Vessela Greens V. Union of India, Ministry of Finance and Deputy Commissioner of Income Tax, Ward 8(1), Hyderabad and The Principal Commissioner of Income Tax- II Hyderabad and The National Faceless Assessment Centre (NFAC), Income Tax Department, Ministry of Finance, Govt. of India

WP/15037/2024

AI Insights

The case involves Vessela Greens, a petitioner, challenging an assessment order issued by the National Faceless Assessment Centre (NFAC) under the Income Tax Act. The petitioner argued that the assessment was conducted without proper consideration of their responses and documents, violating principles of natural justice. The assessment order dated 19/03/2024 included an addition of Rs. 9,61,35,500 to the petitioner's income, which they contested. The court found that the assessment order was based on contradictory findings and lacked proper consideration of the petitioner's submissions, leading to its decision to set aside the order and remand the case for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 819270 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 05-12-2024
• Assessment Year: misc
• Other Referred Cases: Mohinder Singh Gill v. Chief Election Commissioner, M/s.Kranthi Associates v. Masood Ahmed Khan
• Laws Referred To: Article 226 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GADI PRAVEEN KUMAR; P MURALIKRISHNA
• Assessee Lawyers: P SOMASHEKAR REDDY; P MEGHANA SARMA
• Keywords: Assessment Order; Income Tax; Natural Justice; Unexplained income; Writ petition
• Section: 143(3)

Judgement Text

"[ 3430 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY,THE FIFTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE DR. JUSTICE G.RADHA RANI WRIT PETITION NO: 15037 OF 2024 Between: AND Vessela Greens, PAN. AASFWO84P 2nd Floor, East 8lock,-Cyber M.e.adows, Kondapur, Hyd6rabad, Telangana- 500084 Rep. by its Partner Mr' ' P' Prashanth Reddy ...PETITIONER 1. Union of lndia, Ministry of Finance Rep. by its Secretary, 166-8 North Block' New Delhi - 1 10 001 . 2. Deputy Commissioner of lncome T-ax,.-Ward 8(1.), Hyderabad Signature - i;ilr;A,b;p. eotinicaL cardens, seiilingampitiv(M)' Ranga Reddv(D)' Hyderabad, Telangana,500084. I 3. The Principal Commissioner of lncome Tax-- ll Hyderaba{ flO.nqt919 ].oy-ers' - Opp.Botahical Gardens, Serilingampally (M), Ranga Reddy(D) Hyderabad' Telangana, 500084. 4. The National Faceless Assessment centre (NFAC), lncome Tax Department Ministry of Finance Govt. of lndia, New Delhi. ...RESPONDENTS Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may- _be ;i\";; 19 i lisue a Writ, Order or Direction more particularly, in the nature of Writ !i-U\"nA\"rr\", declaring the action of the National Faceless Assessment Centre irlfnCl in mechanically-passing the Assessmen!!1!er dated 19/03/2024 bearing brN jna Lefter tto.treA/ -Rsrl st143(3)t2023-24110629o6321(1) without considering the multiple responses and the submissions '-'!9 by the Petitloner f,\"i.in \"g\"ln\"t the clarifications sought by it, as v-rolative of Principles of Natural Justice, irbitrary, unfair and non-esi in law, ii. Set aside the Show Cause Notice dated igly2t2oi4 and the Assessment Order dated 1910312024 bearing DIN 86 ietter tlo.tfeA/ AST/S/143(3)12023-24t1O62906321(1)passed by the National Faceless Assessment Centre' liilFAC) against the Petitioner making an addition of an amount to the tune of Rs. 9,6'l ,35'500/- lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay the demand and keep in abeyance the recovery proceedings arising out of Assessment Order dated 1910312024 bearing DIN and Letter No. ITBA,/ AST/S/143(3)/2023-2411062906321(1)passed by the Nationat Facetess Assessment Centre (NFAC) against the Petitioner, pending adjudication of this Writ Petition lA NO:.2 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to receive the additional documents namely Covering Letter Cover Letter dated 14.03.2024 and read the same and as a part and parcel of Annexure P-5 of the main Writ Petition herein lA NO: 3 OF 2024 Between: 1. Deputy Commissioner of lncome Tax, Ward 8(1), Hyderabad Siqnature Lory\"rs, Opp. Botanical Gardens, Seritingampbliy(M), Ranga ndOaylO;, Hyderabad, Telangana, 500084. 2. The Ptincipal Co_mmissioner of lncome Tax - ll, Hyderabad Signature Towers, Qp.p. Botanical Gardens, Serilingampally (M), Rariga Reddy(D) Hyderabad, Telangana, 500084. 3. The National Faceless Assessment Centre (NFAC), lncome Tax Department Ministry of Finance Govt. of India, New Delhi. ...PETITIONERS/RESPONDENTS 2 TO 4 AND ...RESPONDENT/RESPONDENT NO..I Counsel for the Petitioner: SRt P. SOMA SHEKAR REDDY AND MS. p. MEDHANA SARMA FOR SRI, POLKAMPALLY PAVAN KUMAR RAO 1. Vessela Greens, PAN. AASF 2084P 2nd Floor, East Block, Cyber Meadows, Kondapur, _!-lyderabad, Telangana- 500084 Rep. by its partner Mr. , p. Prashanth Reddy ...RESPONDENT/PETITIONER 2. Union of lndia, Ministry of Finance Rep by its Secretary, .166-8 North Block, New Delhi - 110 OO1. ' Petition under section 151 cPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim order granted on 1910812024 in W.p.No. 15037 of 2024 Counsel for the Respondent No.l: SRI GADI PRAVEEN KUMAR Dy. SOLICITOR GEN. OF INDIA Counsel for the Respondent Nos.2 to 4: SRt P. MURALI KRISHNA SC FOR INCOME TAX The Court made the following: ORDER THE HONOURABLE SRI JUSTICE SUJOY PAUL AI{D THE HONOURABLE DR..IUSTTCE G. RADHA RANI WRIT PETITION No.15O37 of 2o24 ORDER Per Si Justice Su Heard Sri P.Soma Shekar Reddy and Ms.P.Meghana Sarma, counsel representing on behalf of Sri Polkampally Pavan Kumar Rao, learned counsel for the petitioner and Sri P.Murali Krishna, learned Senior Standing Counsel for Income Tax for respondent Nos. 2 to 4. 2. This petition filed under Article 226 of the Constitution takes exception to the :rssessment order dated 19.03.2024. 3. Briefly stated, the facts are that the petitioner was served with a show canrse notice dated 29.02.2024. The petitioner filed reply on 14.O3.2O24 along with certain documents. The documents filed with LA.No.2 of 2024 were duly loaded in the portal of the Department which is evident from the photocopy of the said portal / 4. karned counsel for the petitioner, by taking this Court to the hndings given in the assessment order, submits that the hndings are self-contradictory. On the one hard, the authority held that no reply has been furnished by the petitioner and on the next breath, considered the reply dated 14.03.2024 in a cryptic manner. No assigned to discard the defence of the justihable reasons were SP, J & Dr.GRR, wp-15037-2024 petitioner. karned counsel further subrnits that in relation to M/s.Yashoda Nookaratnam, the petitioner frled certain documents including confirmation letter and bank statements, but without assig-ning €rny reason, the assessment order was passed ignoring the relevant documents. 5. Learned Senior Standing Counsel for Income Tax, on the other hand, supported the impugned order and submits that the reply of the petitioner was considered and a speaking order is passed. As per the counter frled in this matter, it is clear that the petitioner was required to frle his reply to show cause notice on or before 11.00 am nl A.O3.2O24. The assessee hled reply after that time. The petitioner has a statutory remedy of appeal, which may be availed' 6 The parties conhned their arguments to the extent indicated above. 7 . The relevant portion of the petitioner's reply reads thus: \"3. Unsecured Loan from M. Ananth Reddy Rs.3,30,00,00O I-. ht Your Irtter you mentioned that his income is only Rs. 1 1,80,12O/ - so credit worthiness is not proved. There was no connection between Incorne shown in that year and the Investment made- Also Mentioned money was routed. I am sorry to say this \"Routed\" word to use in this context. Without the Credits in his account, how he will invest/ Give Loan to anybody, Credit in the accounts mean it Was Routing?' You cal ask for source of Credit, but don't blame as it was routed money. Any way Mr.Anant Reddy Taken f ( 3 j, SP,J&DT.GRR,LI wp-15o37 _2024 Loan from Sri Krishna Uppaluri, His Confirmation Letter, Bank Statement and IT Copy Enclosed for your information. 4. Mrs. Yashoda Nooka ratnam. Given Rs.25,OO,OO0/ - Her Conllrmation Letter & Bank Statement was enclosed in My Earlier Reply. However once again I am attaching the same,. 5. G.Mura-lidhar Reddy has given Rs.1,56,35,5O07'- as Unsecurt:d Loan. In Your Letter You Mentioned that his Income is Only Rs.8,86,160/- so creditworthiness not proved. There was no connection between Income Shown In that Year and Investments made In This Year. He is having Agricultural Land and he does Mining and received Royalties in earlier Years, and he is a Partner in Kanishka Builders, moreover he is Iiling Income tax Returns from Last 14 Years and he sold Agricultural Lands ir earlier Years. So yourselves used the word \"Routing' is not correct. 6. In The case of Raghava Reddy Chirumani also Yourselvr:s Mentioned the bank statement was illegible, so creditworthiness and genuineness of the transaction not proved. You are also Mentioned his Income is Only Rs.25,80,670/-. We cannot see this Year Incomc VS Investment Ratio. We Enclosed Bank Statement once again. Note: If Flave a House For Rs. 1,OO,0O,0OO and you will Get Only 1 ,80,OOO/ - as Rent, so we cannot compare simply In.come of that year VS Investment. The source for Purchase of House will have Many Ways like, Loal, Gifted by Parents, Accumulated Earlier years Income or Ancestral Propert5r or in Family Partition it can come. Etc., this cannot be called as \"Routing\" Kindly consider the above facts and Drop the Additions under Sec.68 of The Income Tax Act as \"Unexplained Income\" a.nd oblige.\" 8. The copy taken from portal a;rd Iiled with I.A. shows that along with the reply to show cause notice, the petitioner filed relevaxt documents includ.ing Yashoda Nookaratnam's bank statement, but i 4 SP, J & Dr.GRR, wp 15037 -2024 there is no iota of discussion as to why the said documents are not trustworthy. The petitioner's reply was not discarded on the gror.nd that it was not frled in time. This additional defence taken in the counter cannot improve the reason given in the impugned order' g. The validity of an order of a statutory authority is to be seen on the basis of reasons assigTred therein and it cannot be justified on thebasisofadditionalreasonsgiveninthecounter.Curtainsare drawn on this aspect by Constitution Bench of the Supreme Court way back in Mohinder Singh Gitl v. Chief Election Commr\" New Delhir and the relevant portion reads as under: The second equally relevant matter is that when a tutorv functi makes an order based on certain sta unds. its validiW must udeed bv the reasons SO bei qro mentioned and cannot be supplemented bv fresh reasons 1n e of affidavit or otherwise. Otherwise arlorder bad in the the besin bv the time it comes to court on account of nlns mav, a challen out. We Bose,J. validated b additional ds later brou t may in Co here draw attention to the observations of mmr. of Polie, Bombag u. Gordlnndas BLanji, 1951 SCC lO88: \"Public orders, publicly made, in exercise of a statutory authority \"rrrt oi be construed in the light of explanations \"rbseqrr\"t tly given by the ollicer making the order o{ what he -\"\".rt, o. of*-fr\"t *\"\" irr hi\" mind, or what he intended to' do' Public orders made by public authorities are meant to have poUfi. \"f..t and are intended to allect the actings and co.rduct of those to whom they are addressed and must be construed objectively with reference to the langrage used in the order itself.\" '(tgza) t scc los / / 5 SP,J&Dr.GRR,J. wp 75037 _2024 ,/1 Orders are n()t like old wine becoming better as they grow older:\" 10. In the assessment order, following findings are given \"Show cause notice was issued on 29102/2024 for 14/O3/2O24, but assessee has failed to comply the same and did not furnislr any reply thereafter. Since, the assessee has not furnished any reply to various opportunities t.hat were provided to her during the assessment proceedings, ir is evident that the assessee has nothinsto furnish resardine the alleeed additions prooosed in the Show Cause Notice On 14 /03 12024 assessee frled reply and submit confirmation k:tter of Yasoda Nookaratnam, bank statement but failed to provide ITR of Yasoda Nookaratnam. Assessee provided Sri Krishna Uppaluri confirmation letter but failed to provide but tailed to prove their creditworthiness.\" 1 I . A careful reading of the highlighted portion shows that on the one hand, the proper officer opined that no reply has been furnished and on the other hand, considered the reply. The consideration is also cryptic. We hnd substance in the argument of the learned counsel for the petitioner that the reply and the documents filed therewith were not considered in proper perspective. There is no application of mind on the bank's confrrmation letter and bank statement of Yashoda Nookaratnam. Thus, reasons have not been given for not accepting the defence of the petitioner. The reasons are held to be heartbeat of conclusions. In M/s.Kranthi Associates (pf I l i I t, I 6 SP. J & Dr.GRR, wp 15037 -2024 Ltd. v. Masood Ahmed Khan2, the Supreme Court has emphasized the need of assigning reasons in administrative, quasi-judicial and judicial orders and held as under: \"47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate ttte process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule oi law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justiffing the principle that reason is the soul of justice. (r) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them' All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. f t '1zoro1 9 scc rse 7 / SP, .r & Dr.GRR, J wp 75037 _2024 I (k) If a.judge or a quasi-judicial authority is not candid enough about his/her decision-making process ihen it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (1) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or .rubber_stamp reasons, is not to be equated rvith a valid decision_making process. (m) It cannot be doubted that transpa_rency is the sine qua non of restraint on abuse of judicial po*\".a. Transparency in decision-making not only makes the judges and decision-makers tess prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor [(1987) 1OO Harvard Law Review Z3i_3Zl .l [) Insistence on reason is a accountability and transparency. requirement for both judicial intelligent reasons must be given for judicial {n) Since the requirement to record reasons emanates from the broad doctrinr: of fairness in decision_making, the said requirement is now virt rally a component of human rights and was. considere z o C * oE,-o41gytE // /,a 1t // ( DISPOSING OF THE WRIT PETTTION WTHOUT COSTS "