W.P. No.37642 of 2016 IN HIGH COURT OF JUDICATURE AT MADRAS Dated : 04.03.2020 CORAM HON'BLE MR. JUSTICE R. MAHADEVAN W.P.No.37642 of 2016 and W.M.P.Nos.32267 & 32268 of 2016 Manishkumar B Jain Petitioner Vs. 1.Income Tax Officer Non Corporate Ward 5(3) Kannammai Building 611, Anna Salai Chennai 600006 2.The Commissioner of Income Tax (Appeals) 5 121, Mahatma Gandhi Road Nungambakkam, Chennai 600034 3.The Tax Recovery Officer 9 Kannammai Building III Floor 611, Anna Salai, Chennai 600006 Respondents Prayer: Petition filed under Article 226 of Constitution of India praying to call for records on file of Second Respondent and quash impugned notice for enhancement in ITA No.24/CIT (A)-5/ 2015- 1/6 http://www.judis.nic.in W.P.No.37642 of 2016 16 dated 21.09.2016 issued by Second respondent and direct him to make independent inquiry on assessability of any income covered by order in original passed by customs authorities under customs act and thereafter issue notice of enhancement if he considers necessary For Petitioner : Mr. N. V. Balaji For Respondents : Mr.D.Prabhu Mukund Arunkumar ORDER Challenging notice dated 21.09.2016 issued by 2nd respondent, petitioner has come up with present writ petition. In impugned notice, it is stated that Assessing Officer determined unexplained cash purchase at Rs.1,14,97,899/- based on information received from Customs Authorities and hence, petitioner was called upon to explain as to why total values determined should not be adopted in place of Rs.1,14,97,899/- as determined by Assessing Officer. 2. Upon notice, 2nd respondent filed detailed counter affidavit inter alia stating that on 21.09.2016, notice was issued for enhancement of income and served on AR asking assessee to give his explanation within 15 days, however, till date assessee neither submitted 2/6 http://www.judis.nic.in W.P.No.37642 of 2016 explanation nor requested for more time to submit explanation and in order to give sufficient opportunity to assessee to file with supporting documents, appeal has not been disposed of; and if Assessee furnishes details of purchases, from whom purchases were made along with item purchased, then independent enquiry would be possible to go into genuineness of unaccounted purchase. Stating so, second respondent sought to dismiss this writ petition. 3.The main contention of learned counsel for petitioner is that second respondent, without applying his mind independently, has issued impugned notice relying on report of Assessment Officer, which is arbitrary and illegal and on this score alone, impugned notice is liable to be quashed. In support of his submission, learned counsel relied upon decision of this Court in Commissioner of Income-tax, Trichy v. Amman Steel & Allied Industries [(2017) 79 taxmann.com 331 (Madras) : (2015) 377 ITR 568 (Madras)], wherein, at para 15, it is held as follows: This Court has already held in former portion of order, that assessment order came to be passed only on basis of show cause notice issued by Central Excise 3/6 http://www.judis.nic.in W.P.No.37642 of 2016 Department and no independent enquiry has been conducted by Assessing Officer. Further, ratio of decision of Supreme Court in K.T.M.S. Mohammed v. Union of India [1992] 197 ITR 196/65 Taxman 130, clearly applies to facts of present case. Such being case, in absence of any independent enquiry by Assessing Officer, disallowance sought to be made under Income Tax Act, by Assessing Officer, on basis of show cause notice, issued under Central Excise Act cannot be sustained. When assessable income was arrived at by applying percentage rate, as held by this Court in CIT Vs. S.Mohammad Dhurabudeen [Tax case (Appeal) No.885 of 2007, dated 11.07.2007], said exercise would take care of everything and there is no need for Assessing Officer to make scrutiny of amount incurred on purchases by assessee for purpose of disallowance. Therefore, this Court is of considered view that order of Tribunal in concurring with CIT (Appeals) on this issue is justified and this Court finds no reason to differ with same. 4.On other hand, learned counsel for respondent fairly submitted that if petitioner files necessary objection, 2nd respondent would consider same and pass orders independently, on merits and in accordance with law. 4/6 http://www.judis.nic.in W.P.No.37642 of 2016 5.Upon agreeing aforesaid submission made by learned counsel for respondent, learned counsel for petitioner submitted that petitioner may be permitted to file their objections afresh before 2nd respondent, within time frame to be stipulated by this Court. 6.Considering facts and circumstances of case and having regard to submissions now made by learned counsel on either side, this Court permits petitioner to submit necessary objections to second respondent, within period of two weeks from date of receipt of copy of this order. On receipt of same, 2nd respondent shall consider same and pass appropriate orders independently applying his mind, on merits and in accordance with law, after providing opportunity of personal hearing to petitioner, within period of four weeks thereafter. 7.This writ petition stands disposed of accordingly. Consequently, connected miscellaneous petitions are closed. No costs. 04.03.2020 kas 5/6 http://www.judis.nic.in W.P.No.37642 of 2016 R.MAHADEVAN, J. kas To 1.Income Tax Officer Non Corporate Ward 5(3) Kannammai Building 611, Anna Salai Chennai 600 006 2.The Commissioner of Income Tax (Appeals) 5 121, Mahatma Gandhi Road Nungambakkam, Chennai 600 034 3.The Tax Recovery Officer 9 Kannammai Building III Floor 611, Anna Salai, Chennai 600 006 W.P.No.37642 of 2016 and W.M.P.Nos.32267 & 32268 of 2016 04.03.2020 6/6 http://www.judis.nic.in Manishkumar B. Jain v. ITO, NCW-5(3), Chennai / CIT (A)-5, Chennai / TRO-9, Chennai