Madras High Court
Napa Radhakrishnan vs The Income Tax Officer on 1 August, 2023
W.P.No.21596 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 01.08.2023
CORAM :
THE HONOURABLE MR.JUSTICE C.SARAVANAN
W.P.No.21596 of 2021
and
W.M.P.Nos.22798 & 22799 of 2021
Napa Radhakrishnan ... Petitioner
Vs.
1.The Income Tax Officer,
National e-Assessment Centre,
Income Tax Department,
Ministry of Finance,
Room No.401, 2nd Floor, E-Ramp,
Jawaharlal Nehru Stadium,
Delhi – 110 003.
2.The Assistant Commissioner of Income Tax,
Non-Corporate Circle – 5(1),
Aayakar Bhavan,
No.121, Uthamar Gandhi Salai,
Nungambakkam, Chennai – 600 034. ... Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India, for
issuance of a Writ of Certiorari, to call for the records in
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W.P.No.21596 of 2021
DIN:ITBA/AST/S/147/2021-22/1035375067(1) dated 08.09.2021 on the file
of the first respondent relating to Assessment Year 2013-14 and quash the
same.
For Petitioner : Mr.G.Baskar
For Respondent : Mr.B.Ramaswamy,
Senior Standing Counsel
ORDER
The petitioner is aggrieved by the impugned assessment order dated
08.09.2021 passed by the first respondent for the assessment year 2013-2014.
Relevant portion of the impugned order reads as under:
“Accordingly Statutory Notice u/s 148 was
issued on 23.03.2020 followed by Notice u/s 142(1)
dated 18.09.2021 to make compliance by way of
submitting the relevant reply along with the
documents/papers & other details etc. on E-online.
Also the relevant indispensable accounts or
documents/papers or other details thereof as
mentioned above, are required to be submitted on line
electronically in E-proceedings/facility through your
account specifiedd in the Annexure to this said
notices i.e. In e-filing website
(www.incometaxindiaefiling.gov.in). But no
complaince was made by the assessee on the above
issues. Further Notice u/s 142(1) of I.A.Act, 1961
dated 09.06.2021 along with repeated
Notice/reminders Letters together with the relevant
letter of Questionnaire/Annexure were issued
periodically through departmental E-on line and
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W.P.No.21596 of 2021
served upon the said assessee within the stipulated
time on behalf of the department for making
compliance or calling for the details attributable to
the verification of the genuineness or authenticity of
the aforesaid finding of computation & calculation of
the aforesaid issues. As per submissions/details
including supporting evidence of available on
departmentl E-online Record of ITBA module, NO
satisfactory reply is given on behalf of the aforesaid
assessee & thus the aforesaid issue remained
unexplained/unverified for want of the submission of
relevant reply on E-online proceedings during the
course of the hearing of the E-online scrutiny
proceedings on behalf of the said assessee.
In view of above it is a time barring case &
further also I have no alternative but to dispose off
well within time. The impugned Assessment Order
under Section 143(3) dated 26.02.2015 is erroneous
so far as it is prejudicial to the interest of revenue.
Henceforth, as per materials & submissions or
findings as available on Deptl. E-online record
needed or sought for as and when as well as facts
together with the circumstances of the aforesaid case,
the involvement of escaped or concealed amount of
Rs.10,89,84,933/- being chargeable to tax
attributable to trading transaction of the purchase
and sale of Original UCC & modified UCC-N178 for
Rs.69,26,823/- by the Client mode Modification
during the corresponding year is finally added back
into the total income of the said assessee.
In view of the above narrated facts of the
aforesaid case, a show cause was issued on
19.08.2021 to the reason as to why assessment should
not be completed as per Draft Assessment Order
dated 19.08.2021 for compliance on 25.08.2021.
The said assessee did neither comply within the
prescribed time limit as mentioned in the show cause
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W.P.No.21596 of 2021
notice nor any communication was received before
the undersigned till date against the above show
cause notice assessee has either nothing to say in this
regard or have no objection against the Draft
Assessment Order and as such I am bound to finalize
the Assessment as per information available.
Total Income of the said assessee is ascertained
or determined or assessed afresh as under:-
Total Income : Rs.22,23,080/-
(As per ITR E-filed on 29.03.2013)
Add: Added the Escaped Amount :Rs.69,26,823/-
the involvement of escaped amount of
Rs.10,89,84,933/-
being chargeable to tax attributable to trading
transaction
of the purchase & sale of Original UCC & modified
UCC-N178
for Rs.69,26,823/- by the Client mode Modification
during the
corresponding year
Assessed Total Income : Rs.91,49,903/-
Assessed under Section 144/147 of I.T.Act,
1961 on a Total Income at Rs.91,49,903..only.
Charge Tax & Interest as per rule. Issue DN &
Challan accordingly.
Initiate Penalty proceedings under Section
271(1)(b) & 271 (1)(c) of I.T.Act, 1961”.
2. The impugned notice has been passed under Section 147 read with
Section 144 of the Income Tax Act afer the petitioner was issued with notice
under Section 148 of the Income Tax Act on 23.03.2020. The petitioner
appears to have responded to the same. When the petitioner asked the
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W.P.No.21596 of 2021
respondent to give reasons for re-opening the assessment, the respondent
themselves sent a communication dated 11.03.2021 under Section 143(2)
read with Section 147 of the Income Tax Act was issued on 11.03.2021. In
the said communication, the space meant for giving reasons had been left
blank and has been stated as “NULL”.
“The relevant portion of the communication dated 11.03.2021, reads as
under:
Notice under section 143(2) read with section 147
of the Income-Tx Act, 1961
Dear Taxpayer,
Thank you for filing your return of income for
Assessment Year 2013-14 in response to notice under
Section 148 of the Act, vide Ack.no.372718941290620 on
29.06.2020.
2. While acknowledging the care and diligence you
have taken in preparing the return, there are certain
issues as mentioned below which need further
clarification:-
Issues as per reasons recorded for reopening
null
3.In view of the above, you may submit your
response with supporting documents (if any) on the above
mentioned issues to undersigned electronically in 'E-
proceedings' facility through your account in e-Filling
website (www.incometaxindiaefilling.gov.in) at your
convenience on or before 15.03.2021.
4. In course of assessment proceedings, if required
specific questionnaire(s) or requisition(s) for
information/document may be issued subsequently
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W.P.No.21596 of 2021
5. A brief note on E-proceeding is enclosed for
your kind reference. In case you require any assistance in
filling your response, you may contact toll free Call
Centre number 1800 103 4215.”
3. The learned counsel for the petitioner submitted that the petitioner
had sent a response to the same and once again requested to the respondent to
give the reasons as to basis on which a sum of Rs.69,26,823/- was sought to
be included towards Income. Thereafter, the petitioner was issued with a
show cause notice together with the draft assessment order dated 19.08.2021
which has now culminated in the impugned order.
4. At the time of admission itself, this Court had noted the content of
the communication dated 11.03.2021, calling upon the petitioner to respond
by 15.03.2021. Noting the fact that the aforesaid communication was signed
only on 16.03.2021, this Court had come to the prima facie conclusion that
the aforesaid communication dated 11.03.2021 was uploaded only on
16.03.2021.
5. The impugned order is sought to be assailed by the petitioner on the
ground that the basis on which a sum of Rs.69,28,893/- was proposed to be
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W.P.No.21596 of 2021
added was not explained income to the petitioner, even though, the petitioner
had sent repeated reminders asking the respondent to furnish an explanation
for the basis, on which the aforesaid amount was sought to be added to the
taxable income of the petitioner. He further submits that the petitioner
responded to the details called for notice issued under Section 142(1) in so
far, item nos, 1, 2, 3. In the item nos. 3 & 4, the petitioner has categorically
stated as follows:
S.No.3 Please furnish the copy of the We hereby inform you that during the
bank account through which year under assessment, assessee was carried
business of above client code out trading of futures and options and we
was operated during the period are not able to correlate the turn over
of 01.04.2012 to 31.03.2013. mentioned in your letter Rs.69,26,823/- and
hence we request you to inform us from
where the above amount is taken so that we
will be able to provide the information as
required by you.
S.No.4 Please furnish the full details of In respect of Q-4, we are unable to find
client code mentioned as out the client code mentioned as Original
Original UCC-N 168 and UCC-N 168 and modified UCC- 178 for the
modified UCC- 178 for the period 01.04.2012 to 31.03.2013. We
period 01.04.2012 to request you to provide us the detailed
31.03.2013. information about the data required so that
we will provide you the same.
6. The learned Senior Standing Counsel for the respondents submits
that after notice under Section 148 was issued to the petitioner on
23.03.2020, the petitioner was issued with the notice under Section 142(1) of
the Income Tax Act on 18.09.2022. However, the petitioner did not
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W.P.No.21596 of 2021
responded to the same. It is submitted that the petitioner was thereafter
issued with another notice under Section 142(1) on 09.06.2021 which was
also not responded by the petitioner. Hence, show cause notice cum draft
assessment order was issued on 19.08.2021. Therefore, the Department was
left with no further option, except to pass the impugned assessment order in
the absence of proper explanation by the petitioner regarding the income that
had escaped assessment for a sum of Rs.69,26,823/-.
7. The learned Senior Standing Counsel further submitted that the
petitioner has an alternative remedy before the Appellate Commissioner
against the impugned order and therefore on this count also, the present writ
petition is liable to be dismissed. He further submitted that the petitioner has
not made proper disclosure of income at the time of filing returns under
Section 139 of the Income Tax Act, 1961, on 29.09.2013.
8. The assessment that was completed on 26.02.2015 under Section
143(3) and thereafter re-opened, by the issuance of the notice under Section
148 of Income Tax Act on 23.03.2020. It is further submitted that several
notice was sent to the petitioner through e-mail and on-line facility.
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W.P.No.21596 of 2021
However, the petitioner did not respond. Therefore, the department was left
with no other option except to pass the impugned order based on the
available records.
9. Heard the learned counsel for the petitioner and the learned Senior
Standing Counsel for the respondents.
10. The petitioner has not specifically asked for response for
reopening of assessment in accordance with the decisions of Supreme Court
in the case GKN Driveshafts (India) Ltd Vs ITO, reported in (2003) 259
ITR 19 (SC). However, the department had itself voluntarily attempted to
furnish the reasons vide communication dated 11.03.2021 issued under
Section 143(2) of the Income Tax Act read with 147 of the Income Tax.
However, the aforesaid communication did not contain any reasons.
11. The impugned order refers to a notice issued on 23.03.2020
followed by another notice under Section 142(1) on 18.09.2021. However,
the impugned assessment order is dated 08.09.2021.
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W.P.No.21596 of 2021
12. It indicates that the order has been passed in a hurry to avoid the
assessment becoming time barred under Section 153 of the Income Tax Act,
1961. The aforesaid amount of Rs.69,26,823/- has been added without
proper reasons an without giving petitioner an opportunity to explain to his
stand.
13. In case of Ajay Ajit Tanna Vs Union India, reported in [2023]
151 taxmann.com 324 (Bombay), the Bombay High Court held as under:
11. Equally settled is the principle of law that the
legality of the reassessment proceedings has to be
tested on the touch stone of the reasons recorded by the
A.O for such reopening. In the present case even when
the petitioner had demanded the reasons for reopening
the assessment, no such reasons were furnished to the
petitioner which was otherwise an obligation cast upon
the A.O in terms of the judgment in GKN Driveshafts
(India) Ltd. (supra). Interestingly the A.O in the notice
under section 143(2) of the Act dated 30th June, 202 has
recorded the reasons as 'null' which to our
understanding means that there were no reasons at all
with the A.O to support his belief that income had
escaped assessment for if there were any, the A.O would
not have recorded so. Further if at all there were any
reasons in fact recorded and available with the A.O,
then the same ought to have been furnished to the
petitioner in terms of the mandate of the judgment in
GKN Driveshafts (India) Ltd.(supra).
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W.P.No.21596 of 2021
14. The above reasoning applies to the four corners of present case.
The impugned order is therefore un-sustainable. The impugned order
cannot be explained by way of counter as held by the decision of Hon'ble
Supreme Court in Mohindeer Singh Gill and Another -Vs- The Chief
Election Commissioner, New Delhi and Others reported in 1978 SCR(3)
272.
15. Under these circumstances, the impugned order is set aside and the
case is remitted back to the respondent to pass fresh order. The respondent
shall furnish details as to the basis on which the aforesaid amount of
Rs.69,23,836/- was to be added to the taxable income of the petitioner
within a period of 30 days from the date of receipt of a copy of this order.
The respondent shall pass orders within a period of 30 days thereafter. The
petitioner shall co-operate with the respondent in the assessment proceeding.
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W.P.No.21596 of 2021
16. With the above observation, this Writ Petition is allowed. No
costs. Consequently, connected miscellaneous petitions are closed.
01.08.2023
Index : Yes/No
Internet : Yes/No
Speaking Order/Non-Speaking Order
Neutral Citation : Yes/No
drl
To
1.The Income Tax Officer,
National e-Assessment Centre,
Income Tax Department,
Ministry of Finance,
Room No.401, 2nd Floor, E-Ramp,
Jawaharlal Nehru Stadium,
Delhi – 110 003.
2.The Assistant Commissioner of Income Tax,
Non-Corporate Circle – 5(1),
Aayakar Bhavan,
No.121, Uthamar Gandhi Salai,
Nungambakkam, Chennai – 600 034.
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W.P.No.21596 of 2021
C.SARAVANAN, J.,
drl
W.P.No.21596 of 2021
and
W.M.P.Nos.22798 & 22799 of 2021
01.08.2023
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