M/s.Sri.M.S.Badduddeen and M/s.Smt.Aarifa Badduddeen V. The Assistant Commissioner of Income Tax, Income Tax Circle-I, Virudhunagar

WP(MD)/2214/2011

AI Insights

The case involves multiple writ petitions filed by M/s.Sri.M.S.Badduddeen and M/s.Smt.Aarifa Badduddeen against the Assistant Commissioner of Income Tax, challenging the reassessment orders for various assessment years. The reassessments were based on statements recorded during a survey conducted under Section 133A of the Income Tax Act, 1961. The petitioners argued that these statements, not given on oath, should not be the sole basis for reopening their assessments. The court referenced a previous decision (Commissioner of Income-Tax v. S.Khader Khan Son) which supported the petitioners' stance that such statements without oath cannot be conclusively used for reassessment.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 813136 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 22-02-2012
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax v. S.Khader Khan Son [(2008) 300 ITR 157 (Mad)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R
• Assessee Lawyers: R
• Keywords: Income suppression; Income Tax; Re-assessment; Survey; Writ of Certiorari
• Section: 147; 142(1); 133A; 143(1)(a); 148(2); 226

Judgement Text

"1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 22.02.2012 CORAM: THE HONOURABLE MR.JUSTICE K.K.SASIDHARAN W.P.(MD)Nos.2214 to 2216 and 2274 to 2276 of 2011 and M.P.(MD)Nos.1,1,1,1,1 and 1 of 2011 M/s.Sri.M.S.Badduddeen, 87/330, East Mosque Street, Rajapalayam-626 117, Virudhunagar District. : Petitioner in W.P.(MD)Nos.2214 to 2216/2011 M/s.Smt.Aarifa Badduddeen, 87/330, East Mosque Street, Rajapalayam-626 117, Virudhunagar District. : Petitioner in W.P.(MD)Nos.2274 to 2276/2011 Vs. The Assistant Commissioner of Income Tax, Income Tax Circle-I, Virudhunagar-626 001, Virudhunagar District. : Respondent in all W.Ps. Prayer in W.P.(MD)No.2214 of 2011: Writ Petition is filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the files of the respondent in proceedings dated 31.12.2010 in PAN AGIPB5938L/2007-2008 and quash the same. Prayer in W.P.(MD)No.2215 of 2011: Writ Petition is filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the files of the respondent in proceedings dated 31.12.2010 in PAN AGIPB5938L/2008-2009 and quash the same. Prayer in W.P.(MD)No.2216 of 2011: Writ Petition is filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the files of the respondent in proceedings dated 31.12.2010 in PAN AGIPB5938L/2009-2010 and quash the same. Prayer in W.P.(MD)No.2274 of 2011: Writ Petition is filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the files https://hcservices.ecourts.gov.in/hcservices/ 2 of the respondent in proceedings dated 31.12.2010 in PAN ADYPA0446M/2009-2010 and quash the same. Prayer in W.P.(MD)No.2275 of 2011: Writ Petition is filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the files of the respondent in proceedings dated 31.12.2010 in PAN ADYPA0446M/2008-2009 and quash the same. Prayer in W.P.(MD)No.2276 of 2011: Writ Petition is filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the files of the respondent in proceedings dated 31.12.2010 in PAN ADYPA0446M/2007-2008 and quash the same. For Petitioners : Mr.R.Janarthanan For Respondent : Mr.R.Sathiyamoorthy ******** COMMON ORDER ****** These Writ Petitions are directed against the assessment orders passed by the Assistant Commissioner of Income Tax, Virudhunagar, whereby and whereunder, assessments were re-opened under Section 147 of the Income Tax Act, 1961 on the basis of the materials collected, during the time of survey under Section 133A of the Act. 2. Since the issue involved in all these matters pertains to the legality of the orders passed by the Assistant Commissioner of Income Tax, on the basis of the information collected during the survey conducted on 12 February, 2009 in the premises of the petitioners, the factual matrix as found in W.P.(MD)No.2214 of 2011 is taken to narrate the background facts. THE FACTS: 3. The petitioner is the Proprietor of M/s.Pathy & Company. The petitioner engaged in civil works and more particularly, providing tower foundation and construction of control room for the purpose of commissioning and installation of wind electric generators of M/s.Vestas RRB India Limited, Chennai. During the assessment year 2007-2008, the petitioner has received the total contract receipts of Rs.1,81,71,625/- and he has submitted his return declaring the total income as Rs.10,18,325/-. The petitioner has filed necessary returns for the said assessment year. The return of income was processed under Section 143(1)(a) of the Income Tax Act, 1961 [hereinafter referred to as \"the Act\"] and an order of assessment was made on 21 December, 2009. 4. While the matters stood thus, the business premises of the petitioner was subjected to a survey under Section 133A of the Act. The survey was on 12 February, 2009. A statement was recorded https://hcservices.ecourts.gov.in/hcservices/ 3 from the petitioner during the course of survey. Based on the survey records, the assessing authority issued a notice to him calling for returns under Section 142(1) of the Act. The petitioner, in his reply to the notice, contended that he has shown his income correctly and no order of assessment could be made on the basis of a statement made during the course of survey. However, the assessing officer proceeded with the assessment proceedings and ultimately, passed an order of assessment on 31 December, 2010. Feeling aggrieved by the said order of assessment, the petitioner is before this Court. 5. The Assistant Commissioner of Income Tax, Circle-1, Virudhunagar filed a counter in answer to the contentions raised in the affidavit filed in support of the Writ Petition. According to the assessing authority, there was a survey operation conducted in the business premises of the petitioner on 12 February, 2009 and the survey revealed suppression of income. Therefore, the assessment was re-opened under Section 147 of the Act, after recording reasons under Section 148(2) of the Act. The petitioner, in his explanation, requested to treat the return originally filed as one in response to notice under Section 148. The petitioner was given a pre-assessment notice and after considering his explanation, final order of assessment was made. Accordingly, the assessing authority justified the order of assessment. SUBMISSIONS: 6. The learned counsel for the petitioner, by placing reliance on the judgment of a Division Bench of this Court in Commissioner of Income-Tax v. S.Khader Khan Son [(2008) 300 ITR 157 (Mad)], contended that assessment cannot be re-opened merely on the basis of a statement recorded during the time of survey under Section 133A of the Act. According to the learned counsel, other than the statements recorded during the course of survey, there were no other materials before the assessing authority to re-open the matter and pass an order of re-assessment under Section 147 of the Act. Therefore, the assessment orders are liable to be set aside. 7. The learned Standing Counsel for the Income Tax Department, while admitting that the re-assessment was made only on the basis of the statements recorded by the inspecting officials during a search conducted under Section 133A of the Act, maintained that the disallowance claimed by the petitioner under Section 40A(3) was rightly disallowed and the said amount was added to the total income returned. According to the learned Standing Counsel, no interference is called for in the orders under challenge. DISCUSSION: 8. There is no dispute that the impugned assessment orders under Section 147 were passed only on the basis of statements recorded during the course of a survey conducted in the premises of the petitioners on 12 February, 2009. The returns submitted by the petitioners earlier were accepted and it culminated in passing https://hcservices.ecourts.gov.in/hcservices/ 4 orders of assessment. The assessment orders were re-opened under Section 147 resulting in issuing notice under Section 148 solely on the ground of certain information collected during the course of survey. The information in question were nothing but statements recorded from the concerned petitioners. 9. The core issue is as to whether such statements not given on oath could be the basis for re-opening the assessment under Section 147 of the Act. 10. The issue is no longer res integra, in view of the decision of this Court in (2008) 300 ITC 157 (Mad). 11. The Division Bench in (2008) 300 ITC 157 (Mad) held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to explain his position. The statement given under Section 133A of the Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value. The Division Bench further held that the material or information found in the course of survey proceeding could not be the basis for making any addition in the block assessment. 12. The assessment orders in question proceeds as if the respective assessees have given a sworn statement during the course of survey. Those sworn statements were used to re-open the assessment under Section 147 of the Act. There is nothing on record to show that the authority, who has recorded the statements, was competent to record the statement on oath. Similarly, there is no indication in the orders as to whether such statement was given on oath. Therefore, I am of the view that the impugned orders are liable to be set aside. CONCLUSION: 13. Accordingly, the impugned assessment orders are set aside. The assessing authority is directed to consider the matter afresh. In case there are independent materials suggesting suppression of material particulars justifying a case for re-opening of assessment under Section 147, it is open to the assessing authority to proceed afresh, after giving a reasonable opportunity to the petitioners. 14. The Writ Petitions are allowed as indicated above. Consequently, the connected miscellaneous petitions are closed. No costs. Sd/- Assistant Registrar (Crl.Side) /True Copy/ Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ 5 To The Assistant Commissioner of Income Tax, Income Tax Circle-I, Virudhunagar-626 001, Virudhunagar District. Common Order made in W.P.(MD)Nos.2214 to 2216 and 2274 to 2276 of 2011 Dated:22.02.2012 SML PBK/14.3.12 /5P-2C/ https://hcservices.ecourts.gov.in/hcservices/ "