Telangana High Court

Jupally Real Estate Developers Private ... vs Deputy Commissioner Of Income Tax on 25 October, 2024

            *THE HON'BLE SRI JUSTICE SUJOY PAUL
                            AND
           *THE HON'BLE SRI JUSTICE NAMAVARAPU
                      RAJESHWAR RAO

+WRIT PETITON Nos.29026, 29042, 29143, 29993 AND 29994
                       OF 2023

% 25-10-2024


# Jupally Real Estate Developers Private Limited,
  Rep. by its Director
                                                          ...Petitioner

vs.

$ Deputy Commissioner of Income Tax, Central Circle-2 (1),
  Room No.612, 6th Floor, Aayakar Bhavan, Basheer Bagh,
  Hyderabad and Others
                                                     ... Respondents


!Counsel for the Petitioner: Sri S.Ravi, Senior Counsel

^Counsel for Respondents: Ms.K.Mamata



<Gist :


>Head Note :


? Cases referred
1.    AIRONLINE 2019 SC 714
2.    [2024] 161 taxmann.com 604 (Madras)
3.    (1869) LR 4 HL 100
4.    (1921) 1 kb 64
5.    JT 1999 (2) SC 272
6.    (1951) 2 All ER 473
                                    2



       IN THE HIGH COURT FOR THE STATE OF TELANGANA
                            HYDERABAD
                                ****
 WRIT PETITON Nos.29026, 29042, 29143, 29993 AND 29994
                           OF 2023
              (Per Hon'ble Sri Justice Sujoy Paul)

Between:
Jupally Real Estate Developers Private Limited,
Rep. by its Director
                                                           ...Petitioner

vs.

Deputy Commissioner of Income Tax, Central Circle-2 (1),
Room No.612, 6th Floor, Aayakar Bhavan, Basheer Bagh,
Hyderabad and Others
                                                    ... Respondents
JUDGMENT PRONOUNCED ON: 25.10.2024


             THE HON'BLE SRI JUSTICE SUJOY PAUL
                             AND
     THE HON'BLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO

1.     Whether Reporters of Local newspapers
       may be allowed to see the Judgments? :

2.     Whether the copies of judgment may be
       Marked to Law Reporters/Journals?     :

3.     Whether His Lordship wishes to
       see the fair copy of the Judgment?      :


                                            _______________________
                                            JUSTICE SUJOY PAUL


                       ___________________________________________
                      JUSTICE NAMAVARAPU RAJESHWAR RAO
                                  3



            THE HONOURABLE SRI JUSTICE SUJOY PAUL
                          AND
          THE HONOURABLE SRI JUSTICE NAMAVARAPU
                    RAJESHWAR RAO

         WRIT PETITION Nos.29026, 29042, 29143, 29993 AND
                       29994 OF 2023

COMMON ORDER:

(Per Hon'ble Justice Sujoy Paul)

In these petitions filed under Article 226 of the Constitution,

the petitioner has taken exception to the orders dated 10.10.2023

whereby its representations against the office notices dated

30.12.2022 issued under Section 153C of the Income Tax Act,

1961 (for short, the Act) were rejected by the Commissioner of

Income Tax, Central Circle, Hyderabad.

Facts:

2. Draped in brevity, the admitted facts between the parties are

that a search and seizure operation under Section 132 of the Act

was conducted in the group cases of M/s.Coastal Energy and

M/s.Coastal Energen Private Limited at their premises located in

Chennai. During that search operation, certain documents

relating to 'My Home Group' i.e., (i) M/s.Spinoza Enterprises (P)

Limited, (ii) M/s.JBM Resorts (P) Limited, (iii) M/s.JBM Agros

International (P) Limited and (iv) M/s. JBM Exports were found

and seized by the Department. The respective jurisdictional

officers issued notices under Section 153C of the Act to the above

assesses for the Assessment Years 2012-13 to 2017-18. The

aforesaid four assessee companies submitted their reply by

contending that M/s.Spinoza Enterprises (P) Limited, M/s.JBM

Resorts (P) Limited, M/s.JBM Agros International (P) Limited and

M/s. JBM Exports were amalgamated with M/s.Jupally Real

Estate Developers Pvt. Limited, the petitioner herein, with effect

from 05.09.2019 pursuant to an order of National Company Law

Tribunal dated 05.09.2019. Since the aforesaid four companies

stood amalgamated with the petitioner, no action can be taken

against them. The Department, in view of judgment of the

Supreme Court in Pr. Commissioner of Income Tax v. Maruti

Suzuki India Limited 1, realised that notices issued against

amalgamating entity after amalgamation is void because the said

entity ceased to exist after amalgamation. Thus, the Department

thought it proper to put the petitioner to notice. On 27.12.2022,

the Commissioner of Income Tax, Central Circle-2(1), Hyderabad,

vide impugned orders i.e., DIN Nos.ITBA/AST/F/17/2023-

24/1056948714(1), ITBA/ AST/F/17/2023-24/1056948993(1),

ITBA/AST/F/17/2023-24/1056949244(1), ITBA/AST/F/17/

2023-24/1056948404(1) and ITBA/AST/F/17/2023-24/

1056948563(1), notified the assessing officer who will be having

jurisdiction. Accordingly, notices under Section 153C of the Act

AIRONLINE 2019 SC 714

were issued for the Assessment Years 2012-13 to 2017-18 on

30.12.2022. The petitioner filed reply and raised objection against

the said notices dated 30.12.2022. When no heed was paid to the

representations/objections filed by the petitioner on the point of

limitation, the petitioner filed W.P.No.16237 of 2023 which was

disposed of by order dated 20.07.2023, directing the respondents

to take an appropriate decision on the representations of the

petitioner dealing with the question of limitation under Section

153C of the Act expeditiously preferably within a period of six

weeks. In turn, by impugned orders dated 10.10.2023, such

representations/objections were rejected. These orders are

subject matter of challenge in this batch of Writ Petitions.

Contention of the petitioner:

3. Sri S.Ravi, learned Senior Counsel for the petitioner,

submits that notices were issued to four entities as under:

S.No.   Company                    A.O.         Notice     Date     of
                                                U/S.153C   Reply
1.      M/s.JBM Resorts Private    Respondent   09.04.2021 06.05.2021
        Limited                    No.2
2.      JBM Agros International    Respondent   27.04.2021 06.05.2021
        Private Limited            No.3
3.      JBM      Exports Private   Respondent   26.04.2021 06.05.2021
        Limited                    No.3
4.      M/s.Spinoza Enterprises    Respondent   26.06.2021 06.05.2021
        Private Limited            No.4

4. First notice was issued on 09.04.2021. The limitation is to

be counted as per Section 153B of the Act. The Department has

erred in counting the limitation from 27.12.2022 when jurisdiction

was assigned to the relevant jurisdictional officer. The said

document dated 27.12.2022 is placed on record with rejoinder as

Annexure P-2. Thus, sheet anchor of argument of learned Senior

Counsel for the petitioner is that the limitation cannot be counted

from 27.12.2022 when jurisdictional officer was appointed and

books of account and documents were handed over to him or from

the date of issuance of notice dated 30.12.2022. Instead, the

starting point of limitation is the date of issuance of first notice

under Section 153C of the Act i.e., 09.04.2021. This implies that

the books of account or the documents or the assets seized were

handed over to the assessing officer before 09.04.2021. By

placing reliance on Section 127 of the Act which deals with

transfer of cases between the assessing authorities, it is

contended that it is an internal process and same cannot form

basis for the purpose of extending/renewing or reviving the

limitation. There exists no provision permitting such exclusion.

5. The next limb of argument is that the words 'handed over'

used in proviso to Section 153B of the Act refers to handover of

incriminating material from the seized agency to the assessing

agency. It does not contemplate multiple transfers between

different assessing authorities. If interpretation advanced by the

Revenue is accepted, it would mean that any issue of limitation

can be overcome by an internal process of centralisation. This

cannot be the intention of the legislation while inserting proviso to

Section 153B of the Act.

Contention of the Revenue:

6. Representing the Revenue, Ms.K.Mamata, learned counsel,

supported the impugned orders and urged that previous notices

issued to M/s.Spinoza Enterprises (P) Limited, M/s.JBM Resorts

(P) Limited, M/s.JBM Agros International (P) Limited and M/s.

JBM Exports were issued on different dates of April and June of

2021. After receiving their responses, the Department came to

know that in view of the order of National Company Law Tribunal

dated 05.09.2019, the said companies stood amalgamated with

the petitioner - transferee company. Thus, in view of judgment of

the Supreme Court in Maruti Suzuki India Limited (supra), the

previous notices were treated to be void. The officer who received

the documents from the said four companies and issued the

notices ceased to have jurisdiction because of amalgamation, and

therefore, the documents could not have been said to be handed

over to a competent assessing officer. Post amalgamation, the

proper assessment would be of the transferee entity which is the

petitioner in the instant case.

7. Learned Revenue counsel further contended that the ceased

documents were handed over to the jurisdictional officer only on

27.12.2022, and therefore, the notices dated 30.12.2022 for

Assessment Years 2012-13 to 2017-18 are valid and cannot be

said to be barred by limitation. In support of this submission, she

placed reliance on judgment of the Madras High Court in LKS

Gold House (P) Ltd. v. Deputy Commissioner of Income-tax 2.

8. The parties confined their arguments to the extent indicated

above. We have bestowed our anxious consideration on rival

contentions and perused the record.

FINDINGS:

9. Before dealing with the arguments, it is apposite to

reproduce the relevant provision which reads as under:

"153B. Time limit for completion of assessment under section 153A.

(1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,--

(a) in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed;

(b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of

[2024] 161 taxmann.com 604 (Madras)

twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed:

Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later."

(Emphasis Supplied)

10. The interesting quagmire in this case is relating to starting

point of limitation for the purpose of passing order of assessment.

As noticed above, the parties are at loggerheads on the aspect of

starting point. The stand of the petitioner is that the first notice

was issued on 09.04.2021 which shows that the books of account,

documents and assets seized came in possession of assessing

officer before 09.04.2021. The petitioner in reply

affidavit/rejoinder have reproduced a chart which has been

extracted by us hereinabove. Admittedly, no notice was issued to

the petitioner in the year 2021. The notices referred in the said

chart were issued to aforesaid four transferor companies.

11. The proviso to Section 153B of the Act can be split up for

better understanding.

""153B. Time limit for completion of assessment under section 153A.

1...

Provided that in case of other person referred to in section 153C,

(i) the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section

(ii) or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later."

(Emphasis Supplied)

12. A plain reading of the provision and expression 'whichever is

later' shows the legislative intent that out of aforesaid two

methods of counting limitation, the later one will prevail.

Undisputedly, in the instant case, the argument revolves around

the second (ii) mode of counting limitation. As per the petitioner,

the starting point is 2021 when notices were issued to the said

four companies, whereas the Revenue has taken a diametrically

opposite stand by contending that the books of account or

documents were handed over to the assessing officer having

jurisdiction only on 27.12.2022. This point deserves serious

consideration.

13. The argument of the petitioner, as reflected in the ground-E

of writ affidavits, shows that the petitioner assumed that starting

point of limitation is founded upon first notice issued under

Section 153C on 09.04.2021. The said notice was not issued to

the petitioner. The said notice has lost its complete shine because

the same was issued against a company which stood

amalgamated in view of judgment of the Supreme Court in Maruti

Suzuki India Limited (supra). The said notice and action is void

in nature. No amount of argument is advanced by the learned

Senior Counsel for the petitioner to rebut the argument advanced

on the basis of judgment of the Supreme Court in Maruti Suzuki

India Limited (supra). Thus, we find no difficulty in accepting the

argument of the Revenue that earlier notices issued to the said

four transferor companies fade into insignificance and no

limitation can be counted on the basis of the said notices.

14. Before dealing further, it is apposite to remind ourselves

about general principles of construction in taxing statutes. In a

classic passage LORD CAIRNS stated the principle thus: 'If the

person sought to be taxed comes within the letter of the law he must

be taxed, however great the hardship may appear to the judicial

mind to be. On the other hand, if the Crown seeking to recover the

tax, cannot bring the subject within the letter of the law, the subject

is free, however apparently within the spirit of law the case might

otherwise appear to be. In other words, if there be admissible in

any statute, what is called an equitable, construction, certainly,

such a construction is not admissible in a taxing statute where you

can simply adhere to the words of the statute (see Partington

v.A.G. 3). VISCOUNT SIMSON quoted with approval a passage

from ROWLATT, J., expressing the principle in the following

words: 'In a taxing Act one has to look merely at what is clearly

said. There is no room for any intendment. There is no equity

about a tax. There is no presumption as to tax. Nothing is to be

read in, nothing is to be implied. One can only look fairly at the

language used (see Cape Brandy Syndicate v. IRC 4). The above

principle of strict construction of taxing statues was quoted with

approval in Commissioner of Income-tax, Madras v. Kasturi &

Sons 5 where the word 'moneys' in the expression 'moneys payable'

in Section 41(2) of the Income-tax Act, 1961 was not construed to

include 'money's worth'. In interpreting a section in a taxing

statute, according to LORD SIMONDS, 'the question is not at what

transaction the section is according to some alleged general purpose

aimed, but what transaction its language according to its natural

meaning fairly and squarely hits (see St. Aubyn (LM) v. A.G. 6.

LORD SIMONDS call this 'the one and only proper test'.

(1869) LR 4 HL 100

(1921) 1 kb 64

JT 1999 (2) SC 272

(1951) 2 All ER 473

15. The aforesaid legal journal makes it crystal clear that if

language of statute is plain and unambiguous, it has to be given

effect to, irrespective of consequences.

16. In this backdrop, the proviso to Section 153B of the Act

needs to be examined. A microscopic reading of relevant portion

of the said proviso leaves no room for any doubt that the date

when books of account or documents or assets seized were

handed over to the assessing officer having jurisdiction over such

person is the crucial date and if it is later in time, under

'whichever is later' expression, this date will be starting point for

counting limitation. Since previous notices which were issued to

four transferor companies were void, same vanished in thin air

and relevant dates for issuance of said notices are of no relevance.

Merely because some time was consumed in centralising and

handing over relevant incriminating material to the assessing

officer having jurisdiction, the petitioner will not come out of rigors

of the said proviso which is clear and unambiguous.

17. The Madras High Court in LKS Gold House (P) Ltd. (supra),

held as under:

"103. Even if the "Assessing Officers" of the "searched person"

and the "Assessing Officer" of "other persons" like the respective petitioner are same, the date of "satisfaction note"

is to be the deemed date of handing over of the books of account or documents or assets seized or requisitioned for the

purpose of computation of limitation. Thus, twelve months from the end of the financial year from the date on which the documents were handed over or deemed to have been handed over to the "Assessing Officer" of the "other person" such as these petitioners would be start running for computation of limitation from 31.03.2023.

106. Even if the Assessing officer of the "searched person" and that of the "other person" i.e the petitioner were same, it has to be construed that the officer concerned was wearing two different hats one as the "assessing officer" of the "searched person" and one as the "assessing officer" of the "other person". It would be different if they are different in which case it is the date of actual handing over of the books of account or documents or assets seized or requisitioned."

(Emphasis Supplied)

18. The Madras High Court considered a situation where

assessing officer of the 'searched person' and 'other person' were

same. Despite that, it opined that the officer performing two

different duties was wearing two 'different hats'.

19. In the instant case, it is not the case of the petitioner that

the officer who conducted search on aforesaid four companies and

the officer who has been given jurisdiction by order dated

27.12.2022 are same. We are unable to persuade ourselves with

the line of argument of learned Senior Counsel for the petitioner

that the notices dated 30.12.2022 are barred by limitation and

bad in law. We find no reason to interfere with the impugned