Bombay High Court
Sanjay Ratra vs Assistant Commissioner Of Income Tax ... on 7 January, 2025
Author: M. S. Sonak
Bench: M. S. Sonak
2025:BHC-OS:156-DB
Revati pronouncement 4.WP.38.25.docx
SAYYED Digitally signed
by SAYYED IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SAEED SAEED ALI
ALI AHMED ALI
ORDINARY ORIGINAL CIVIL JURISDICTION
AHMED Date:
2025.01.07
ALI 15:52:17 +0530
WRIT PETITION NO.38 OF 2025
Sanjay Ratra
B-101, Swati Apartments,
Yari Road, Versova, Andheri (W),
Mumbai-400061 .. Petitioner
Versus
1. Assistant Commissioner of
Income Tax Circle, Mumbai
Room No.302, 3rd floor,
Kautilya Bhavan, C-41 to C-43,
G Block, Bandra Kurla Complex,
Bandra (E), Mumbai-400051
2. Principal Commissioner of
Income Tax-17, Mumbai
Kautilya Bhavan, C-41 to C-43,
G Block, Bandra Kurla Complex,
Bandra (E), Mumbai-400051
3. Principal Chief Commissioner of
Income Tax, Mumbai
Aayakar Bhawan, Maharshi Karve Road,
Churchgate, New Marine Lines,
Mumbai-400020.
4. Assistant Commissioner of
Income Tax Circle-35(3), Mumbai
Kautilya Bhavan, C-41 to C-43,
G Block, Bandra Kurla Complex,
Bandra (E), Mumbai-400051
5. Union of India
through the Secretary,
Department of Revenue,
Ministry of Finance,
Government of India,
North-Block, New Delhi-110001
6. The Central Board of Direct Taxes,
Department of Revenue,
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Revati pronouncement 4.WP.38.25.docx
Ministry of Finance,
Government of India,
North-Block, New Delhi-110001 .. Respondents
_______________________________________________________________
Ms. Rutuja N Pawar a/w Ms. Hetal Laghave for the petitioner.
Mr. Akhileshwar Sharma for respondents.
_______________________________________________________________
CORAM : M. S. Sonak &
Jitendra Jain, JJ.
RESERVED ON : 6 January 2025
PRONOUNCED ON : 7 January 2025
JUDGMENT (Per Jitendra Jain J):
-
1. This petition under Article 226 of the Constitution of India seeks
to challenge the notice under Section 148 of the Income Tax Act 1961
(the said Act) dated 17 April 2023 for the assessment year 2016-17
consequent to the notice issued under Section 148A (b) of the said Act
dated 24 March 2023.
2. The petitioner is an individual. For the assessment year 2016-17,
the petitioner has filed his original return of income on 8 April 2017
interalia, disclosing capital gain amounting to Rs.66,59,598/-. The said
return was revised on 13 April 2017, but the capital gain disclosed
remained intact.
3. The aforesaid return of income was selected for a scrutiny
assessment by the respondents vide notice under Section 142(1) dated
26 October 2018 of the said Act. In the annexure to the said notice, the
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petitioner was called upon to furnish the copy of bank statement, copy
of form No.26-AS, re-conciliation of the receipts with return of income,
documentary evidence for claim of deduction under Chapter VI-A, etc.
4. On 30 November 2018, an assessment order under Section 143
(3) was passed by the respondents, who accepted the return of income.
The assessment order records that the scrutiny was limited to only
verifying deductions under Chapter VI-A.
5. On 24 March 2023, a notice under Section 148-A(b) of the Act
for the assessment year 2016-17 came to be issued by the respondents.
In the annexure to the said notice, it was stated that the respondents
had received the information in accordance with the Risk Management
Strategy Formulated by the Central Board of Direct Taxes (CBDT) and
as per the said information, it was alleged that the petitioner had
received cash of Rs.1.30 crore which is undisclosed and further the
credit card transaction amounting to Rs.19,09,144/- was also required
to be verified. In the annexure, it is further stated that neither of these
transactions had been accounted for, and therefore, the income charged
to tax has escaped assessment. It further states that since the amount
involved is more than Rs.50 Lakhs, larger period under Section 149(1)
(b) is invoked. The annexure further states that since the return of
income has not been filed, income chargeable of tax has escaped
assessment for AY 2016-17, and therefore the petitioner was required to
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show cause as to why the notice under Section 148 should not be issued
on the basis of the above information.
6. The petitioner filed a letter dated 8 April 2023 objecting to the
above show cause notice and made submissions. Concerning the credit
card transaction, the petitioner enclosed the bank statement and
submitted that the credit card expenses pertain to the general and travel
expenses of the petitioner and his family. Similarly, concerning the
alleged cash receipt of Rs.1.30 crores, the petitioner made his
submission on the merits as to why the same cannot be added as
income in his hands. The petitioner also enclosed the sale deed
valuation report, etc., supporting his objections. No jurisdictional issue
was raised in the objections.
7. On 17 April 2023, the respondents passed an order under Section
148 A(d) rejecting the petitioner's objection. Along with the order of
rejection, the petitioner was also served with a copy of approval under
Section 151 of the Act. The order of rejection was followed by a notice
under Section 148 of the Act, which is impugned in the present
proceeding.
8. Ms Pawar, learned counsel for the petitioner, submits that the
respondents in the information provided proceeded on any erroneous
assumption that the petitioner had not filed his return of income,
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whereas, in fact, the petitioner has filed his return of income and which
fact has not been denied in the order rejecting the objection. Therefore,
the very basis of re-opening the case falls to ground. Secondly, Ms.
Pawar relying on Clause (iv) of Explanation 2 to Section 148 and the
second proviso to Section 148 as it exists before Finance (No.2) Act of
2024 submitted that respondents ought to have issued notice under
Section 153C of the Act and not under Section 148 of the Act, since in
the present case the search in the case of a party to whom the land was
sold took place on 6 June 2018 which was prior to 1 April 2021 and
therefore provisions of Section 148 as amended would not be
applicable. We may note that after the matter was closed for orders, in
the afternoon session, Ms. Pawar mentioned and stated that she forgot
to argue one more point, which is the ground relating to the issue being
covered by the decision of this Court in 'Hexaware Technologies Ltd. Vs
Assistant Commissioner of Income Tax & Ors.1.
9. Ms. Pawar, further submitted that the issues were examined
during the course of the assessment proceedings since the bank
statement was furnished in the course of the regular assessment
proceedings. In view thereof, Ms.Pawar submitted that the impugned
proceedings are without jurisdiction and ought to be quashed. She
relied upon the decision of Delhi High Court in the case of 'Shri.
1 (2024) 464 ITR 430
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Trilochanlal Goyal Vs Assistant Commissioner of Income Tax & ors.'2 and
the decision of the co-ordinate bench of this Court in the case of
'Narendra Kumar Shah Vs.Assistant Commissioner of Income Tax & ors. 3
in support of her submissions.
10. Mr. Sharma learned counsel for the respondent vehemently
objected to the prayers made by the petitioner. Mr. Sharma submitted
that the information regarding the alleged cash transaction was
received after the assessment order was passed. He further submitted
that credit card expenses and alleged cash transactions were not
examined during the course of assessment proceedings since the
assessment proceedings were limited to verification of deduction under
Chapter VI-A, and it was a limited scrutiny. Mr Sharma further
submitted that the reliance placed on Clause (iv) of Explanation 2 and
the second proviso to Section 148 cannot be read in a reverse manner to
mean that the impugned proceedings are without jurisdiction. Mr
Sharma submitted that on a correct reading of the scheme of Section
148, the only conclusion that can be drawn is that in case of a person in
whose case a search is conducted or any other person connected with
such search person, the procedure prescribed under Section 148A need
not be followed and the officer can issue a notice under Section 148
directly. Mr. Sharma further submitted that there is nothing on record to
3 (2024) 465 ITR 385
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show that the issues for which re-opening is sought were examined
during the course of assessment proceedings, and in any case it would
involve an investigation into questions of facts, and therefore the
present petition should be dismissed. He further submitted that none of
the issues raised now were raised in the objections.
11. We have heard learned counsel for the petitioner and respondents
and have perused the documents brought to our notice.
12. At the outset, on a perusal of the objections raised vide letter
dated 8 April 2023 by the Petitioner, we could not find any of the
arguments raised today before us having been raised in the said
objections. The objections are purely on the merits of the case.
Therefore, on this count itself, we do not wish to interfere in our writ
jurisdiction to permit the Petitioner to raise the grounds which have not
been raised in the objections.
13. However, we permit the petitioner to raise this issue if permitted
in law in the course of the assessment and appellate proceedings if and
when such occasion arises. In any case, even if we had to consider their
submissions, which are raised before us today, we, for the reasons
mentioned hereinafter, prima facie , do find any case having been made
out for interference.
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14. The first submission of Ms. Pawar that these issues were
examined and, therefore, the proceedings are without jurisdiction is
required to be rejected. The issue of alleged cash receipt was not
examined during the course of the regular assessment proceedings since
the information from Faridabad Officer was received after the
conclusion of the assessment proceedings. The assessment proceedings
were concluded on 30 November 2018 whereas the information of
alleged cash receipt was received on 21 February 2022. Furthermore,
from the questionnaire issued to examine issues in the regular
assessment proceedings there is no query on credit card expenses or
alleged cash receipt. Therefore, both issues do not appear to have been
examined. The assessment order further records that the assessment
was limited scrutiny assessment only for verification of deduction under
Chapter VI. The Petitioner has not enclosed the submissions made
during assessment proceedings in the present petition, and therefore,
we cannot give any conclusive findings in the writ proceedings.
Therefore, on these counts, the submissions made by Ms Pawar prima
facie are required to be rejected.
15. The second submission made by Ms Pawar that in the
annexure to notice under Section 148A(b), it is stated that the return is
not filed is incorrect since the return was, in fact filed and the same has
not been disputed in the order rejecting the objections. In our view, the
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reopening has to be done based on "information" and the said
information has been reproduced in the annexure to the notice under
Section 148A(b). It is based on the said information that the present
proceedings are initiated. Although the respondents in the said
annexure to the notice have stated that the return has not been filed,
but in our prima facie view, that is not the basis on which the reopening
is sought. The reopening is based on the information in accordance with
the Risk Management Strategy Formulated by the CBDT. The
respondents in their replies have stated that the statement in the
information annexed to the notice that the petitioner has not filed
return of income is a typographical error. In our view, without going
into the same, prima facie since the reopening is based on the
information, this submission made by Ms Pawar is rejected and can
better be examined in appellate proceedings.
16. Reliance placed by Ms. Pawar on the decision of Delhi High Court
in the case of Shri Trilochanlal Goyal (supra) is not applicable since
Delhi High Court was concerned with pre-amended Section 148 and the
pre-amended law did not use the phrase "information". Insofar as, the
decision of Narendra Kumar Shah (supra) is concerned the same, is
distinguishable on facts since that was not the case where information
of alleged unaccounted cash receipt was received. Therefore, the
decision relied upon by Ms. Pawar prima facie is distinguishable on facts
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and not applicable.
17. Ms. Pawar submitted since the search in the case of Faridabad
party was prior to 1 April 2021 and, therefore, provisions of Section
153C would be applicable and not Section 148A is prima facie required
to be rejected since in the present case the information is not only qua
the alleged cash receipt on account of search but also about credit card
expenses and credit card transactions. Therefore, even on this count,
we cannot accept prima facie, the submissions made by the Petitioner.
18. Ms Pawar, after the hearing, mentioned the matter in the post-
lunch session and submitted that the issue is covered by the decision of
this Court in the case of Hexaware Technologies Ltd. (supra). We have
perused the grounds raised in the petition and do not find any grounds
having been raised on this issue except in para dealing with delay in
explaining in approaching this Court. No foundational facts are stated in
this regard in the petition. Therefore, this ground also cannot be
considered. However, the petitioner is at liberty to raise this ground
before the appellate authority if and when any occasion arises.
19. Now we come to the submission of Ms. Pawar concerning
approval under Section 151 of the said Act. Ms. Pawar submitted that
the approval is without application of mind. We have perused the
approval memo, which was annexed to the petition and we do not find
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prima facie that the approval is without application of mind. In the
remarks column in Item 21 and 22 it is stated after going through the
annexure, the authority has given its approval by referring to the
material available on record and consideration of the same. This is not a
case where in the approval column, the approving authority has only
stated 'yes', but the approval records the perusal of the draft order
submitted by the assessing officer, material available on record,
consideration of the same and the information as per Risk Management
Strategy. Therefore, prima facie we are not impressed with the
submission of the petitioner on this count.
20. In view of the above and the facts of the present petition, we
do not see any reason to interfere in the impugned proceedings to
quash the notices challenged in the present petition. However, the
petitioner is at liberty to raise the same in normal reassessment /
appellate proceedings if and when the occasion arises. We have only
expressed a prima facie view to decide whether to exercise our
jurisdiction under Article 226 of the Constitution of India without
considering the merits of the matter because such merits need to be
examined by the assessing officer in the first instance.
21. Accordingly, this Petition is dismissed with no order as to costs.
(Jitendra Jain, J.) (M. S. Sonak, J.)
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