High Court of Judicature at Madras Judgment: W.P.No.34605 of 2022

Case Name:

Mr. Shiva Prasad Singh vs. Assistant Commissioner of Income Tax, Central Circle 1(1) Chennai & Commissioner of Income Tax (Appeals) – 18 (High Court of Madras)

Key Takeaways:

1. The writ petitioner’s case was found to be erroneously deemed not covered under ‘Instruction No.1914 dated 02.12.1993 as modified by two Office Memoranda dated 29.02.2016 and 31.07.2017’.

2. The High Court set aside the impugned order and remitted the petition seeking an interim order back to the first respondent for consideration on its own merits and in accordance with the law.

3. The first respondent was directed to complete the above exercise expeditiously, within three weeks from the date of the judgment.

4. The Court clarified that it had not expressed any view or opinion on the merits of the matter and the facts were captured for the limited purpose of appreciating the order.

Case Synopsis:

The provided is a judgment from the High Court of Judicature at Madras, dated 23.12.2022, with the case number W.P.No.34605 of 2022 and W.M.P.No.34048 of 2022. The case involves Mr. Shiva Prasad Singh as the petitioner and the Assistant Commissioner of Income Tax, Central Circle 1(1) Chennai, and the Commissioner of Income Tax (Appeals) – 18 as the respondents. The writ petition was filed under Article 226 of the Constitution of India, seeking a Writ of Certiorarified Mandamus to quash the impugned order in ITBA/COM/F/17/2022-23/1047942677(1) dated 12.12.2022 for the Assessment Year 2020-21 as illegal, arbitrary, against the principles of natural justice, and devoid of merits. The petitioner also sought a stay of recovery of demand for the Assessment Year 2020-21 pending disposal of the appeal.

The judgment provides a detailed account of the proceedings, including the search operation under Section 132 of the Income Tax Act, notices issued, assessment orders, and the subsequent appeal by the writ petitioner. The impugned order dated 12.12.2022 was the subject of challenge in the writ petition. The High Court, after considering the arguments presented, set aside the impugned order on the sole ground that it had proceeded on the erroneous basis that a specific instruction did not apply to the writ petitioner. The Court remitted the petition seeking an interim order back to the first respondent for reconsideration and directed the first respondent to complete the exercise within three weeks from the date of the judgment.

The judgment also clarified that the Court had not expressed any view or opinion on the merits of the matter and that the facts were captured for the limited purpose of appreciating the order. The writ petition was disposed of with the aforementioned directives, and the Writ Miscellaneous Petition was disposed of as closed, with no order as to costs.

FAQ

Q1: What was the main issue in the case?

A1: The main issue revolved around the legality and merits of the impugned order in ITBA/COM/F/17/2022-23/1047942677(1) dated 12.12.2022 for the Assessment Year 2020-21.

Q2: What was the outcome of the judgment?

A2: The High Court set aside the impugned order and remitted the petition seeking an interim order back to the first respondent for reconsideration, directing the first respondent to complete the exercise within three weeks from the date of the judgment.

Q3: What was the basis for setting aside the impugned order?

A3: The impugned order was set aside on the sole ground that it had proceeded on the erroneous basis that the said instruction did not apply to the writ petitioner.

This order will now dispose of the captioned writ petition and captioned 'Writ Miscellaneous Petition'['WMP' for the sake of brevity].

2. Ms. A.Niveditha, learned counsel on record for writ petitioner is before this Court. Learned counsel submitted that there was a search operation qua the writ petitioner under Section 132 of the 'Income Tax Act, 1961' ('IT Act' for the sake of brevity); that on the basis of seized material, a notice under Section 153C of IT Act was issued; that this was followed by a notice dated 14.12.2021 under Section 143(2) and a notice dated 20.01.2022 under Section 142(1); that all this culminated in an order dated 28.03.2022 made by the first respondent inter alia under Section 143(3) read with Section 153 of IT Act [hereinafter 'said order of Assessing Officer' for the sake of convenience and clarity]; that vide the said order of Assessing Officer, the Assessing Officer had come to the conclusion that there is unaccounted capital drawings and unexplained interest credit both under Section 56 of IT Act; that pursuant to such assessment a demand of Rs.67,91,531/- was raised; that the said order of Assessing Officer was carried in appeal by the writ petitioner by way of an appeal dated 26.04.2022 to the second respondent; that it is to be noted that the second respondent is the Appellate Authority; that this Court is informed that the appeal is under Section 246A of IT Act; that pending appeal, writ petitioner moved the first respondent (Assessing Officer) under Section 220(6) of IT Act with an interim prayer; that the first respondent in and by a terse 'order dated 12.12.2022 bearing reference ITBA/COM/F/17/2022 23/ 1047942677(1)' [hereinafter 'impugned order' for the sake of convenience and clarity] negatived the interim prayer; that captioned writ petition has been filed assailing the impugned order.

3. Considering the narrow compass on which the captioned main writ petition turns, this Court deemed it appropriate to take up the captioned main writ petition with the consent of counsel for writ petitioner and Mr. A.P.Srinivas, learned Senior Standing Counsel (Income Tax) along with Ms. S.Premalatha, learned Junior Standing Counsel (Income Tax) who accepted notice for both the respondents.

4. As already alluded to supra, the impugned order of the first respondent is terse and a scanned reproduction of the same is as follows:

5. The impugned order has been made on one basis and that lone basis is that the writ petitioner's case is not covered under 'Instruction No.1914 dated 02.12.1993 as modified by two Office Memoranda dated 29.02.2016 and 31.07.2017' [hereinafter collectively 'said instruction' for the sake of convenience and clarity]. There is no disputation or disagreement as between the petitioner's counsel and the learned Revenue counsel that this is incorrect. This is evident and obvious from the first and second sentences in the first paragraph of impugned order. The first sentence says that stay of demand is governed by said instruction and second sentence says that writ petitioner is not covered by said instruction.

6. As there is no disputation or disagreement that the writ petitioner's case i.e., writ petitioner's plea that interim order is covered by said instruction read with Section 220(6) of IT Act and as the only ground on which the prayer has been negatived is that the writ petitioner is not covered by said instruction, this Court deems it appropriate to interfere qua the impugned order.

7. In the light of the narrative thus far, the following order is passed:

a) the impugned order i.e., order dated 12.12.2022 bearing reference ITBA/COM/F/17/2022-23/1047942677(1) made by the first respondent is set aside. The impugned order is set aside on the sole ground that it has proceeded on the lone erroneous basis that said instruction (Instruction No.1914 dated 02.12.1993 as modified by two office memoranda dated 29.02.2016 and 31.07.2017) does not apply to the writ petitioner;

b) The petition of the writ petitioner seeking interim order is remitted back to the first respondent for consideration on its own merits and in accordance with law inter alia by applying said instruction;

c) The above exercise shall be completed by the first respondent as expeditiously as his business would permit and in any event, within three weeks from today i.e., on or before 12.01.2023;

d) Though obvious it is made clear that the writ petitioner's petition styled 'petition to keep the demand of tax in abeyance' before the first respondent now gets revived and the same will stand over for consideration by the first respondent as per the aforementioned directive within aforementioned time line.

(e) Though obvious, it is made clear that this Court has not expressed any view or opinion on the merits of the matter and the facts have been captured for limited purpose of appreciating this order. Captioned writ petition disposed of with the aforementioned directives. Consequently, captioned WMP is disposed of as closed.

There shall be no order as to costs.

23.12.2022

Index: yes/no