2024 (11) TMI 1271 - HC - Income Tax

Writ application challenging validity of assessment passed u/s 153C - Unexplained income to be taxed u/s 69A - HELD THAT - Both learned counsel would bring to the notice of the Court that post institution of the writ appeals, the appellants have instituted statutory appeals, the details of which are extracted below, before the Commissioner of Income Tax (Appeals). They would also confirm that they have raised all necessary grounds in those appeals, including on the aspect of assumption of jurisdiction We see no reasons to entertain these writ appeals as the appellants are seen to be riding two horses, which is impermissible. Hence, these writ appeals are dismissed. It is made clear that none of the observations made by the learned Judge in order dated 18.01.2024 will stand in the way of the appellant in the adjudication of the appeals, that shall be decided in accordance with law. Addition of amount of unexplained income to the accounts of both the directors - appellants is primarily aggrieved by the fact that, while directing de novo assessment Ld' Judge has added a caveat that 'the unexplained income u/s 69A of the Income Tax Act, 1961' shall be added to the income of the appellants - We see some merit in this contention, as the assessment has been remanded to be re-done, de novo. Hence, it is appropriate that the question of unexplained income to be taxed under Section 69A, also be considered by the assessing authority, in accordance with law. The contents of paragraph 115 shall not be read as a direction to the assessing officer, who is at liberty to conduct the assessment proceedings afresh.

Summary

Issues:
1. Challenge to order of the writ Court dated 18.01.2004 regarding assessment under Section 153C of the Income Tax Act, 1961.
2. Appellants instituting statutory appeals post institution of writ appeals.
3. Dismissal of writ appeals due to appellants pursuing two horses.
4. Directions of the writ Court regarding assessments made in the cases of Maneesh Parmar and Sunil Khetpalia.

Analysis:

Issue 1:
The High Court of Madras dealt with the challenge to an order of the writ Court dated 18.01.2004, which pertained to assessments passed under Section 153C of the Income Tax Act, 1961. The writ petitions were dismissed by the writ Court, leading to the filing of present appeals by the appellants.

Issue 2:
After the institution of the writ appeals, the appellants also initiated statutory appeals before the Commissioner of Income Tax (Appeals) raising necessary grounds, including jurisdictional aspects. The Court noted that the appellants were pursuing both avenues, which was impermissible, leading to the dismissal of the writ appeals. However, the observations made by the writ Court would not hinder the adjudication of the appeals before the Commissioner.

Issue 3:
The Court dismissed certain writ appeals concerning assessments made in the cases of Maneesh Parmar and Sunil Khetpalia, who were directors in the companies involved in other writ appeals. The writ Court directed a redo of the exercise by adding unexplained income under Section 69A of the Income Tax Act to the income of the petitioners. The Court remanded the cases back to the assessing authority for fresh assessment within a specified period.

Issue 4:
The appellants contested the direction to add unexplained income under Section 69A as part of the redone assessment. The Court acknowledged the merit in this contention and clarified that the assessing authority should consider the question of unexplained income in accordance with the law during the fresh assessment proceedings. The Court dismissed the writ appeals with these observations, emphasizing that the assessing officer has the liberty to conduct the assessment proceedings afresh without being bound by the specific direction regarding unexplained income.

Ultimately, the Court provided a detailed analysis of each issue involved, ensuring clarity on the legal implications and directions given in the judgment.