SRI SURESH KUMAR KOTHARI (HUF) vs INCOME TAX OFFICER

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 2ND DAY OF FEBRUARY, 2015

BEFORE

THE HON'BLE MR.JUSTICE B.S. PATIL

W.P.No.39375/2014(T-IT) BETWEEN: SRI SURESH KUMAR KOTHARI (HUF) S/O SHA POONAMCHAND GALBAJI, AGED ABOUT 40 YEARS, RESIDING AT NO.1, OMKAR VIHAR, SHARDHANAND BHAWAN ROAD, V.V. PURAM, BENGALURU- 560 004. … PETITIONER (BY SHRI.VINAY V -ADV. FOR DNS LAW HOUSE)

AND:

INCOME TAX OFFICER, WARD 9(3), 3RD FLOOR, JEEVAN SAMPIGE, LIC BUILDING SAMPIGE ROAD, MALLESHWARAM, BENGALURU- 560 003.

…RESPONDENT (BY SHRI. JEEVAN J NEERALGI –ADV. )

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER PASSED BY THE RESPONDENT UNDER SECTION 143(3) R/W SECTION 143(3) R/W SECTION 147 OF THE INCOME TAX ACT, 1961, DTD 30.6.2014 FOR THE ASSESSMENT YEAR 2009-10 I.E., ANNEX-C AND CONSEQUENTIAL NOTICE OF DEMAND ISSUED BY THE RESPONDENT DT. 30.6.2014 FOR THE ASSESSMENT YEAR 2009-10 I.E., ANNEXURE- D.

THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-

O R D E R

Sri. Jeeevan Neeralgi, standing counsel for the revenue is directed to take notice for respondent.

It is submitted by the counsel for the petitioner that similar questions raised in WP No.39373/2014 has been considered and disposed of by this court on 29.1.2015 by allowing the writ petition and remanding the matter for fresh consideration to the Income Tax Officer-Ward 9(3), Bengaluru.

3 3. Upon hearing the learned counsel for both parties, I find that the facts and circumstances leading to this writ petition are similar to the one involved in the writ petition which has been already disposed of on 29.1.2015. In this writ petition also notice under section 148 of the Income Tax Act 1961 was issued by the respondent for reopening the assessment pertaining to assessment year 2009-10. In response to the said notice, petitioner requested the respondent that returns filed earlier could be treated as returns filed in response to the notice issued under section 148 of the Income Tax Act.

Grievance of the petitioner is that respondent has failed to assign reasons for reopening the assessment, despite which petitioner participated in the reassessment proceedings which was concluded resulting in addition of a sum of Rs.13,72,250/- to the income of the petitioner holding that certain shares were purchased by the petitioner out of the income that had escaped assessment. The basis for this approach of the respondent is that one Mukesh

4 Choksi is purported to have admitted having made entries in his books, which was revealed during search conducted on 25.11.2009 at his Mumbai Office and that the authorities at Mumbai had issued a letter in this regard to the respondent disclosing the said fact, therefore, the amount in a sum of Rs.13,72,250/- had to be recorded as “ income escaped assessment”.

The same basis was adopted in the matter involved in the connected writ petitions wherein, this court, after referring to various contentions of the learned counsel and provisions of law and also to judgment of the Delhi High court has set aside the order impugned therein.

This court has made the following observations in paragraph 6 to 8 in W.P.No.39373/2014:

“6. Thus, it is apparent that without furnishing a copy of the statement stated to have been given by Mukesh Choksi and without notifying the petitioner regarding

5 basis of the transaction that petitioner is said to have entered into with Mukesh Choksi, respondent has passed the impugned order. The entire basis for the impugned order is the sworn statement of Mukesh Choksi. Unless petitioner is given opportunity to have his say in the matter with regard to the said statement and its contents, it cannot be said that petitioner was given an opportunity of being heard in the matter. Hence, it has to be held that the impugned order is passed without providing any fair and reasonable opportunity of being heard to the petitioner.

In fact, learned Counsel for the petitioner places reliance on the judgment of the Division Bench of the Delhi High Court in the case of Mr. Ashok Mittal Vs Assistant Commissioner of Income Tax and another in WP (C)No.1452/2013, wherein also petitioner therein had specifically objected for the assessment proceedings stating that he had no transaction with either Mukesh Choksi or any other related companies, but the Assessing Officer had solely proceeded on the basis of the statement and the list provided without there being any other information or

6 details furnished to the petitioner though petitioner therein had sought for such details. The High Court of Delhi has held that there was absence of fair and reasonable opportunity and such an assessment order could not be sustained and could be interfere with under Article 226 of the Constitution of India.

In the light of the facts and circumstances as adverted to above, and as the petitioner has been denied an opportunity of fair hearing by providing copy of the statement and related details regarding the alleged share amount, I am of the view that the matter requires to be re-considered by the respondent by providing fair and reasonable opportunity of hearing to the petitioner and by furnishing the details/copy of the statement based on which the impugned assessment order has been passed.”

In the light of the above, following the said reasoning, this writ petition is also allowed. The impugned order is set aside. The matter is remitted for fresh consideration to the respondent. Respondent is directed to furnish copy of the statement of the said

7 Mukesh Choksi to petitioner and provide him fair and reasonable opportunity of being heard and thereafter pass a reasoned order.

Shri Jeevan Neeralgi, is permitted to file memo of appearance within two weeks.

Sd/-

JUDGE

Psg*

SRI SURESH KUMAR KOTHARI (HUF) vs. INCOME TAX OFFICER