2018 (12) TMI 1639 - HC - Income Tax

Misrepresentation and furnishing incorrect information regard the quantum of receivables before the authorities - Illegality in the procedure alleged to have been adopted by the officer concerned in the matter of search and seizure/attachment- Permit the second petitioner PDIT (Investigation)), Chennai to revoke the order passed pursuant to the order passed by the Division Bench in this appeal - whether an attempt by the Executive Authority to provide itself a protective cover against challenges or criticism to its action by passing the bug to the judiciary in the official decision should be resisted and avoided? - HELD THAT - Petition filed by the revenue is maintainable and we are entitled to consider the same and we are of the firm opinion that it is not an attempt to pass on the bug to this Court and to obtain a protective cover against the departmental action. Department is well justified in moving this Court as there are several writ petitions pending apart from the direction issued in the writ appeal by the Division Bench and the main writ petition has also been pending. In the fitness of things, it is appropriate on the part of the Department to seek for leave from this Court to revoke the order dated 07.11.2018. Therefore, we find that it is not a case where the authorities are attempting to pass on the bug to the Court or to obtain protective orders so as to put the assessee in disadvantage position. Therefore, the preliminary objection raised by the assessee stands rejected. Considering the factual matrix the matter definitely requires to be re-considered and the assessee should be given an opportunity to place materials. Further, the TNCS and ICDS are also required to be heard by the authority before taking a decision and an Officer not below the rank of Managing Director should be present before the concerned authority with all records to show as to what are the receivables by the assessee and the other concerns. Petition allowed and consequently the order stands revoked and the matter stands remanded to the Principal Director of Income Tax (Investigation), Tamil Nadu and Pondicherry, Investigation Wing, Chennai 34 for taking a fresh decision after giving effective opportunity to the assessee. It is made clear that the above direction has been issued in the light of the stand taken by the Department that the receivables are lesser than what the assessee had stated before them at the time when the order dated 07.11.2018 was passed. The said authority is directed to conclude the hearing and pass orders within a period of one week from today (03.12.2018).

Summary

Issues:
1. Maintainability of the petition filed by the revenue to revoke an order.
2. Allegations of misrepresentation by the assessee regarding receivables.
3. Justification for revoking the order dated 07.11.2018.
4. Consideration of factual matrix and reassessment of the matter.

Issue 1: Maintainability of the petition filed by the revenue to revoke an order

The petition filed by the Director General of Income Tax (Investigation) and officials of the Income Tax Department sought permission to revoke an order dated 07.11.2018. The counsel for the petitioners argued against the maintainability of the application, citing a Supreme Court decision. However, the Court found the petition maintainable, rejecting the contention that it was an attempt to pass the burden to the Court and obtain a protective cover. The Court supported this conclusion by stating that they were entitled to consider the petition.

Issue 2: Allegations of misrepresentation by the assessee regarding receivables

The Department received information indicating that the receivables reported by the assessee were misrepresented. A notice was issued to the assessee, alleging that incorrect information had been furnished regarding the quantum of receivables. The assessee challenged this notice separately, arguing that they had received communication showing higher receivables. The Court acknowledged the need for reconsideration and directed that the assessee be given an opportunity to present evidence. It was also ordered that the authorities hear from relevant agencies before making a decision.

Issue 3: Justification for revoking the order dated 07.11.2018

The Court considered the justification for revoking the order dated 07.11.2018 in light of the Department's view that the assessee had misrepresented the receivables. After assessing the facts, the Court allowed the petition to revoke the order and remanded the matter to the Principal Director of Income Tax (Investigation) for a fresh decision. The Court emphasized the need for effective opportunity for the assessee to present their case and directed the authority to conclude the hearing and pass orders within a week.

Issue 4: Consideration of factual matrix and reassessment of the matter

The Court reviewed the factual matrix, considering the contentions raised by both the revenue and the assessee. It emphasized the importance of reassessing the situation and giving all parties involved a fair chance to present their case. The Court allowed the petition, revoked the order dated 07.11.2018, and instructed the authority to make a fresh decision promptly, taking into account all relevant information and submissions.

In conclusion, the High Court of Madras addressed various issues concerning the maintainability of a petition to revoke an order, allegations of misrepresentation by the assessee, justification for revoking the order, and the reassessment of the matter. The Court found the petition maintainable, considered the misrepresentation allegations, and justified the revocation of the order based on the need for a fresh decision considering all relevant facts and submissions.