M.Thirugnanam V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP(MD)/1974/2020

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The case involves M. Thirugnanam, a businessman engaged in vehicle hiring and gravel supply, who challenged the assessment orders issued by the Assistant Commissioner of Income Tax, Trichy. The petitioner argued that the orders were passed without proper jurisdiction and violated natural justice, as they were based on incomplete submissions and were issued without considering the petitioner's request for additional time to provide necessary details. The respondent contended that the assessments were conducted under the e-proceedings system and were based on the petitioner's failure to provide required information within the stipulated time. The court's decision emphasized the need for adherence to natural justice in administrative proceedings, particularly in allowing adequate time and opportunity for the affected parties to present their case.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 688344 (HC-MADURAI)
• Appeal Type: Others
• Pronouncement Date: 23-07-2021
• Assessment Year: misc
• Other Referred Cases: W.P.No.1178 and 1182 of 2020
• Laws Referred To: Income Tax Act, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: N KUMAR
• Assessee Lawyers: K SOUNDARARAJAN
• Keywords: Arbitrary; Best Judgment Assessment; E-assessment; Ex-facie illegal; Principles of natural justice; Violation of natural justice; Without jurisdiction; Writ of Certiorari
• Section: 144; 142(1); 143(2); 115BBE; 143(3A); 156

Judgement Text

"W .P(MD)No.1974 of 2020 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 23.07.2021 CORAM : THE HONOURABLE MRS.JUSTICE J.NISHA BANU W.P(MD)No.1974 of 2020 and WMP(MD)Nos.1647 and 1648 of 2020 M.Thirugnanam ... Petitioner vs. The Assistant Commissioner of Income Tax, Circle 2(1) Trichy, O/o. the Assistant Commissioner of Income Tax, 3rd Floor, Main Building, Williams Road, Cantonment, Tiruchirappalli-620 001. ... Respondent Petition filed under Article 226 of the Constitution of India, for issuance of Writ of Certiorari, to call for the records of the respondent in PAN ACLPT8747Q vide Order No.ITBA/AST/S/144/2019- 20/1022911126(1) dated 23.12.2019 and raised a demand under Section 156 of the Income Tax Act in No.ITBA/AST/S/156/2019-20/1022911177(1) dated 23.12.2019 and quash the same as ex-facie illegal, arbitrary, without jurisdiction and against the principles of natural justice. For Petitioner : Mr.K.Soundararajan For Respondent : Mr.N.Dilip Kumar, Senior Standing Counsel ORDER This writ petition has been filed for issuance of a Writ of Certiorari, to call for the records of the respondent in PAN ACLPT8747Q vide Order No.ITBA/AST/S/144/2019-20/1022911126(1) dated 23.12.2019 and raised a demand under Section 156 of the Income Tax Act in No.ITBA/AST/S/156/2019-20/1022911177(1) dated 23.12.2019 and quash the same as ex-facie illegal, arbitrary, without jurisdiction and against the principles of natural justice. 2.The petitioner is doing the business of hiring of vehicles and supplying red gravel and for the assessment year 2017-18, the petitioner filed return and the assessment has been completed. Subsequently, a notice was issued by the Assistant Commissioner, Thanjavur, on 22.09.2018 under Section 143(2) of the Act and thereafter a notice under Section 142(1) of the Act was issued on 21.10.2019 by the respondent. The petitioner filed reply in part on 18.11.2019 and agreed to furnish the other details at the time of 1/4 https://hcservices.ecourts.gov.in/hcservices/ W .P(MD)No.1974 of 2020 personal hearing. Again on 22.11.2019, further details were filed and the petitioner requested for personal hearing. The respondent issued a notice under Section 142(1) of the Act on 07.12.2019 seeking for the first time fresh details including the details for the assessment year 2016-2017 even though the assessment year is 2017-18 and granted time upto 10.12.2019. The petitioner filed reply on 10.12.2019 seeking 15 days time for giving fresh details requested. According to the petitioner, the respondent did not consider the letter dated 10.12.2019 and passed the assessment order on 23.12.2019 without granting the time and therefore, the petitioner has filed the present writ petition stating that the impugned order has been passed against the principles of natural justice and also against the circular issued by the Directorate of Income Tax on 26.12.2019 in which it was informed that the facility for electronic submission of documents shall be automatically closed on 29.12.2019. 3.The learned counsel for the petitioner would state that the respondent has no jurisdiction to assess under e-proceedings when admittedly Section 143(3A) of the Income Tax Act was amended with effect from 01.04.2020 giving the right to make e-assessment proceedings under Section 144 and therefore, the e-assessment order passed by the respondent is bad in law. The learned counsel for the petitioner would further state that the respondent has assessed the income under the amended Section 115BBE of the Act when admittedly the amendment came into effect on 01.04.2017 i.e., from the previous year 2017-2018 i.e., from the assessment year 2018-2019 and not for the assessment year 2017-2018. According to the petitioner, because of the wrong application of the amended provision, huge liability was raised by the respondent and the petitioner is put to great hardship and mental agony and therefore, the petitioner is before this Court. 4.He would further state that even on similar occasion in W.P.No.1178 and 1182 of 2020 dated 27.01.2020, the assessment orders made without granting further time as requested by the assessee, were set aside and the matter was remitted to the respondent for making de nova assessment. Subsequently, the respondent in his proceedings dated 26.03.2021, has passed an order accepting the claim of the assessee and therefore, the learned counsel for the petitioner would state that the assessment orders passed by the respondent herein without giving opportunity to the petitioner herein in spite of his request for adjournment, is a clear violation of the principles of natural justice and therefore, the impugned orders are liable to be set aside on the said ground. 5.The learned Senior Standing Counsel for the respondent would state that when there is an effective statutory appeal available to the petitioner, he cannot bypass the same. He would further state that the petitioner's case was selected for scrutiny through Computer Aided Scrutiny Selection(CASS) in Income Tax Business 2/4 https://hcservices.ecourts.gov.in/hcservices/ W .P(MD)No.1974 of 2020 Application Module and a notice under Section 143(2) of the Act was issued on 22.09.2018 by the Assistant Commissioner, Thanjavur, through electronic mode. Further notice under Section 142(1) was issued on 21.10.2019 calling for details in connection with cash deposits made during demonitization period to be submitted on or before 05.11.2019 electronically. According to the respondent, the petitioner had submitted details on 18.11.2019 and 22.11.2019 partially and thereafter further notice under Section 142(1) was issued on 07.12.2019 to furnish accounts and documents to be submitted on or before 10.12.2019. He would further state that that petitioner has filed adjournment petition dated 10.12.2019 seeking further extension time of 15 days and the Assessing Officer did not entertain the adjournment petition because the time limit to complete the assessment expired on 31.12.2019 and therefore, the assessment order was concluded under Section 144 of the Act i.e., best judgment assessment and the impugned orders came to be passed. 6.Heard the learned counsel for the petitioner as well as the learned Senior Standing Counsel for the respondent. 7.Admittedly, the assessment order has been concluded in spite of the petitioner's request seeking further time for making his reply. Admittedly, the petitioner was not given opportunity by the respondent by not considering his petition dated 10.12.2019 and has closed the Portal on 17.12.2019. The main contention raised in the counter is that the Assessing Officer did not entertain the adjournment petition of the petitioner, because the time limit to complete the assessment expired on 31.12.2019. The petitioner has not submitted the details as called for through the notice under Section 142(1) of the Act. Since the petitioner has failed to discharge the burden of proof for the cash deposit of SBN note to the tune of Rs.31,08,000/- and agricultural income of Rs.7,43,800/- totalling Rs.38,51,800/-, the respondent had no other option except to conclude the assessment under Section 144 of the Act i.e., best judgment assessment. The said contention cannot be accepted for the simple reason that the petitioner has filed adjournment petition dated 10.12.2019 seeking 15 days further time. Admittedly, the Assessing Officer did not entertain the said adjournment petition. 8.This Court in similar matters cited by the petitioner where assessment orders passed without granting further time, set aside the assessment orders therein and remitted the matter to the authority concerned for fresh consideration. Admittedly, here also, the petitioner's petition for adjournment has not been considered and therefore, it is a case of violation of principles of natural justice. No personal hearing was also granted. If atleast personal hearing is granted to the petitioner, the petitioner would have explained his case. Though the respondent has raised many other contentions, since the impugned orders have been passed without considering the petitioner's adjournment petition, without adverting to the other merits of the case, only on the ground of violation of 3/4 https://hcservices.ecourts.gov.in/hcservices/ W .P(MD)No.1974 of 2020 principles of natural justice, I am inclined to set aside the impugned orders. 9.Accordingly, the impugned orders of the respondent in PAN ACLPT8747Q vide Order No.ITBA/AST/S/144/2019-20/1022911126(1) dated 23.12.2019 and raised a demand under Section 156 of the Income Tax Act in No.ITBA/AST/S/156/2019-20/1022911177(1) dated 23.12.2019, are set aside and the matter is remitted back to the respondent to pass fresh order after giving opportunity to the petitioner for making his detailed reply and after affording opportunity of personal hearing, within a period of three months from the date of receipt of a copy of this order. 10.With the above direction, this Writ Petition is allowed. No costs. Consequently, connected miscellaneous petitions are closed. Sd/- Assistant Registrar(CS-) // True Copy // / /2021 Sub Assistant Registrar(CS) bala To The Assistant Commissioner of Income Tax, Circle 2(1) Trichy, O/o. the Assistant Commissioner of Income Tax, 3rd Floor, Main Building, Williams Road, Cantonment, Tiruchirappalli-620 001. ORDER MADE IN W.P(MD)No.1974 of 2020 DATED : 23.07.2021 cm(CO) TR(06.08.2021) 4P 2C 4/4 https://hcservices.ecourts.gov.in/hcservices/ "