appellant should avail the alternate remedy of appeal before the
CIT(A) but not for the reasons stated therein but for the reasons assigned by
us in the preceding paragraphs.
7.We note that the order of assessment which was impugned in the
writ petition is dated 29.12.2017. The writ petition was filed well within the
period of limitation prescribed under the statute for filing a statutory appeal
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
and the writ petition was disposed of on 23.06.2021. Therefore, the period
during which the writ petition was pending, i.e. from February 2018 till the
date of order passed in the writ petition or receipt of the certified copy of the
order has to be necessarily excluded. That apart, since the writ petition was
filed immediately after the assessment order was passed, the time taken for
filing the writ petition also needs to be excluded for computing the
limitation. Soon after the writ petition was dismissed, the appellant had
filed the present appeal and there was a delay in the appeal getting
numbered on account of certain miscellaneous petition which had to be filed
by the appellant so as to enable the Registry to number the appeal.
Therefore, the period spent before this Court both before the learned Single
Bench as well as before us needs to be excluded while computing limitation.
Therefore, there can be no difficulty for us to make an observation that in
the event the appellant files an appeal before the CIT(A), the appeal shall be
entertained without rejecting the same on the ground of limitation and we
grant thirty days time from the date of receipt of a copy of this judgment
within which time the appellant shall file the appeal before the CIT(A). As
observed by us earlier, the factual matrix need to be gone into. The matter
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
pertaining to the property in question is subject matter of an award by the
Arbitral Tribunal and there is a challenge to certain portions of the award
and there are proceedings before the NCLT which would all have a direct
impact on the assessment as observed. Therefore, the appellant is granted
liberty to file additional documents and raise additional grounds before the
CIT(A) as this material was not available during the assessment
proceedings. If such a request is made by the appellant, the CIT(A) shall
permit the appellant to raise those grounds and decide the same subject to
just objections by the revenue on merits and not on the entitlement of the
appellant to raise additional grounds which we have permitted. In the said
appeal, the appellant is given liberty to file a stay petition and seek for stay
of the assessment proceedings on the ground which they have mentioned
before us in this appeal as well as in the writ petition. Since the appellant
had the benefit of interim order since February 2018 till the disposal of the
writ petition on 23.06.2021, the assessment order dated 29.12.2017 shall
remain stayed for a period of sixty days from the date of receipt of a copy of
this order or till the disposal of the stay petition that would be filed by the
appellant before the CIT(A) whichever is earlier.
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
8.In the result, the writ appeal stands disposed of. No costs.
Consequently, connected miscellaneous petitions are closed.
(T.S.S., J.) (S.S.K., J.)
07.10.2021
Index: Yes/ No
Speaking Order : Yes/ No
cse
To
Income Tax Officer,
Non Corporate Ward 15(4),
Aayakar Bhawan, Wanapathy Building,
Room No.207, 2nd Floor,
NO.121, N.H.Road,
Chennai – 600 034.
_________
https://www.mhc.tn.gov.in/judis/
W.A.No.2533 of 2021
T.S.Sivagnanam, J.
and
Sathi Kumar Sukumara Kurup, J.
cse
W.A.No.2533 of 2021
07.10.2021
_________
https://www.mhc.tn.gov.in/judis/
