Madras High Court
M/S Sterlite Industries (India) Ltd vs The Assistant Commissioner Of Income ... on 12 March, 2008
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated 12..3..2008 Coram: The Hon'ble Mr. Justice K.CHANDRU W.P. No. 27780 of 2007 and M.P. No. 1 of 2007 M/s Sterlite Industries (India) Ltd. Rep. by its General manager (Finance & Accounts) L.N. Tandon SIPCOT Industrial Complex Madurai By pass Road T.V. Puram Tuticorin :: Petitioner vs. 1. The Assistant Commissioner of Income Tax Company Circle VI (4), Room No. 705 7th Floor, New Block No. 121 Mahathma Gandhi Road Nungambakkam Chennai - 34 2. The Deputy Commissioner of Income Tax Company Circle VI (4), Room No. 705 7th Floor, New Block No. 121 Mahathma Gandhi Road Nungambakkam Chennai 34 :: Respondents Petition filed under Article 226 of the Constitution of India seeking for issuance of writ of Certiorari calling for the records comprised in No. CHE/CO-VI(4))/ST/131/2000-2001 dated 27.3.2007 on the file of the second respondent issued in the form of notice under Section 148 and the consequential communication in Lr. No. CGHE/COC-VI (4)/ST/131/2000-2001 dated 17.7.2007 on the file of the first respondent and quash the same. For Petitioner : Mr. N. Venkataraman, SC for Mr. R. Karthikeyan For Respondents : Mr. J. Narayanasamy for Mrs. Pushya Sitaraman O R D E R
Heard the arguments of Mr. N. Venkataraman, learned Senior Counsel leading Mr. R. Karthikeyan, learned counsel appearing for the petitioner and Mr. J. Narayanasamy representing Mrs. Pushya Sitaraman, learned Standing Counsel representing the respondents and have perused the records.
2. The petitioner challenges the order passed by the first respondent dated 17.7.2007 wherein and by which notice was given to reopen the assessment for the year 2000-2001. It is stated in the impugned order that they had received information from the Enforcement Directorate through proper channel which shows possible inflation of purchases on certain items. The following three information are furnished in the impugned order.
(i) Transaction between M/s SIIL and Oasis International for import of drawings and designs Standard Chartered Bank reported that SIIL have failed to file the bills of entry. The charges have been corroborated by examining the bills of lading from BPT which prove that imports were not lifted by the party and were auctioned by BPT for an amount of Rs.150/-.
(ii) Standard Chartered Bank had reported another 10 pending import bills for non submission of original exchange control copies of Bills of Entry.
(iii) RBI had reported another 39 Bills pertaining to BNP Paribas, Scatia Bank, Ceylon Bank, ABN Amro Bank, Canara Bank where SIIL had asked for waiver of submission of original exchange copy of bill of entries."
3. This notice is attacked by the petitioner Company on the ground that such a notice is without jurisdiction and contrary to Sections 147, 148 and 149 of the Income Tax Act, 1961 [for short, 'I.T. Act']. According to the petitioner, the information allegedly received from the Enforcement Directorate for initiating a proceeding does not relate to the relevant assessment year 2000-2001 and that no import of any design or drawing was made during the year 2000-2001 from a Company called Oasis International. The phraseology used in the notice was that there was no reason to suspect and there was no mention of the words 'that there were reasons to believe'. It is nothing but a change of opinion of the Assessing Officer and in the absence of any credible materials, there was no question of reopening the assessment contrary to the ingredients of Section 147 of the I.T. Act. Further, the notice is also barred by limitation. According to the petitioners, since there is a jurisdictional error, they are entitled to approach this Court to challenge the same without availing any remedy provided under the Act.
4. An additional affidavit dated 01.9.2007 was also filed by them stating that the copy of the order obtaining previous sanction by Commissioner of Income Tax was not provided as required under Section 151 of the Act and it is mandatory to have the prior sanction.
5. Interim stay was granted on 14.9.2007 and it was continued till 19.11.2007 against which only, the respondents have entered appearance.
6. The respondents have filed a counter dated 13.9.2007 stating that the information received from Enforcement Directorate relates to the assessment year 2000-2001 and the previous sanction of the Commissioner was also obtained. It is also stated in the order dated 31.8.2007 issued to the writ petitioner that the previous sanction of the Commissioner of Income Tax was obtained under Section 151 of the I.T. Act. Since the said statement coupled with the counter affidavit and assertion made in paragraph 5, there is no reason to disbelieve that there was no such order in existence.
7. The learned counsel for the petitioner submitted placing reliance upon the judgment of the Supreme Court in M/s Chhugamal Rajpal v. S.P. Chaliha and others [1971 (1) SCC 453], that if Section 151 of the I.T. Act provides for previous sanction and that available rights under Sections 148 and 151(2) of the I.T. Act should not be denied to the assessees.
8. He further relied upon the judgment of the Supreme Court in 1973 (3) SCC 581 [Union of India and others v. Messrs. Rai Singh Dev Singh Bist and others] and stated that reason must be recorded for invoking the power under Section 147 of the I.T. Act. The counsel also relied upon the judgment of the Delhi High Court in (2002) 256 ITR 0001 [Commissioner of Income Tax v. Kelvinator of India Ltd.] to drive home the very same point. He also relied upon the judgment of this Court in (2007) 290 ITR 0583 [Commissioner of Income Tax v. Chamundeswari]. Unless a fresh information is available with the Assessing Officer, he cannot invoke the power under Section 147(b) of the I.T. Act and consequently, reassessing the assessment. It is not clear as to how the above said judgments will be of any assistance to the petitioner.
9. The facts of the present case is totally different. In the present case, the definite stand of the Department is that previous sanction from the Commissioner of Income Tax was obtained and credible information received relates to the year 2000-2001. It was also stated that an adjudication order dated 22.8.2007 was already passed and despatched to the petitioner and it is the petitioner, who did not receive the same.
10. Reliance was also placed upon the decision of the Supreme Court relating to GKN Driveshafts (India) Ltd. v. ITO [(2003) 259 ITR 19] wherein in paragraph 5, it was observed as follows:
Para 5: "We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years."
[Emphasis added]
11. In the present case, it is only required to see whether there was any prima facie material available on the basis of which the Department can reopen the file. In view of the counter affidavit and the impugned notice, this Court cannot reject the case of Revenue for invoking the power under Sections 147 and 148 of the I.T. Act.
12. In the light of the above, the writ petition fails and the same shall stand dismissed. No costs. Consequently, connected Miscellaneous Petition is closed.
gri To
1. The Assistant Commissioner of Income Tax Company Circle VI (4), Room No. 705 7th Floor, New Block No. 121 Mahathma Gandhi Road Nungambakkam Chennai - 34
2. The Deputy Commissioner of Income Tax Company Circle VI (4), Room No. 705 7th Floor, New Block No. 121 Mahathma Gandhi Road Nungambakkam Chennai 34