Karti P. Chidambaram vs Principal Director of Income Tax (Investigation)

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Mad) 3003

IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. SUBRAMANIAM, J.
Karti P.Chidambaram – Appellant
Versus
The Principal Director of Income Tax (Investigation) – Respondent
W.P.Nos.16686, 16758, 16689, 16692, 16693, 16695, 16698, 16710,
16716, 16719, 16760 and 16764 of 2020 and W.M.P.Nos.20690, 20691, 20730, 20733, 20774, 20775, 20701, 20703, 20713, 20721, 20728, 20693, 20685, 20694, 20695, 20737, 20768, 20770, 20771, 20772, 20687, 20696, 20698 & 20699 of 2020
Decided on : 05-07-2021

Advocates:
Advocate Appeared:
For the Appellant : Dr.Abhishek Singhvi, Mr.N.R.R.Arun Natarajan and Mr.Amit Bhandari, Mr.K.V.Viswanathan, Mr.N.R.R.Arun Natarajan, Mr.R.V.Easwar, Mr.N.R.R.Arun Natarajan and M/s.Rubal Bansal, Mr.N.R.R.Arun Natarajan, Mr.AR.L.Sundaresan
For the Respondent: Mr.R.Sankaranayanan, Mr.A.P.Srinivas and Mr.A.N.R.Jayaprakash

Headnote:
Criminal Procedure Code, 1973 - Section 245 - Income Tax Act, 1961 - Section 45, 132, 143, 143(3), 148, 153C, 271C and 277 - Constitution of India, 1950 - Article 226 - Capital gains - Scope of judicial review - Whether existence of alternate remedy would operate as a bar in instance case - Whether procedures followed is in consonance with procedures contemplated under Act or not – Held, all these writ petitions are filed, challenging Show Cause Notices issued under Section 153C of Act - Procedures for assessment/reassessment are yet to commence - Petitioners are expected to avail opportunity and defend their case in manner known to law - Scope of judicial review under Article 226 of Constitution of India is to scrutinize processes and procedures through which a decision is arrived in consonance with provisions of Statutes by competent authority, but not decision itself - In present case, authority competent must be allowed to scrutinize searched and impounded materials and provide an opportunity to assessee to defend their case - Such an adjudicatory process alone would provide justice to parties to lis and therefore, this Court is not inclined to interfere at stage of 'show cause notice' as far as present writ petitions are concerned - Factual controversies and intricacies involved are to be adjudicated elaborately for purpose of culling out truth and such an adjudication is dictum of law and thus, this Court has opined that interference at this stage would cause prejudice to due process of law to be undertaken by authorities - Thus, respondents are directed to proceed with assessment/reassessment by following procedures as contemplated and by affording opportunity to petitioners and complete same as expeditiously as possible - Writ petitions stand dismissed.

ORDER :

THE FACTS IN BRIEF SUBMITTED BY THE PETITIONER

1. The facts in detail presented by the petitioners are that the petitioner/assessee filed his return of income for the Assessment Year [hereinafter referred to as 'AY'] 2014-15, disclosing fully and truly his income including the “capital gains” arising out of a sale of land in the Financial Year 2013- 14. The capital gains could be assessed only in AY 2014-15 by virtue of Section 45 of the Income Tax Act, 1961 [hereinafter referred to as 'Act']. The return was taken up for scrutiny assessment under Section 143 of the Act and the Assessing Officer completed the assessment under Section 143(3). Accordingly, the return of income was accepted in toto by the Assessing Officer, including the disclosed capital gains.

2. On 31.01.2014, 27.03.2014 and 27.03.2014 in Financial Year 2013-14 pertaining to AY 2014-15, the petitioner sold his land measuring 5.11 acres by three sale deeds to M/s. Agni Estates and Foundations Private Limited at the rate of Rupees three Crore per acre and received the entire consideration of Rs.15.33 crore by cheque, registered the sale deeds and delivered possession of the land to the buyer. The transaction was completed. The petitioner states that there were many encroachments on the lands sold in favour of M/s.Agni Estates by local fishermen of that locality and thus, the price was negotiated and the buyer undertook the responsibility of settling with the fishermen for further development of the property. The guideline value of the property was Rupees Three Crore per acre and the buyer had not agreed to pay a higher price in view of the encroachments.

3. On 05.07.2018 and 09.07.2018, Search was conducted by the Deputy Director of Income Tax (investigation) [hereinafter referred to as “DDIT (Inv)”]/the second respondent, at the premises of the buyer M/s.Agni Estates. It is stated that “small note books” were seized and statements were recorded from R.N.Jayaprakash, K.Narayanan and Dhileep Kumar. On 10.08.2018, the Assessing Officer of the petitioner received informations from DDIT (Inv) about the search and seizure operation conducted under Section 132 of the Income Tax Act on 05.07.2018 in the case of M/s.Agni Estates and Foundations Private Limited. Consequently, on 20.08.2018, the Assessing Officer initiated proceedings against the petitioner under Section 148 of the Act and re-opened the assessment for AY 2014-15, with an allegation that a sum of Rs.6,38,75,000/- (Rupees Six Crore Thirty Eight Lakh and Seventy Five Thousand only) had escaped assessment in AY 2014-15. In response, the petitioner filed a fresh return, reiterating the original return filed by him. Even before the time allowed for filing a fresh return had expired, the DDIT (Inv) filed a compliant on 12.09.2018 in EOC.No.266 of 2018, renumbered as CC No.15 of 2019 before the Special Court, alleging that the petitioner had contravened Section 271C and Section 277 of the Act. The petitioner states that the limitation for passing an order, re-opening the assessment under Section 148 was 31.12.2019. On 12.10.2018, the Assessing Officer furnished the “reasons” for re-opening the assessment for AY 2014-15 recorded by him on 14.08.2018 and the “Satisfaction note” recorded by the Additional Commissioner on 20.08.2018. The “reasons” referred to the statements recorded and the evidences that were found during the search and also specified the alleged amount that was undisclosed income of a sum of Rs.6,38,75,000/-.

4. The petitioner filed an application on 26.11.2019 in Crl.M.P.No.25634 of 2019 under Section 245 of Cr.P.C. before the Special Court and sought for discharge of the petitioner from CC No.15 of 2019. Under these circumstances, the Assessing Officer on 16.12.2019, issued the impugned notice under Section 153C to the petitioner and directed the petitioner to file returns for a block of six assessment years AY 2013-14 to AY 2018-19.

5. The petitioner states that he sought for information from t

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2021 Supreme(Mad) 3003

Cases Referred (10)