M/S. VIRA PROPERTIES (MADRAS PVT LTD RAYALA TOWERS 158 (781-785)ANNA SALAI CHENNAI 600 002 v. ASST. COMMISSIONER OF INCOME TAX COMPANY CIRCLE III (4) CHENNAI 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 01.07.2009CORAMTHE HONOURABLE MR. JUSTICE V. DHANAPALANW.P.Nos.1947 and 1948 of 2008 and M.P.No.1 of 2008M/S. VIRA PROPERTIES (MADRAS PVT LTD RAYALA TOWERS 158 (781-785)ANNA SALAI CHENNAI 600 002BY ITS EXECUTIVE DIRECTOR M.R. PRATAP.. PETITIONER in both the writ petitions VsASST. COMMISSIONER OF INCOME TAX COMPANY CIRCLE III (4) CHENNAI 600 034 ..RESPONDENT in both the writ petitionsPrayerWrit Petition filed under Article 226 of the Constitution of Indiapraying for the issuance of a writ of Certiorari to call for therecords of the Respondent in his assessment order dated 31.12.2007passed under section 143 (3) read with section 147 for the Assessmentyear 2003-04 and 2004-2005 in respect of the petitioners income taxAssessment and quash the sameFor Petitioner:Mr.V.Ramachandran,Senior CounselFor Respondent :Mrs.Pushya Sitaraman, Standing counsel for the respondent.O R D E RBy consent of both parties, the main writ petition itself istaken up for final disposal. 2. This writ petition has been filed praying to call for therecords of the Respondent in his assessment order dated 31.12.2007passed under section 143 (3) read with section 147 for the Assessment https://hcservices.ecourts.gov.in/hcservices/ years2003-04 and 2004-2005 in respect of the petitioners incometax Assessment and quash the same. 3. The Petitioner is a private limited company incorporatedunder the provisions of the Companies Act 1956 and an assessee underthe Income Tax Act 1961. According to the petitioner, for theassessment years 2003-2004 and 2004-2005, it has filed its return ofincome. For the Assessment Years 2003-2004 and 2004-2005,therespondent processed the return of income under the provisions ofSection 143(1) of the Act and granted the refund as claimed in thereturns of income. However, on 04.08.2006, the respondent has issueda notice under Section 148 seeking to reassess the income underSection 147 of the Act. The petitioner, vide its letter dated17.08.2006 had sought for the reason for reopening the assessmentsand the respondent vide his letter dated 22.8.2006 has stated thatcertain income chargeable to tax has escaped assessment within themeaning of Section 147 of the Act. 4. It is further stated that the petitioner vide its letterdated 19.09.2006 had sought for personal inspection of the recordsfor the relevant periods which has caused the respondent to reopenthe assessment for the purpose of submitting comprehensivereply/objection for reopening the assessment under section 147 of theAct, which as an assessee the petitioner is eligible for. 5. According to the petitioner, for the earlier years 1999-2000and 2000-2001, the respondent had issued similar notices undersection 148 of the Act, and consequential notices under section 143(2) of hearing issued fixing the date for the hearing on 14.07.2003for both the years. Subsequently, the petitioner had objected to thenotices issued under section 148 of the Act and sought the reasonsfor re-opening the assessments on 25.06.2003 and thereafter therespondent had dropped the proceedings on 02.12.2004. 6. It is further submitted that the respondent had completed theassessment for all the years commencing from 1990-2000 till 2002-2003under Section 143(1) of the Act holding the income derived by thepetitioner as "Income from Business and profession in terms ofSection 28 of the Act". Completion of these assessments are inaccordance with the settled principles of law and provisions of thestatute specially Section 27(iii)(b) as amended by Finance Act.Further in respect of income received for providing amenities and itsmaintenance, till date in all the other assessment years includingfor the assessment years 2002-2003, the income has been assessedunder the head 'business income'. Neverthesless, on mere change ofopinion the respondent had issued the notices under Section 148 ofthe Act on 04.08.2006 for the assessment years 2003-2004 and 2004-2005 and completed the assessment, when the very notice was underchallenge before this Court in Writ Petition No.29611 and 29612 of https://hcservices.ecourts.gov.in/hcservices/ 2007 and this Court gave an oral instruction to the standing counselfor the department to keep the assessment pending till the disposalof the interim application filed by the petitioner for stay. 7. It is further submitted that the petitioner by letter dated06.10.2006 filed detailed objections to the notices issued by therespondent under section 148 of the Income Tax Act. However, therespondent by letter dated 13.03.2007 over ruled the objections. 8. The petitioner further submits that they challenged thenotice issued under Section 148 of the Income Tax Act as well as theorder dated 22.08.2006 in W.P.Nos.29611 and 29612 of 2007 before thisCourt and despite the oral instructions of the court to therespondent not to proceed with the assessment pending disposal of theinterim applications, the respondent went ahead and completed theimpugned assessments on the plea that the same was getting timebarred without affording the petitioner a personal hearing. Therespondent is seeking to reopen the assessment on a mere change ofopinion. It is further submitted that the respondent has violatedthe principles of natural justice as well as the statutory provisionscontained under Section 143(2) of Income Tax Act, which requires aspecific hearing and enquiry before making the assessment. 9. The respondent has filed counter affidavit and stated that on27.9.2007, W.P.Nos.29611 and 29612 of 2007 were filed challenging thenotice under Section 148 and consequent order overruling objections.When the matter was taken up for hearing, this Court had directed thecounsel for the respondent not to take any action for two weeks andthe last day of the said two weeks fell on 11.10.2007 and hencebeyond that there was no oral direction from this Court to extend thestay. It is further stated that the Standing Counsel has stated thatin the absence of any stay order, the Department may proceed with theassessment within the time limit allowed under the Act. It is furtherstated that in the absence of any specific stay order and nonavailability of extended time limit, the assessment was completedwith the material available on record. It is also submitted that thepetitioner had withdrawn the W.P.No.29611 and 29612 of 2007 on20.2.2008. According to the respondent when this writ petition wastaken up for hearing, the petitioner ought not have mentioned beforethis Court on 24.1.2008, that oral direction were issued to theStanding Counsel to inform the Officer to await the disposal of thewrit petition before proceeding with the hearing by respondent. It isfurther submitted that the respondent had passed orders on the lastday available under the limitation on 31.12.2007 since no ordereither oral or written were issued to the respondent. 10. The respondent further stated in the counter that for theassessment years 1999-2000, 2000-2001, the question of assessing theincome from building never arose. Earlier notice under section 148 https://hcservices.ecourts.gov.in/hcservices/ for the assessment year 1999-2000 and 2000-2001 were issued callingfor return of income and when the petitioner filed evidence forhaving filed the return, the proceedings were dropped. Thus thefacts and circumstances for the issue of notice under Section 148 forthe assessment year 1999-2000 and 2000-2001 are entirely differentcompared to the assessment year 2003-2004 and 2004-2005. 11. Heard Mr.Ramachandran, learned Senior counsel for thepetitioner and Mrs.Pushya Sitaraman, learned Standing counsel for therespondent. 12. It is vehemently argued by the learned counsel for thepetitioner that on 27.09.2007, in W.P.Nos.29611 and 296112 of 2007where notices under Section 148 of the I.T.Act were challenged, thisCourt directed the respondent to file a counter and further directedthat the respondent shall not proceed with the assessment and thisdirection was in force till 11.10.2007. However, the respondentissued a notice dated 4.10.2007 posting the case for enquiry on09.10.2007 and proceeded to make an assessment on that basis. Hefurther contended that the petitioner informed the respondent inwriting that since there was a restraint imposed by this Courtagainst making an assessment, the enquiry cannot be proceeded with on09.10.2007 and hence the case was adjourned. 13. The further contention of the learned Senior counsel for thepetitioner is that subsequent to the above posting of the case on09.10.2007, no notice of hearing was given. While so the assessmentorder was completed on 31.12.2007 on the ground that the assessmentwas getting time barred on that day. Thus the respondent hasviolated the principles of natural justice as well as the statutoryprovisions contained under section 143(2) of I.T.Act, which requiresa specific hearing and enquiry before making the assessment. 14. Per contra, learned Standing counsel for the respondentsubmitted that on 27.9.2007 when W.P.No.29611 and 29612 of 2007 wastaken up for hearing, the court had directed the counsel for therespondent not to take any action for two weeks and the last day ofthe said two weeks fell on 11.10.2007. She further submitted thatthere was no oral direction from this Court to extend the say.Hence, in the absence of any stay order, the department may proceedwith the assessment within the time limit allowed under the Act.She has further contended that the petitioner had withdrawn theW.P.Nos.29611 and 29612 of 2007 on 20.02.2008 and when the presentwrit petition was taken up for hearing, the petitioner ought not havementioned before this Court on 24.1.2008 that oral direction wereissued to the Standing Counsel to inform the Offcier to await thedisposal of the writ petition before proceeding with the hearing byrespondent. She further contends that the respondent had passedorder on the last day available under the limitation i.e.., on https://hcservices.ecourts.gov.in/hcservices/

31.12.2007 since no order either oral or written were issued to therespondent. 15. I have heard the learned counsel on either side. 16. Though several issues have been raised in the writ petition,the pertinent issue involved in this case is that no opportunity ofhearing is given to the petitioner before passing the assessmentorders and hence it violates the principles of natural justice. 17. It is seen that W.P.No.29611 and 29612 of 2007 was listed on27.9.2007 and this Court gave an oral direction not to proceedfurther for a period of two weeks. The learned Standing Counsel forthe respondent does not dispute such an oral direction and acceptsthe fact that the oral direction was in force till 11.10.2007.According to the learned Standing Counsel for the respondent, hearingtook place on 09.10.2007, however, the petitioner was not present onthat day for hearing. 18. A perusal of the records reveal that the petitioner had theintention to attend the hearing, however, there was no oral orwritten notice for them to appear for enquiry after 11.10.2007 thelast date of the oral order and in the absence of the petitioner, therespondent passed orders without giving an opportunity of hearing.To substantiate his contention, learned Senior counsel appearing forthe petitioner relied on a decision of the Supreme Court reported in2005(6) SCC 499 and the relevant portion of the judgment reads thus:-"17. We shall first deal with the plearegarding alternative remedy as raised by theappellant State. Except for a period whenArticle 226 was amended by the Constitution(Forty-second Amendment) Act, 1976, the powerrelating to alternative remedy has beenconsidered to be a rule of self-imposedlimitation. It is essentially a rule of police,convenience and discretion and never a rule oflaw.Despite the existence of an alternativeremedy it is within the jurisdiction ofdiscretion of the High Court to grant reliefunder Article 226 of the Constitution. At thesame time, it cannot be lost sight of that thoughthe matter relating to an alternative remedy hasnothing to do with the jurisdiction of the case,normally the High Court should not interfere ifthere is an adequate efficacious alternativeremedy. If somebody approaches the High Courtwithout availing the alternative remedy providedthe High Court should ensure that he has made outa strong case or that there exist good grounds to https://hcservices.ecourts.gov.in/hcservices/ invoke the extraordinary jurisdiction. 18. The Constitution Benches of this Courtin K.S.Rashid and Son V. Income Tax InvestigationCommission Sangram Singh Vs. Election Tribunal,Kotach, Union of India V. T.R.Varma, State ofU.P. V. Mohd.Nooh and K.S.Venkataraman and Co.(P) Ltd., V. State of Madras held that Article226 of the Constitution confers on all the HighCourt a very wide power in the matter of issuingwrits. However, the remedy of writ is anabsolutely discretionary remedy and the HighCourt has always the discretion to refuse togrant any writ if it is satisfied that theaggrieved party can have an adequate or suitablerelief elsewhere. The Court, in extraordinarycircumstances, may exercise the power if it comesto the conclusion that there has been a breach ofprinciples of natural justice or procedurerequired for decision has not been adopted. "19. Having noticed that there was a oral direction not toproceed with the enquiry and after that period there was no notice ofhearing, the respondent has proceeded in conducting the enquirywithout affording an opportunity to the petitioner. Therefore, theimpugned order suffers from legal infirmity and it cannot besustained and in the light of the above decision of the Supremecourt, the impugned order dated 31.12.2007 passed by the respondentis set aside and the matter is remanded to the respondent for freshassessment and the respondent is directed to pass orders on the freshassessment after affording an opportunity of hearing to thepetitioner. It is open to the petitioner to agitate all the issuesraised in this writ petition before the assessing authority . 20. The writ petition is allowed with the above observation. Nocosts. Consequently, connected M.P.No.1 of 2008 is closed. Sd/Asst.Registrar/true copy/Sub Asst.Registrarnvsri https://hcservices.ecourts.gov.in/hcservices/ To : THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE III (4) CHENNAI 600 034.2 cc To Mr.George Seriyan, Advocate, SR.27443.1 cc To Mr.Pushya Sitaraman, Standing Counsel for I.T.Cases, SR.27975.W.P.Nos.1947 and 1948 of 2009 KA(CO)RVL 14.07.2009