Swapna Manuel Vs ACIT (Madras High Court)
The Madras High Court has dismissed two writ petitions filed by Swapna Manuel, who runs a ladies hostel under the name M/s. Olive Castles and is also involved in real estate, challenging an assessment order and a subsequent penalty order for the assessment year 2016-17. The case, Swapna Manuel Vs. Assistant Commissioner of Income Tax (ACIT), involved a reassessment initiated after a survey revealed discrepancies in her declared income of ₹97,08,580.
The initial assessment order was quashed by the High Court in an earlier writ petition due to a lack of reasonable opportunity for Manuel to respond to a show-cause notice. The matter was then remanded for reassessment, leading to the impugned assessment order dated December 16, 2021, and the penalty order dated June 28, 2022. Manuel’s counsel raised several grounds of challenge against the reassessment order.
One of the primary arguments was that the Assessing Officer (AO) failed to provide reasons for reopening the assessment, allegedly violating the Supreme Court’s ruling in GKN Driveshafts (India) Ltd v. Income Tax Officer and others. However, Justice Anitha Sumanth, presiding over the case, noted that Manuel did not file a revised return in response to the Section 148 notice nor did she request the AO to treat her original return as the one filed under the said notice. The court cited the GKN Driveshafts judgment, stating that the assessee should file a return and then seek reasons for reopening. Since Manuel did not follow this procedure, the court found no merit in this contention. The court also distinguished the reliance placed on Tiwari Kanhaiya Lal and S.G.Portfolio (P) Ltd judgments, which pertain to situations where the assessee indicates that the original return may be treated as the return under Section 148.
Another key contention was the alleged non-provision of statements relied upon by the AO, specifically the statement of M/s. Meenakshi Timber & Plywood, and the denial of an opportunity to cross-examine Manuel’s husband, Mr. Manuel Joseph. The court examined the reference to M/s. Meenakshi Timber & Plywood’s statement in the assessment order, which indicated that M/s. Olive Castles was involved in the project execution. Regarding the cross-examination of Mr. Manuel Joseph, who stated he lacked experience in certain aspects of the work, the court held that the denial did not warrant interference under Article 226 of the Constitution, especially without a clear indication of prejudice to the assessee. The court clarified that the Evidence Act is not strictly applicable to such proceedings, and a right to cross-examination cannot be demanded in all circumstances, citing Andaman Timber Industries v. Commissioner of Central Excise, Kolkata-II.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
