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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. Subramaniam, J.
South Asia FM Limited - Appellant
Vs.
Assistant Commissioner of Income Tax - Respondent
W.P. Nos. 10257, 44312, 44313 of 2016; Writ Miscellaneous Petition Nos. 9080, 38178 & 38179 of 2016
Decided On : 10-10-2018
Writ petitions challenging the notices issued under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') and the consequential orders passed by the first respondent, are under challenge in WP No.10257 of 2016. WP Nos.44312 and 44313 of 2016 are filed challenging the notices issued under Section 148 of the Act in respect of the assessment years 2010-2011 and 2011-2012 and the consequential orders passed by the first respondent.
Fact of the Case:
The impugned notices for reopening of the assessments are issued with reference to the assessment years 2008-2009, 2010-2011 and 2011-2012. The writ petitioner-Company states that they have filed the return of income within the time limit stipulated. The assessments were taken up for compulsory scrutiny and the assessments were completed under Section 143(3) of the Act by making disallowances of Rs. 4,10,17,643/- and Rs. 91,03,884/- by invoking the provisions of Section 14-A read with Rule 8-D.
Finding of the Court:
The writ petitioner is of an opinion that the writ petitioner is not implicated in the criminal case by the CBI. Therefore, there is no reason to reopen the assessment already concluded in respect of the writ petitioner-Company. The writ petitioner is of an opinion that the impugned notice issued under Section 148 of the Act, is hit by the law of limitation prescribed under Section 149(1)(b) of the Act.
Issues: Whether the impugned notice issued under Section 148 of the Act, is hit by the law of limitation prescribed under Section 149(1)(b) of the Act.
Ratio Decidendi: The very concept of notice is that the authorities while issuing notice should not predetermine the issues or arrive a conclusion. In the event of stating the reasons elaborately, it is to be construed that such reasonings are recorded without providing an opportunity to the Assessee and such a procedure now argued by the writ petitioner deserves no merit consideration. Thus, the notice is issued based on certain materials available with the Department and on receipt of the notice, the Assessee has got right to seek for the reasons from the Department and the Department is bound to provide reasons, enabling the Assessee to submit his explanations/objections in order to defend his case. Thus, mere issuance of notice will not preclude the writ petitioner from seeking the reasons and other documents.
Final Decision: The writ petitions are devoid of merits. The respondent is empowered to proceed further in accordance with law. Accordingly, the writ petitions stand dismissed. However, there shall be no order as to costs. Consequently, connected miscellaneous petitions are also dismissed.
S.M. Subramaniam, J.
The notice issued by the second respondent in proceedings dated 27.3.2015 under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') and the consequential order dated 4.3.2016 passed by the first respondent, are under challenge in WP No.10257 of 2016.
2. WP No.44312 of 2016 is filed challenging the notice dated 30.3.2016 issued under Section 148 of the Income Tax Act in respect of the assessment year 2010-2011 and the consequential order dated 9.12.2016 and WP No.44313 of 2016 is filed challenging the notice dated 30.3.2016 issued under Section 148 of the Income Tax Act in respect of the assessment year 2011-2012 and the consequential order dated 9.12.2016.
3. In all these writ petitions the writ petitioner is M/s. South Asia FM Ltd., represented by its Authorised Signatory Mr. K.S. Rajesh. Thus, all the three writ petitions are filed challenging the notices issued under Section 148 of the Act in respect of the three different assessment years. Thus, the facts in respect of all the three writ petitions are common.
PLEADINGS OF THE PETITIONER AS WELL AS THE ARGUMENTS:
4. The impugned notices for reopening of the assessments are issued with reference to the assessment years 2008-2009, 2010-2011 and 2011-2012. The writ petitioner-Company states that they have filed the return of income on 24.9.2008, admitting an income of Rs. 33,24,51,590/-. The return was processed under Section 143(1) of the Income Tax Act, accepting the return of income. After a lapse of six and half years and after filing and accepting the return by the first respondent on 27.3.2015, the impugned notice has been issued for reopening of the assessment on the ground that the Assessing Officer had reason to believe that the income had escaped assessment within the meaning of Section 147 of the Act and required the writ petitioner-Company to file one more return of income for the same assessment year i.e., 2008-2009.
5. In response to the notice impugned, the writ petitioner-Company by their letter dated 28.4.2015, requested the first respondent to treat the return already filed on 24.9.2008 as a return in response to the notice issued under Section 148 of the Act and also requested the first respondent to furnish the reasons for reopening the above assessment. The respondents on 23.2.2016, furnished the reasons for reopening the assessment. Immediately on 29.2.2016, the writ petitioner filed the objections on the alleged reasonings recorded for reopening the assessment. On 4.3.2016, just before 27 days for the completion of reassessment, the first respondent by an order allegedly to be a speaking order, dismissing the petitioner's objections in a mechanical manner and thereby reopened the assessment of the petitioner for the assessment year 2008-2009. It is contended that the respondents had not considered the objections raised by the writ petitioner. An order of rejection has been issued mechanically and without considering the legal grounds raised by the writ petitioner.
6. In WP No.10257 of 2016, the reasons, in brief, recorded by the respondents for reopening of the assessment for the year 2008-2009 are:-
(a) The Assessee M/s. South Asia FM Ltd., received investment in the form of shares to the tune of Rs. 193.54 crores during the year 2007 to 2010;
(b) As per the CBI charge sheet, Shri Dayanithi Maran, while functioning as Minister for Communications and Information Technology had facilitated the takeover of Aircel Ltd and in return Shri T. Anandakrishnan, through his group company invested Rs. 193.54 crores in M/s. South Asia FM Ltd.;
(c) This payment of share capital received by M/s. South Asia FM Ltd is not in the nature of capital receipts but they are revenue receipts camouflaged as capital receipts as found out by CBI;
(d) Hence the assessment in your case for the AY 2008-2009 was reopened under Section 147 of the Act, to verify the genuineness of the investment of Rs. 193.54 crores in the writ petitione
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