Madras High Court
Mitesh Surana vs The Income Tax Officer on 15 June, 2022
Author: Anita Sumanth
Bench: Anita Sumanth
W.P.No.7682 of 2021 &
WMP.Nos.8219, 8220 & 19763 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 15.06.2022
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P.No.7682 of 2021 &
WMP.Nos.8219, 8220 & 19763 of 2021
Mitesh Surana ... Petitioner
Vs
1.The Income Tax Officer,
Non-Corp Ward 3(3),
121, Mahatma Gandhi Road,
Nungambakkam, Chennai – 600 034.
2.Principal Chief Commissioner of Income Tax,
National e-Assessment Centre,
Room No.401, 2nd Floor, E-Ramp,
Jawaharlal Nehru Stadium,
New Delhi – 110 003.
3.Central Board of Direct Taxes,
Department of Renevue,
Ministry of Finance, North Block,
New Delhi. ...
Respondents
PRAYER: Writ Petitions filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorarified Mandamus, calling for the records in
ITBA/AST/S/143(3)/2020-21/1031020916 (1) dated 26.02.2021 on the file of
the respondent No.2 relating to the Assessment Year 2018-19 and quash the
same for being ex-facie, illegal, arbitrary, against the principles of natural justice
https://www.mhc.tn.gov.in/judis
W.P.No.7682 of 2021 &
WMP.Nos.8219, 8220 & 19763 of 2021
and in violation to the E-assessment Scheme, 2019 notified vide Notification
No.61/2019/F.No.370149/154/2019-TPL dated 12.09.2019 with further direction
to grant opportunity for personal hearing before passing the fresh orders.
For Petitioner : Mr.N.V.Balaji
for Mr.M.R.Venkatesh
For Respondents : Mrs.Hema Murali Krishnan,
Senior Standing Counsel.
ORDER
The petitioner is an individual, who has challenged an order of assessment for assessment year (AY) 2018-19 on the ground that the assessment is ex-facie illegal, arbitrary and against the principles of natural justice apart from being in gross violation of e-assessment Scheme, 2019 notified under Notification No.S.O.3264(E) [No.61/2019 (F.No.370149/154/2019-TPL)] dated 12.09.2019, amended by Notification S.O.2745 (E) [No.370149/154/2019-TPL] dated 13.08.2020. As a consequence, he prays that an opportunity be granted by the Assessing Authority for personal hearing prior to passing of fresh orders.
2. Two grounds have been raised and specifically argued by the learned counsel for the petitioner. The first is that the impugned order of assessment deals with an addition on account of alleged suppression of sales at paragraph 3 thereof. My attention is drawn to show cause notice dated 20.01.2021, which raises three issues as proposals. The first is in regard to investment in immovable https://www.mhc.tn.gov.in/judis W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 properties being brought to tax as an unexplained investment, the second is an addition to capital account on the ground that there were certain infusions of capital out of unexplained/undisclosed sources and the third is the proposed addition to total income under the head 'income from other sources'.
3. It is clear, on a comparison of the assessment order with the show cause notice issued, that the issue of suppression of sales has not been put to the assessee for rebuttal at all. Thus, this ground is answered in favour of the assessee.
4. The second argument is as regards the lack of personal hearing afforded to the petitioner. The defence of the respondent is that though admittedly, the assessee had sought an opportunity of personal hearing in his response dated 26.01.2021 to show cause notice dated 20.01.2021, the grant or otherwise of such opportunity was subject to the discretion of the authority.
5. In this connection, my attention is drawn to Notification, being Notification 61 dated 12.09.2019, as amended by Notification No.60 dated 13.08.2020, especially clause (5), in terms of which, e-assessments have been finalised. The relevant portion of Clause (5) reads as follows:
'5. Procedure for assessment. — (1) The assessment under this Scheme shall be made as per the following procedure, namely: — .............
(xvi) the National e-assessment Centre shall examine the draft https://www.mhc.tn.gov.in/judis assessment order in accordance with the risk management strategy W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 specified by the Board, including by way of an automated examination tool, whereupon it may decide to, —
(a) finalise the assessment as per the draft assessment order and serve a copy of such order and notice for initiating penalty proceedings, if any, to the assessee, alongwith the demand notice, specifying the sum payable by, or refund of any amount due to, the assessee on the basis of such assessment; or
(b) provide an opportunity to the assessee, in case a modification is proposed, by serving a notice calling upon him to show cause as to why the assessment should not be completed as per the draft assessment order; or
(c) assign the draft assessment order to a review unit in any one Regional e-assessment Centre, through an automated allocation system, for conducting review of such order.
.................'
6. I have had an occasion to consider an identical issue in W.P.No.9900 of 2021 and held as follows:
6. The defence of the respondent turns upon the use of the word 'may' in clause (xvi) above as per which the Department seems to indicate that an opportunity of hearing is only optional. I disagree.
Proceedings for assessment result in a civil liability upon the assessee and the word 'may' utilized therein, must be read as 'shall'. It is incumbent upon the authority to afford effective opportunity of hearing prior to finalising of the assessment. All the more in a case such as the present, where the assessee has itself sought such opportunity.
7. The prayer in this Writ Petition is restricted to certiorari and hence the matter can well be closed by quashing the order for the infraction of principles of natural justice. However, learned counsel for the respondent would plead that the matters be remanded to the file of the assessing authority for correction of the error and completion from that stage onwards.
8. No objection is put forth by the petitioner/learned counsel for the petitioner to the aforesaid request. That apart, the violation https://www.mhc.tn.gov.in/judis W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 is one of procedure, which is curative in nature. Hence, and also bearing in mind the following decisions of the High Court’s wherein a similar prayer as aforesaid has been considered and accepted, I accede to the same:-
i) Orissa Stevedores Ltd. V. UOI ((2021) 128 taxmann.com 163 (Orissa))
ii) Interglobe Enterprise Pvt. Ltd. V. National Faceless assessment Centre Delhi ((2021) 130 taxmann.com 54)
iii) Piramal Enterprises Ltd. V. Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer ((2021) 129 taxmann.com 18 (Bombay))
iv) Akashganga infraventures India Ltd. V. National Faceless Assessment Centre, Delhi ((2021) 130 taxmann.com 401 (Delhi))
v) Javin Construction Pvt. Ltd. v. National Faceless Assessment Centre ((2021) 130 taxmann.com 430 (Delhi))
vi) Faqir Chand V. National E-Assessment Centre, Delhi ((2021) 130 taxmann.com 323 (Delhi))
vii) Golden Tobacco Ltd. V. National Faceless assessment Centre ((2021) 132 taxmann.com 296 (Bombay))
viii) Mudar Sudheer V. Union of India ((2022) 138 taxmann.com 47 (Andhra Pradesh))
7. For the aforesaid reasons, the impugned assessment is set aside. Let the assesseee file his objections to the proposals contained in the original show cause notice as well as the order of assessment, treating the same as additional show cause notice, within a period of four (4) weeks from date of receipt of a copy of this order. The respondent is directed to ensure that the portal is enabled, such that the objections of the assessee may be uploaded therein as permitted.
8. Thereafter, a notice of personal hearing shall be issued, the petitioner heard and after considering the objections and all/any materials filed and the oral https://www.mhc.tn.gov.in/judis W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 submissions made in the course of personal hearing, an order of assessment be passed, in accordance with law. The entire exercise, including the time granted for filing objections, shall be completed within a period of 90 days from date of receipt of a copy of this order.
9. This Writ Petition is allowed in the aforesaid terms. No costs.
Connected Miscellaneous Petitions are closed.
15.06.2022 sl Index : Yes / No Speaking Order / Non Speaking Order To
1.The Income Tax Officer, Non-Corp Ward 3(3), 121, Mahatma Gandhi Road, Nungambakkam, Chennai – 600 034.
2.Principal Chief Commissioner of Income Tax, National e-Assessment Centre, Room No.401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi – 110 003.
3.Central Board of Direct Taxes, https://www.mhc.tn.gov.in/judis W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 Department of Renevue, Ministry of Finance, North Block, New Delhi.
Dr.ANITA SUMANTH,J.
Sl https://www.mhc.tn.gov.in/judis W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 W.P.No.7682 of 2021 & WMP.Nos.8219, 8220 & 19763 of 2021 15.06.2022 https://www.mhc.tn.gov.in/judis