SHRI S.MUNIYANDI vs. THE INCOME TAX OFFICER,

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TCA/254/2021HC Madras30 March 2021Bench: Hon`ble Mr Justice T. S. SIVAGNANAM6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the assessee had filed a declaration/undertaking under the Vivad Se Vishwas Scheme on 29.1.2021 and was awaiting orders. In light of this subsequent event, the Court directed the Competent Authority to process the application/declaration under the Direct Tax Vivad Se Vishwas Act, 2020, and pass appropriate orders expeditiously. The assessee was granted liberty to restore the appeal if the decision on the Vivad Se Vishwas declaration was not in their favour. The Court stated that upon such a request, the Registry would entertain the prayer for restoration without insisting on a delay condonation application and place it before the appropriate Division Bench. Consequently, the Tax Case Appeal was disposed of with the aforementioned liberty, and the substantial questions of law raised were left open. No costs were awarded. The operative direction is to process the Vivad Se Vishwas application and allow restoration of the appeal if needed, leaving the substantial questions of law undecided.

What were the facts?

The assessee, Shri S. Muniyandi, filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order dated 12.4.2017 passed by the Income Tax Appellate Tribunal, Chennai ('the Tribunal'). The appeal pertains to the assessment year 2006-07. The assessee raised several substantial questions of law concerning the validity of reassessment proceedings under Sections 147/148 of the Income Tax Act, 1961, alleged violations of natural justice, reassessment based on a change of opinion, lack of tangible material, audit objections, borrowed satisfaction, assessment beyond the limitation period, and the assessability of certain additions. The assessee also argued that the Tribunal confirmed additions of Rs. 25,73,500/- and interest income of Rs. 31,565/- under Section 68 without satisfying the jurisdictional facts, and that the Assessing Officer failed to follow the jurisdictional High Court's decision. Subsequently, the assessee filed a declaration under the Vivad Se Vishwas Scheme on 29.1.2021.

What were the issues?

The Tribunal had to decide the following substantial questions of law raised by the assessee: 1. Whether the Tribunal's order was perverse on facts and law, and opposed to principles of natural justice and fair procedure. 2. Whether the Tribunal erred in not quashing reassessment proceedings under Section 147/148 due to: (a) Gross violations of natural justice and fair procedure, including non-furnishing of reasons and reassessment on the same day notice was served. (b) Reassessment being based on a change of opinion, lack of tangible materials, audit objection, and borrowed satisfaction. (c) Assessment being made beyond the limitation period. (d) Assessability of the assessee when investment was made by a company and the appellant's only admitted source was salary income. 3. Whether the Tribunal was justified in confirming additions of Rs. 25,73,500/- and interest income of Rs. 31,565/- under Section 68 without satisfying the jurisdictional facts inherent in the section. 4. Whether the Assessing Officer was right in not following the binding decision of the jurisdictional High Court in the case of A.R.Srinivasan (by LRS)(Mad) regarding the exercise of jurisdiction, given the Assessing Officer's finding that the appellant had no source other than salary income. Assessee's Contentions: The assessee argued that the reassessment proceedings were vitiated by gross violations of natural justice, change of opinion, lack of tangible material, audit objection, borrowed satisfaction, and being beyond limitation. They also contended that the additions under Section 68 were made without satisfying jurisdictional facts and that the Assessing Officer failed to follow binding precedents. The assessee also submitted a declaration under the Vivad Se Vishwas Scheme. Revenue's Contentions: No specific contentions for the revenue are recorded in the judgment regarding the substantial questions of law.

Which sections of the Income-tax Act were involved?

Section 260A,Section 147,Section 148,Section 68

AI-generated summary — verify with the full judgment below

TCA.No.254 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.3.2021 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MS.JUSTICE R.N.MANJULA Tax Case Appeal No.254 of 2021 Shri S.Muniyandi ...Appellant Vs The Income Tax Officer, Corporate Circle 3(2), Chennai-34. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 12.4.2017 passed by the Income Tax Appellate Tribunal, 'B' (SMC) Bench, Chennai made in I.T.A.No.2695/Mds/2016 for the assessment year 2006-07. For Appellant : Mr.N.Devanathan For Respondent : Mr.M.Swaminathan, SSC assisted by Ms.V.Pushpa, JSC Judgment was delivered by

T.S.SIVAGNANAM

This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order 1/6 https://www.mhc.tn.gov.in/judis/ TCA.No.254 of 2021 dated 12.4.2017 made in I.T.A.No.2695/Mds/2016 on the file of the Income Tax Appellate Tribunal, Chennai 'B' (SMC) Bench ('the Tribunal' for brevity) for the assessment year 2006-07. 2. The assessee has filed this appeal by raising the following substantial questions of law: “1. Whether on the facts and circumstances of the case, the order of the Tribunal is not perverse on facts and law, opposed to principles of natural justice and fair procedure ? 2. Whether the Income Tax Appellate Tribunal erred in law and on facts by not quashing the assessment proceedings under Section 147/148 of the Act in the light of : (a) gross violations of natural justice and fair procedure by non furnishing of reasons and reassessment was made on the same day the notice was served? (b) reassessment was based on change of opinion, exists no tangible materials, based on audit objection and borrowed satisfaction ?

(c) Assessment was made beyond limitation period? (d) Assessability of the assessee when investment was made by company and admittedly the appellant has only source of 2/6 https://www.mhc.tn.gov.in/judis/ TCA.No.254 of 2021 salary income? 3(a) Whether on the facts and circumstances of the case, the Tribunal was justified in law in confirming the additions in the sum of Rs.25,73,500/- and interest income in the sum of Rs.31,565/- in terms of Section 68 of the Act without satisfaction of jurisdictional facts in built in the said Section? And (b) Whether the Assessing Officer was right in law in not following the binding decision of jurisdictional High Court in the case of A.R.Srinivasan (by LRS)(Mad) in regard to exercise of jurisdiction as has been laid down in the case CIT Vs. Smt.P.K.Noorjahan (1999) 237 ITR 570 (SC) on the facts found by the Assessing Officer in the appellant's case to the effect that he has no source except salary income and hence the said addition was not emanated from him?” 3. We have heard Mr.N.Devanathan, learned counsel for the appellant – assessee and Mr.M.Swaminathan, learned Senior Standing Counsel assisted by Ms.V.Pushpa, learned Junior Standing Counsel accepting notice for the the respondent/Revenue. 4. There is a delay in representing the papers. Today, only the petition seeking to condone the delay in representation has been listed 3/6 https://www.mhc.tn.gov.in/judis/ TCA.No.254 of 2021 and the same has been ordered. It is also seen that there has been a delay in filing the appeal. The petition seeking to condone the delay in filing the appeal has also been ordered today and the appeal has been directed to be numbered. 5. The learned counsel on behalf of the assessee submits that the assessee already filed the declaration/undertaking under the Vivad Se Vishwas Scheme on 29.1.2021 and is awaiting orders to be passed in Form No.3. 6. In the light of the subsequent event, the Competent Authority shall process the application/declaration in accordance with the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) and pass appropriate orders as expeditiously as possible. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a miscellaneous petition for restoration, the Registry shall place such petition before the appropriate Division Bench for orders. 4/6 https://www.mhc.tn.gov.in/judis/ TCA.No.254 of 2021 7. The tax case appeal stands disposed of with the aforementioned liberty. Consequently, the substantial questions of law raised are left open. No costs. 30.3.2021 To 1.The Income Tax Appellate Tribunal, 'B' (SMC) Bench, Chennai. 2.The Income Tax Officer, Corporate Circle 3(2), Chennai-34. RS 5/6 https://www.mhc.tn.gov.in/judis/ TCA.No.254 of 2021 T.S.SIVAGNANAM,J AND R.N.MANJULA,J RS

TCA.No.254 of 2021 30.3.2021 6/6 https://www.mhc.tn.gov.in/judis/

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