Madras High Court
Naresh Sangeetha vs Income Tax Officer on 27 November, 2023
Author: Krishnan Ramasamy
Bench: Krishnan Ramasamy
W.P.No.20694 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 27.11.2023
CORAM
THE HON'BLE Mr. JUSTICE KRISHNAN RAMASAMY
W.P.No.20694 of 2023
and
W.M.P.No.20053 of 2023
Naresh Sangeetha
... Petitioner
Vs.
1.Income Tax Officer,
Non Corporate Ward 6(1),
Chennai 600 006.
2.Assessment Unit,
Income Tax Department,
New Delhi.
... Respondents
Prayer:
Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorari, to call for the records pertaining to
the Notice under Section 148A(b) dated 16.03.2022, PAN
No.ALLPS7507C, in DIN: ITBA/AST/F/148A(SCN)/2021-
22/1040906233(1), issued by the first respondent and the order under
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W.P.No.20694 of 2023
Section 148A(d) dated 31.03.2022 vide ITBA/AST/F/18A/2021-
22/1042352752(1), issued by the first respondent and order dated
28.03.2023 under Section 147 read with Section 144B of the Income Tax
Act, PAN No.ALLPS7507C, in DIN: ITBA/AST/S/147/2022-
23/1051498461(1) passed by the second respondent and quash the same
as illegal and void.
For Petitioner : Mr.Ravi Kannan
For Respondent : Dr.B.Ramaswamy,
Senior Standing counsel
ORDER
This writ petition has been filed challenging the Notice dated
16.03.2022 issued by the first respondent and the orders dated
31.03.2022 and 28.03.2023 passed by the first respondent and the second
respondent respectively.
2. The learned counsel for the petitioner had made very many
submissions before this Court. However, after some arguments, he had
restricted his submissions to the extent as follows:
(i) The learned counsel for the petitioner would
submit that the entire proceedings were initiated against
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the petitioner only based on the statement of one Naresh
Jain. However, the said statement of Naresh Jain and the
other relevant documents, which were relied upon by the
respondents while passing the impugned order, have not
been provided to the petitioner. Hence, he requests this
Court to direct the respondent to provide the said
statement and documents to the petitioner.
(ii) Further, he would submit that the respondent
had not provided any opportunity to the petitioner to
cross-examine the said Naresh Jain. Hence, he requests for
an opportunity to cross-examine Naresh Jain, since the
proceedings against the petitioner were initiated only
based on the statement of Naresh Jain.
3. He would also submit that the consideration of the above
requests by this Court will be sufficient to meet out the case of the
petitioner.
4. In view of the above requests, Dr.B.Ramaswamy, learned
Senior Standing counsel for the respondent would submit that in such
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case, since the respondents had only relied upon the documents, which
were obtained from various source based on the statement of Naresh Jain
and not relied upon any of the oral evidence of Naresh Jain without
relevant documents, the cross-examination of Naresh Jain will only be an
empty formality, which is not at all necessary in view of the law laid
down by the Hon'ble Apex Court in Telestar Travel Pvt Ltd vs. Special
Director of Enforcement reported in (2013) 9 SCC 549.
5. Further, he would submit that the respondents will provide the
documents, which they had relied upon in the impugned order, to the
petitioner.
6. In this regard, the learned Senior Standing counsel for the
respondent had also filed an affidavit. The relevant portion of the said
affidavit is as follows:
“5. I submit that multiple documents have been
collected based on the oral statements of Mr.Naresh
Jain who operated the Penny stock case. The entire
investigation order was passed not just based on the
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oral statement of Mr.Naresh Jain but as per the
information received inside portal that Mrs.Naresh
Sangeetha had transacted in penny stock by name
“M/s.Monotype India Pvt. Ltd.” to the tune of
Rs.38,21,826/-.
6 to 13. ......................
14. I submit that therefore, the question of AO
depending up the oral statement of Mr.Naresh Jain does
not arise. We had corroborated all his statements with
proper document, evidence, materials and other such
proofs.”
7. I have given due consideration to the submissions made by the
learned counsel for the petitioner and the respondent and also perused
the materials available on record.
8. In the present case, at paragraph No.2.3.16 of the impugned
assessment order dated 28.03.2023, it has been stated as follows:
“2.3.16. A show cause notice proposing the
addition was issued to the assessee on 16.03.2023. In
response to this show cause notice, assessee submitted
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her reply on 19.03.2023 which is considered and placed
on record. In her reply assessee raised the same
objection which were raised earlier vide 05.07.2022.
Since these objections are already disposed off vide
letter dated 12.12.2022, hence need not to be disposed
off again in the reply assessee that she has not availed
any exemption u/s 10(38) of the Act and also paid LTCG
@10% u/s 112 A of the Act. In this regard it is pertinent
to mention here that assessee has filed her original
return u/s 139(1) of the Act on 31.08.2018 for the AY
2018-19 declaring an income of Rs. 9,94,910/- wherein
she has not declared any LTCG and Rs. 35,33,957/- was
claimed as exempted LTCG. This return of income was
revised on 10.10.2018 and assessee admitting total
income of Rs. 45,28,870/- declaring LTCG of Rs.
35,33,957/- and Rs. 3,53,396/- was paid as taxes thereon
as an afterthought. Assessee has also stated that Sh.
Naresh Jain or his associates are not connected to her
and also requested to provide an opportunity of cross
examination. Here it is important to mention that cross
examination is not necessary (reference is drawn to
Hon'ble Supreme court order dated 13.02.2023 in case
of Telestar travels Pvt. Ltd. Vs Special Director of
Enforcement). As already explained (supra) without any
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strong financials and thin profits and even losses, share
price of M/s.Monotype India Ltd increased many folds as
a result of artificial jacking by syndicate controlled by
Sh. Naresh Jain and assessee is also a beneficiary of it.
Direct connection to the kingpin i.e., Sh. Naresh Jain is
not necessary but what is important is that assessee is a
clear cut beneficiary by receiving fictitious benefits from
penny stock M/s.Monotype India Limited. Mere paying
of LTCG does not exonerate assessee from these sham
transactions in shares of this penny stock.”
9. On perusing the above portion, it appears that a request was
made by the petitioner for cross-examining Naresh Jain, since the entire
proceedings were initiated by relying upon the various documents, which
were obtained from various sources based on the statement of Naresh
Jain. However, considering the judgment of the Hon'ble Apex Court in
Telestar case (referred supra), the second respondent had quashed the
aforesaid request of the petitioner stating that since the respondent had
only relied upon the documents, which were obtained based on the
statement of Naresh Jain, the cross-examination of Naresh Jain is not
required and accordingly, the second respondent had rejected the request
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of the petitioner.
10. No doubt, if the oral statement of a person is not utilized in a
case, it is not necessary to cross-examine the said person. In the present
case also, it was contended by Dr.B.Ramasamy, learned Senior Standing
counsel, that the oral statement of Naresh Jain was not relied upon by the
respondent, however, only the documents, which were obtained based on
the statement of Naresh Jain was relied upon by them in the impugned
proceedings.
11. In reply, the learned counsel for the petitioner would fairly
submit that since only the documents are relied upon by the respondents,
there is no requirement for cross-examination of Naresh Jain. However,
he requests this Court to direct the respondent to provide all the
documents, which were relied upon by them in the assessment order
based on the information received from Naresh Jain.
12. Considering the above submissions made by the learned
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counsel for the petitioner and the respondents, it appears that the
respondent had only relied upon the documents, which were obtained
based on the statement of Naresh Jain. Hence, this Court is of the view
that the petitioner is entitled to get a copy of those documents, which
were obtained from various sources based on the statement of Naresh
Jain, since furnishing the said documents will enable the petitioner to file
her detailed reply.
13. In the present case, the learned Senior Standing counsel for the
respondent had fairly submitted that though the respondent had relied
upon very many documents to substantiate the case against the
petitioner, some of the documents were not provided to the petitioner
and the same will be provided at the earliest. Hence, after receipt of the
said documents, the petitioner shall file her detailed reply. If no reply is
filed, there is no doubt that it will go against the petitioner. In such view
of the matter, this Court is inclined to pass the following order:
(i) The impugned order dated 28.03.2023 alone is
set aside and this Court is not inclined to express its
view with regard to the other reliefs sought by the
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petitioner in this petition. Accordingly, the matter
pertaining to the said impugned order dated 28.03.2023
is remitted back to the respondent for re-consideration;
(ii) The respondent is directed to provide the
documents, which are relied upon by them, which were
received from various sources, based on the statement
of Naresh Jain, to the petitioner within a period of 30
days from the date of receipt of copy of this order;
(iii) The petitioner is directed to file her reply
along with the documents relied upon in the reply
within a period of 30 days from the date of receipt of
the aforesaid documents from the respondent;
(iv) Thereafter, the respondent is directed to pass
appropriate order in accordance with law after
providing an opportunity of personal hearing to the
petitioner;
14. With the above direction, this writ petition is disposed of. No
costs. Consequently, the connected miscellaneous petition is also closed.
27.11.2023
Speaking/Non-speaking order
Index : Yes / No
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Neutral Citation : Yes / No
nsa
To
1.Income Tax Officer,
Non Corporate Ward 6(1),
Chennai 600 006.
2.Assessment Unit,
Income Tax Department,
New Delhi.
https://www.mhc.tn.gov.in/judis
KRISHNAN RAMASAMY.J.,
nsa
27.11.2023
(1/2)
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