A.Rangasamy Engineers Private Limited vs. The Assistant Commissioner of Income Tax

WP(MD)/18172/2023HC MadrasHCMD01083629202327 July 2023Author: HONOURABLE MRS JUSTICE S.SRIMATHY8 pages
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What were the facts?

The petitioner, A.Rangasamy Engineers Private Limited, filed a writ petition challenging an assessment order dated 22.12.2022 passed under Section 143(3) read with Section 144B of the Income Tax Act for the assessment year 2021-2022, and a consequential demand notice dated 14.06.2023. The petitioner is engaged in trading waste materials. The assessment was initiated after the petitioner filed a NIL return, setting off carried forward business losses. The respondents, the Assistant Commissioner and Deputy Commissioner of Income Tax, deemed transactions doubtful because the sellers had not filed their income tax returns. The petitioner contended that they provided explanations and documentary evidence, including GST returns, but the respondents insisted on proof of sellers' income tax returns and other particulars, which the petitioner argued they had no access to. The respondents also noted discrepancies in vehicle numbers for six transactions, which the petitioner attributed to inadvertence. The petitioner had already preferred a statutory appeal against the assessment order.

What did the High Court hold?

The Court held that while the petitioner had a statutory appeal pending, the writ petition was not maintainable for the purpose of challenging the assessment order itself. However, the Court found that the petitioner was not liable to pay 25% of the demand, especially with the statutory appeal pending. The Court's opinion was that the petitioner was not liable to submit evidence to prove the seller's return and other particulars of the seller. Therefore, the Court granted a stay of the demand notice alone, making it clear that this order was for the limited extent of deciding the payment of the 25% demand and would not affect the rights of either party to argue the appeal on its merits. The appellate authority was directed to consider the issue on its own merits, uninfluenced by this order. The appeal was to be considered within six months. The Court explicitly stated that this order would not serve as a precedent.

What were the issues?

1. Whether the writ petition is maintainable when a statutory appeal has already been filed by the petitioner against the assessment order, and the petitioner has not availed the remedies of filing a stay application before the appellate authority or a petition before the Assessing Officer to stay the demand? Petitioner's contention: The petitioner, represented by senior counsel, argued that the assessment order and demand notice were illegal. They had provided explanations and documentary evidence, including GST filings, but these were disregarded. The respondents' demand for proof of sellers' income tax returns was unreasonable as the petitioner had no access to such information. The petitioner sought to quash the impugned orders. Respondents' contention: The respondents, through their standing counsel, argued that the writ petition was not maintainable because the petitioner had already filed a statutory appeal. They contended that the petitioner ought to have filed a stay application before the appellate authority or a petition before the Assessing Officer to seek a stay of the demand, rather than filing a writ petition. They relied on the judgment in Queen Agencies Vs. Assistant Commissioner of Income Tax (2021) 128 taxmann.com 107 (Madras).

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 220(6)

AI-generated summary — verify with the full judgment below

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 27.07.2023 CORAM THE HONOURABLE MRS.JUSTICE S.SRIMATHY W.P

(MD)No.18172 of 2023

and W.M.P(MD)No.15159 of 2023 A.Rangasamy Engineers Private Limited, Represented by its Managing Director, R. Gangadharan Raja.

... Petitioner Vs.

1.

The Assistant Commissioner, The Assessment Unit, Income Tax Department, Corporate Ward-I, Madurai.

2.

The Deputy Commissioner of Income Tax, The Assessment Unit, Income Tax Department, Corporate Ward-I, Madurai. ... Respondents PRAYER : Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Certiorari, calling for the records relating to the impugned order in DIN. ITBA/AST/S/143 (3)/2022-23/1048181545 (1), dated 22.12.2022 passed U/s. 143 (3) r.w.s. 144B of the Income Tax Act in PAN. AAECA7041A by the 1st respondent for the assessment year 2021-2022 along with the demand notice ITBA/AST/S/156/ 2022- 23 / 1048181653 (1) dated

22.12.

2022

consequential

notice

issued

in DIN. 1/8 https://www.mhc.tn.gov.in/judis

ITBA/RCV/F/17/2023-24/1053711063 (1), dated 14.06.2023 and quash

The order continues below.

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