TaxTMI 
TaxTMI 
2025 (11) TMI 1777
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....JUSTICE P.SAM KOSHY) Heard Mr. S. Ravi, learned Senior Counsel representing M/s. R.S. Associates for the petitioner in Writ Petition No. 38716 of 2022; appearing for Mr. V. Aneesh, learned counsel for the petitioner in Writ Petition No.39666 of 2022, and also appearing for Mr. Dundu Manmohan along Mr. Dundu Sashank, learned counsel for the petitioner in Writ Petition No.39706 of 2022, Mr. Mandala Nagendra Babu, learned counsel for the petitioner in Writ Petition No. 1219 of 2023; and Mr. J.V. Prasad & Ms. K. Mamata, learned Senior Standing Counsels for the Income Tax Department appearing on behalf of the respondents / Revenue. 2. Since the issue involved in these batch of Writ Petitions is one and same, they have been taken up and heard together and are decided by this Common Order. However, we first intend to refer to the facts in Writ Petition No.39706 of 2022. 3. The instant writ petition is filed by the petitioner under Article 226 of the Constitution of India challenging the order dated 29.09.2022 passed by the respondent No. 1 under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (briefly 'the Act' hereinafter) for the assessment year 2020-21 vide D....
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....ll companies as assumed. 6. The petitioner promptly objected to this material mischaracterization through a detailed letter dated 23.09.2022 once again reiterating with supporting documentary evidence that the advances were exclusively for land transactions and not for any residential units. The petitioner further provided confirmation letters which clearly stated that Rs. 22 crores out of the total Rs. 134 crores under scrutiny were opening balances which were carried forward from previous assessment years and, therefore, did not represent fresh receipts during the current previous year 2019-20 under consideration. The petitioner particularly emphasized that one significant transaction with EKGE Retail LLP amounting to substantial sums was initially structured as a mortgage arrangement with stipulated interest, and that interest amount of Rs. 27,00,000/- had been duly credited to the party's account and claimed as business expenditure in the profit and loss account, which was accepted by the Assessing Officer without any disallowance. The petitioner argued that this acceptance of the interest component made it logically and legally inconsistent for the Assessing Officer to ....
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....tal Rs. 134 crores under scrutiny were opening balances carried forward from earlier assessment years and therefore did not represent fresh receipts during the current previous year 2019-20 under consideration, yet the Assessing Officer erroneously treated even these opening balances as unexplained cash credits chargeable to tax under Section 68 of the Act in the current assessment year, which shows a complete lack of understanding of basic accounting principles and temporal applicability of tax provisions. 9. Learned Senior Counsel further submitted that on 20.09.2022 at 06:00 P.M. the respondent No. 1 issued a show cause notice under Section 144B(1)(xii) of the Act stating that certain advances disclosed under other long-term liabilities were significantly high and exceeded the value of flats / villas. He further clarified that the advances in question pertained to purchase of land only and not to the value of flats / villas. Furthermore, out of 11 parties from whom advances were received, 5 were individuals and not companies, contrary to the assertion made in the show cause notice. In response to the queries raised, the petitioner also furnished complete details of the partie....
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....porting evidence, and the Assessing Officer cannot now take advantage of his own wrong in not following the due procedure prescribed under Section 144B of the Act. Thus, praying this Court to set-aside the impugned order passed by respondent No. 1 and also allow the present writ petition. 13. Per contra, learned Senior Standing Counsel for the Revenue contended that the assessment proceedings were conducted in accordance with the provisions of law and adequate opportunities were provided to the petitioner throughout the assessment process. It was submitted that the petitioner was issued notices under Section 143(2) of the Act on 29.06.2021, followed by detailed questionnaires on 21.02.2022, 09.03.2022, and 22.08.2022 calling for specific information and documents, and that the Assessment Order was passed only after careful examination of the material on record and the submissions made by the petitioner from time to time. 14. Learned Senior Standing Counsel further contended that the show cause notice dated 20.09.2022 clearly set out the proposed additions and the reasons therefor, specifically highlighting that certain advances disclosed in other long-term liabilities were si....
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....tanding Counsel submitted that such inordinate delay hampered the assessment proceedings and indicates lack of seriousness and cooperation on the part of the petitioner. That despite the delay, the department accommodated the petitioner by issuing further notices and questionnaires on 09.03.2022 and 22.08.2022, calling for specific details and clarifications. 17. Learned Senior Standing Counsel lastly contended that the petitioner's excuse of COVID-19 pandemic and lack of adequate staff is not acceptable, particularly when the petitioner is a corporate entity engaged in real estate business with substantial transactions and is expected to maintain proper records and documentation. However, the Senior Standing Counsel submitted that the petitioner cannot take advantage of its own wrong and delay in complying with statutory notices and then claim that adequate opportunity was not provided. It was also submitted that the assessment proceedings had to be completed within the statutory time limit prescribed under the Act, and the delay caused by the petitioner left very little time for detailed back-and-forth correspondence, which the petitioner is now trying to project as denial....
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....gave his reply on 23.09.2022 and thereafter the impugned assessment order has been passed on 29.09.2022. 21. Upon perusal of the responses submitted by the petitioner, certain facts which are apparently evident is that the petitioner has not been able to produce complete details including PAN, address of the parties, etc. in spite of repeat notices being issued by the Department and based upon which necessary verification could had been conducted. Further, the petitioner also was not able to explain credit worthiness of the advances so made particularly in respect of an amount of Rs. 134,11,84,938/-. 22. Apart from the aforesaid facts, the admission on the part of the petitioner himself of having received repeated show-cause notices by the Department from time to time, goes to establish that the contention of the petitioner being denied fair opportunity of defence would not be sustainable as the Department in fact had given ample opportunity to the petitioner to appear and defend its case by leading cogent and substantial materials to substantiate the contents of the show-cause notice. Thus, this Bench is of the firm view that the contention of the petitioner of the impugned ....
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....roceedings from the stage of the issuance of notices under Section 148, nor is the directions to that effect. And there cannot be any confusion, ambiguity or mis-conception for the respondent-Department to have in this regard. 29. The Hon'ble Supreme Court has in paragraph No.7 specifically held that the High Courts have rightly held that the benefit of new provisions shall be made available in respect of the proceedings relating to past assessment years. Further, the Hon'ble Supreme Court again in paragraph No.8 very emphatically had said that the proceedings ought not to have been issued under the unamended Act. Rather ought to had been issued under the substituted provisions as per the Finance Act, 2021. Further, in the same paragraph clearly directed the Income Tax Department to proceed further as per the Finance Act, 2021, subject to compliance of all the procedural requirements and defences available to the assessee under the substituted provisions under the Finance Act, 2021. The fact that the Hon'ble Supreme Court allowed the notice earlier issued under Section 148 be treated as notice one under Section 148A and further it was also be treated as the show cause noti....
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....eventive) Jam Nager 2015 11 SCC 628, wherein it has been held that there can be no stopple against the law. If the law requires something to be done in a particular manner, then it must be done in that manner, if it is not done in that manner then it would have no existence in the eye of law. In paragraph 18 of the said judgment, the Hon'ble Supreme Court held as under: "The Tribunal's judgment has proceeded on the basis that even though the samples were drawn contrary to law, the appellants would be estopped because their representative was present when the samples were drawn and they did not object immediately. This is a completely perverse finding both on fact and law. On fact, it has been more than amply proved that no representative of the appellant was, in fact, present at the time the Customs Inspector took the samples. Shri K.M. Jani who was allegedly present not only stated that he did not represent the Clearing Agent of the appellants in that he was not their employee but also stated that he was not present when the samples were taken. In fact, therefore, there was no representative of the appellants when the samples were taken. In law equally the Tribunal ought ....
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....sions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent-Department is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention to the directives issued by the Hon'ble Supreme Court in the case of Ashish Agarwal, supra. 36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nullified automatically." 25. In the instant case also, the Department has not been able to show one good reason as to w....
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....ed order of assessment having been passed by the Jurisdictional Assessing Officer of the concerned unit in the Income Tax Department and whether the order issued by the Jurisdictional Assessing Officer is in violation of Section 144B or not has been extensively dealt with while deciding the second issue in Writ Petition No.38706 of 2022. In view of the same, applying the same principles, the second issue raised by the petitioner in this case also stands decided in favour of the petitioner and against the Revenue. The proceedings ought to had been initiated in a faceless manner as is envisaged under Section 144B of the Act in respect of the proceedings initiated after 01.04.2021. The impugned order therefore is not sustainable and the same deserves to be and accordingly set aside / quashed and the consequential orders also would thereby be not sustainable and the same also are set aside / quashed. Accordingly, Writ Petition No. 1219 of 2023 also stands allowed. 29. Coming to Writ Petition No. 38716 of 2022, the grounds raised by the petitioner in this case are also similar to the facts and circumstances in Writ Petition No.39706 of 2022. Here also the impugned order has been assa....