Centum Electronics Ltd. V. Deputy Commissioner of Income Tax Circle-11(2)

WP/31486/2013

AI Insights

The case involves M/s Centum Electronics Ltd., which challenged a notice and subsequent order issued by the Deputy Commissioner of Income Tax under Section 148 of the Income Tax Act, 1961. The petitioner argued that the initiation of proceedings under Section 147 read with Section 148 was without jurisdiction. Initially, the High Court granted an interim order in favor of the petitioner, but a final order had already been passed by the respondent authority before this interim order. The court found that the petitioner was not given a fair opportunity to present its case before the final order was passed, leading to the quashing of the order and directing a fresh hearing.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 810196 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 30-10-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PADMABUSHAN
• Assessee Lawyers: CHYTHANYA
• Keywords: Income Tax; Jurisdiction; Notice; Reassessment; Writ petition
• Section: 147; 148; 144; 226; 227

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 30TH DAY OF OCTOBER, 2014 BEFORE THE HON’BLE MRS.JUSTICE B.V.NAGARATHNA WRIT PETITION NO.31486 OF 2013 (T-IT) BETWEEN: M/S CENTUM ELECTRONICS LTD., (FORMERLY KNOWN AS M/S SOLECTRON EMS INDIA LTD.,) #44, KHB INDUSTRIAL AREA, YELAHANKA NEW TOWN, BENGALURU-560 016. REP.BY ITS CHAIRMAN AND MANAGING DIRECTOR, SRI APPARAO V.MALLAVARAPU AGED ABOUT 57 YEARS S/O SRI RAMAKRISHNA RAO MALLAVARAPU ... PETITIONER (BY SRI CHYTHANYA K.K., ADV.,) AND: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-11(2), 14/3, 5TH FLOOR, R.P.BHAVAN, NRUPATHUNGA ROAD, OPP. RBI BENGALURU-560 001. `... RESPONDENT (BY SRI PADMABUSHAN N., ADV., FOR SRI K.V.ARAVIND, ADV.,) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO 2 QUASH AS FAR AS THE PETITIONER IS CONCERNED BY THE IMPUGNED NOTICE ISSUED BY THE RESPONDENT I.E., DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(2) U/S 148 OF THE INCOME TAX ACT 1961, DATED 26.2.2013 ENCLOSED AS ANNEXURE-A. THIS PETITION COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Though writ petition is listed to hear various interim applications filed by the petitioner, I have nevertheless heard the matter at length and writ petition is disposed by this order. 2. Petitioner is a Public Limited Company engaged in the business of manufacture of printed circuit board assemblies in the EHTP unit and mobile phone repair business in the DTA unit. Petitioner has assailed notice dated 26-02-2013 (Annexure-A) and order dated 15-05-2013 (Annexure-B). 3. The facts germane to the disposal of this writ petition are; that the petitioner had filed its return of income for the assessment year 2008-09. Infact, the 3 scrutiny proceedings of the assessment had also taken place. Subsequently, notice dated 26-02-2013 under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’ for short) was issued to the petitioner. On receipt of that notice, petitioner filed its return on 20-03-2014 and thereafter sought for reasons for issuance of the said notice which were given by the respondent on 03-04-2013. Subsequently, petitioner filed objections to the notice on 29-04-2013. Considering those objections, order dated 15-05-2013 (Annexure-B) was passed by the respondent, over-ruling the objections. The writ petition was filed on 15-07-2013 assailing notice at Annexure-A and order at Annexure-B. The writ petition was listed before this Court on 11-03-2014, on which date there was an interim order granted in favour of the petitioner. However, it transpires that even prior to grant of that interim order, on 05-03-2014, the order on the proceedings initiated under Section 147 r/w. Section 4 148 of the Act was passed and proceedings were concluded. That order dated 05-03-2014 is produced by the petitioner at Annexure-Q to the writ petition. Subsequently, along with it, a demand notice has also been issued, a copy of which is produced at Annexure- R. It is in the context of the above chronology of dates, the petitioner has filed the aforesaid applications , I.A.Nos.3/2014 for stay, 4/2014 for dispensation, 5/2014 for additional documents, 6/2014 for amendment, 7/2014 for stay and memo for withdrawal of I.A.No.3/2014. 4. I have heard the learned counsel for the petitioner and learned counsel appearing for the respondent – Department and perused the materials placed on record. 5. Initially, the petitioner was aggrieved by the initiation of proceedings under Section 147 r/w. Section 148 of the Act. Be that as it may. It is now relevant to 5 note that those proceedings have culminated in order dated 05-03-2014 which is at Annexure-Q and demand has been issued pursuant to the said order. I have perused the said order at Annexure-Q. 6. Learned counsel for the petitioner while drawing my attention to various documents that have been annexed to the writ petition and also the applications, contended that the order dated 05-03-2014 is not in accordance with law, inasmuch as the respondent had no jurisdiction whatsoever to initiate proceedings under Section 147 r/w. Section 148 of the Act. He contended that it was in that context Annexures-A and B were assailed at the first instance and as there was progress in the matter, several applications have been filed seeking various interim reliefs in aid of the final relief. He therefore, contended that the matter ought to be heard on the question of jurisdiction of the respondent to initiate proceedings 6 against the petitioner under Section 147 r/w. Section 148 of the Act. 7. Per contra, learned counsel for the Department contended that the proceedings have culminated in the order dated 05-03-2014. The said order was passed much earlier to the interim order of stay granted by this Court and therefore, if the petitioner is aggrieved by the order dated 05-03-2014, he is at liberty to avail statutory remedy and at this stage, this Court need not consider the correctness of the notice issued under Section 148 of the Act. 8. It is apparent on record that until interim order granted by this Court on 11-03-2014, the respondent had every authority to proceed with the proceedings initiated by him by virtue of the notice dated 26-02-2013. It is also noted that even prior to the interim order granted by this Court on 11-03-2014, the final order dated 05-03-2014 was passed on the said 7 proceedings. On perusal of the same, it is noted that before passing the final order which is at Annexure-Q, the respondent – Authority had issued notice dated 26-02-2014 to the petitioner asking its representative to be present along with requisite documents on 04-03-2014. On further perusal of the order dated 05-03-2014, it is noted that the petitioner’s representative did not appear on that date, instead petitioner’s counsel issued a letter dated 05-03-2014 i.e., on which date the order was passed, requesting the Authority not to proceed with the reassessment proceedings and not to proceed to make best judgment under Section 144 of the Act until disposal of the interim application for stay filed by the petitioner before this Court. The petitioner may not be aware of the fact that on 05-03-2014 itself, the final order would be passed. On narration of the aforesaid facts, it is apparent that prior to the passing of the order dated 05-03-2014, petitioner has not been heard in the 8 matter, inasmuch as, petitioner did not appear on 04-03-2014. Therefore, the order at Annexure-Q has been passed based on the materials available with the respondent and without considering materials which the petitioner would have made available to the respondent prior to the passing of the order under Section 147 r/w. Section 148 of the Act. In that view of the matter, and without going into the merits of the matter, order dated 05-03-2014 is quashed. The petitioner is at liberty to appear before the respondent – Authority on 24-11-2014 without expecting any separate notice from that Authority. The purpose is to enable the petitioner to putforth its case before the respondent – Authority before a fresh order is passed on the proceedings initiated. On that date or any other date to be given by the respondent – Authority, the petitioner to make its submission through its authorised representative. On considering the same, the respondent – Authority to pass a fresh order in 9 accordance with law. The writ petition stands disposed in the aforesaid terms. In view of the disposal of the writ petition, all interim applications would not survive for consideration and they are ordered to be filed. Sd/- JUDGE VMB "