Case Law Details
Suresh Patel Vs PCIT (Madras High Court)
The case of Suresh Patel vs PCIT presented before the Madras High Court involves a challenge to an order issued by the first respondent on March 24, 2022, under Section 263 of the Income Tax Act, 1961. Preceding this order was a show cause notice dated January 25, 2022, to which the petitioner had responded, leading to the impugned order. Instead of pursuing the matter through the appellate Tribunal as per Section 253(1)(c) of the Income Tax Act, 1961, the petitioner chose to approach the Court after a significant delay.
The petitioner’s argument revolves around the completion of scrutiny assessment based on the income tax return filed on December 30, 2019. Additionally, the petitioner claims to have complied with the order by paying the differential tax and an additional sum towards the Pradhan Mantri Garib Kalyan Yojana Scheme (PMGKYS) 2016.
The crux of the petitioner’s contention is that the respondent’s invocation of Section 263 of the Income Tax Act, 1961, to revise the assessment order of December 30, 2019, is unjustified since the petitioner had already fulfilled the obligations set forth in that order.
On the contrary, the opposition to the Writ Petition argues that the petitioner had an alternative remedy available through the appellate Tribunal, and the delay in approaching the Court renders the petition liable for dismissal. Furthermore, it’s highlighted that an assessment order was passed on March 24, 2023, under Section 144 read with Section 263 read with Section 144B of the Income Tax Act, 1961, and a demand notice has been issued, indicating ongoing proceedings.
The respondent contends that the scrutiny assessment order dated December 30, 2019, was indeed erroneous and prejudicial to the revenue’s interest, justifying the use of power under Section 263 of the Income Tax Act, 1961. Thus, the respondent argues for the dismissal of the Writ Petition.
The court deliberated on the arguments presented by both parties and observed that a survey was conducted under Section 133A of the Income Tax Act, 1961, on March 14, 2017, wherein the petitioner declared income under the PMGKYS 2016 and made corresponding payments.
Following this, the petitioner filed a return on November 3, 2017, declaring a loss, leading to the scrutiny assessment order on December 30, 2019. The court emphasized that this scrutiny assessment order should not be confused with the impugned order of March 24, 2022, issued under Section 263 of the Income Tax Act, 1961.
Consequently, the court found no merit in the Writ Petition and granted liberty to the petitioner to file a statutory appeal before the Appellate Tribunal within 45 days from the receipt of the order. Additionally, the petitioner was given the option to appeal against the assessment order passed on March 24, 2023, within the specified timeframe. The petitioner was also permitted to apply for a stay on the operation of the impugned order and the assessment order passed on March 24, 2023, pending appeal.
In conclusion, the Writ Petition was disposed of without costs, and the connected Miscellaneous Petition was closed accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner has challenged the impugned order passed by the first respondent on 24.03.2022 under Section 263 of the Income Tax Act, 1961. The impugned order has preceded a show cause notice dated 25.01.2022, to which, the petitioner has replied, which has culminated in the impugned order. Instead of challenging the impugned order before the appellate Tribunal under Section 253(1)(c) of the Income Tax Act, 1961, the petitioner has approached this Court belatedly.
2. The specific case of the petitioner is that his scrutiny assessment was completed on the return of income filed by him on 30.12.2019.
3. The learned counsel for the petitioner would submit that the petitioner has also complied with the order by depositing the differential tax of Rs.1,49,70,000/-. That apart, the petitioner has also paid a further sum of Rs.75,00,000/- towards Pradhan Mantri Garib Kalyan Yojana Scheme [PMGKYS] 2016.
4. It is submitted that long after the petitioner complied with the order, it was not open for the first respondent to invoke Section 263 of the Income Tax Act, 1961, seeking revision of the assessment order passed on 30.12.2019 under Section 143(3) of the Income Tax Act, 1961.
5. The Writ Petition is opposed primarily on the ground that the petitioner had an alternate remedy before the appellate Tribunal under Section 253(1)(c) of the Income Tax Act, 1961. That apart, it is submitted that pursuant to the impugned order dated 24.03.2022, assessment order was also passed under Section 144 read with Section 263 read with Section 144B of the Income Tax Act, 1961, on 24.03.2023 and that a demand notice has also been issued under Section 156 of the Income Tax Act, 1961.
6. It is therefore submitted that the Writ Petition is liable to be dismissed on account of laches and inordinate delay. It is submitted that the submission of the petitioner that the petitioner’s case was under scrutiny as per Section 143 of the Income Tax Act, 1961 under Computer Aided Selective Scrutiny (CASS), which is attributable to the power of revision under Section 263 of the Income Tax Act, 1961, is wholly wrong. It is submitted that scrutiny assessment order was passed earlier on 30.12.2019 under the mechanism followed under CASS.
7. It is submitted that ample power is vested with the authorities wherever the authorities find that an assessment order passed is erroneous and prejudicial to the interest of the revenue. It is submitted that in this case, the scrutiny assessment order dated 30.12.2019 that was both erroneous and prejudicial to the interest of the revenue and thus, the power was rightly invoked under Section 263 of the Income Tax Act, 1961. It is therefore submitted the Writ Petition lacks merit and therefore, it is also liable to be dismissed.
8. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents.
9. It is noticed that a survey was conducted under Section 133A of the Income Tax Act, 1961 on 14.03.2017. The petitioner had declared Rs.3,00,00,000/- under Pradhan Mantri Garib Kalyan Yojana Scheme [PMGKYS] 2016 and has paid Rs.1,49,70,000/- and deposited a sum of Rs.75,00,000/- under it.
10. It is thereafter, the petitioner filed return on 03.11.2017 declaring a total loss of Rs.2,39,61,352/-, which culminated in the scrutiny assessment order dated 30.12.2019 under Section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2017-2018. It is, in this background, the show cause notice was issued under Section 263 of the Income Tax Act, 1961.
11. The scrutiny assessment order passed under Section 143(3) of the Income Tax Act, 1961, cannot be confused with the impugned order dated 24.03.2022, pursuant to invocation of power under Section 263 of the Income Tax Act, 1961. Therefore, there is no merit in this Writ Petition. Further, the issue involves disputed question of facts, liberty is given to the petitioner to file a statutory appeal before the Appellate Tribunal under Section 253(1)(c) of the Income Tax Act, 1961, within a period of 45 days from the date of receipt of a copy of this order. The petitioner is also at liberty to move suitable appeal under the same proviso against the assessment order passed on 24.03.2023 under Section 144 read with Section 263 read with Section 144B of the Income Tax Act, 1961, within such time. The petitioner is also at liberty to move suitable application for staying the operation of the impugned order as also the assessment order passed on 24.03.2023 under Section 144 read with Section 263 read with Section 144B of the Income Tax Act, 1961, along with the proposed appeal.
12. This Writ Petition is disposed of accordingly. No costs. Consequently, connected Miscellaneous Petition is closed.
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