Bombay High Court
Shah Nanji Nagsi Exports Private ... vs Dcit/ Acit, Circle 4, Nagpur And Others on 5 May, 2025
Author: Avinash G. Gharote
Bench: Avinash G. Gharote
2025:BHC-NAG:4863-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
WRIT PETITION No. 1988 OF 2023
PETITIONER : Shah Nanji Nagsi Exports Privated
Limited
Plot No. 72, Block No. 202, Salasar
Palace Apartment Gangabai Ghat
Square Old Bagadganj, Nagpur
Vs.
RESPONDENTS : 1. DCIT / ACIT, Circle 4, Nagpur
Aayakar Bhawan, Seminary Hills,
Nagpur
2. Income Tax Officer, Ward No. 5(1),
Nagpur
Aayakar Bhawan, Seminary Hills,
Nagpur
3. Assessment Unit, Income Tax
Department, New Delhi
4 The Principal Commissioner of
Income Tax-1, Nagpur
Aayakar Bhawan, Seminary Hills,
Nagpur
5 The Union of India, through its
Secretary, Department of Revenue,
Ministry of Finance, Government of
India, New Delhi - 110002
Mr. K.A. Hirani, Advocate for Petitioner
Mr. Bhushan Mohta, Advocate for Respondents
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CORAM : AVINASH G. GHAROTE AND
ABHAY J. MANTRI, JJ.
DATE : 05/05/2025
ORAL JUDGMENT (Per : AVINASH G. GHAROTE, J.)
1. Rule. Rule made returnable forthwith. Heard Mr.
Hirani, learned counsel for the petitioner and Mr. Mohata,
learned counsel for the respondents.
2. On 01.4.2025, we had recorded the following position :
"Mr. Hirani, learned Counsel for the
petitioner admits, that only issues limited to the
challenge to the notice under Section 148 of the I.T.
Act, would be permissible to be raised in the present
petition as any challenge to the adjudication order
subsequently passed would always lie by way of an
appeal. He would, therefore, restricts the arguments
in the present petition to the notice under Section
148 of the I.T. Act.
2. One of the grounds, raised in the present
petition is, that the notice under Section 148 of the
I.T. Act which was for the assessment year 2014-15,
in respect of which the return was filed by the
petitioner on 24-9-2014, regular assessment under
Section 143(3) of the I.T. Act in respect of which, was
carried out by the Assessment Officer on 13-12-2016,
was issued on 1-4-2021, i.e. beyond the period of six
years from the end of the assessment year 2014-15
which ended on 31-3-2015. Section 149(1)(b) of the
I.T. Act as it was then prevalent, states that no notice
under Section 148 of the I.T. Act shall be issued for
the relevant assessment year if four years, but not
more than six years, have elapsed from the end of the
relevant assessment year unless the income
chargeable to tax which escaped assessment amounts
to or is likely to amount to Rs.1,00,000/- (Rupees One
Lac) or more for that year. By inviting our attention to
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the notice under Section 148 of the I.T. Act (Page
No.139), which is dated 31-3-2021, it is contended
that it was actually sent on 01-4-2021 at 3:58:33 a.m.
by email for which the document at page 140 is being
relied upon. Reliance is also placed upon the word
"issued" as occurring in Section 149(1) of the I.T. Act
in relation to Section 13(1) of the Information
Technology Act, 2000 to contend that the expression
would mean the dispatch of an electronic record,
would occur when it enters a computer resource
outside the control of the originator. It is, therefore,
submitted that though the notice under Section 148
(Page No.139) may have been digitally signed by the
Assessing Officer on 31-3-2021 at 18:36:17 p.m.
what is necessary to be looked into is the point of time
of dispatch, which as indicated above was 01-4-2021
at 3:38:33 a.m. (Page No.140). Reliance is also
placed upon Daujee Abhushan Bhandar (P) Ltd. v.
Union of India & Ors., (2022) 325 CTR Allahabad
659.
3. Mr. Parchure, learned Counsel for the
respondents submits, that the judgment has been
questioned before the Hon'ble Apex Court. In order to
verify the position by the petitioner, list the matter on
02-4-2025."
3. On 02.4.2025, Mr. Hirani, learned counsel for the
petitioner pointed out to us, that the SLP against the judgment in
Daujee Abhushan Bhandar (P) Ltd. Vs. Union of India & Ors.
(2022) 325 CTR Allahabad 659, had been disposed off by the
Hon'ble Apex Court on 03.10.2024 and the findings rendered
therein regarding the expression "issuance" has not been
disturbed.
4. Today, Mr. Mohata, learned counsel for the
respondents, by relying upon the decision in Balgopal Holdings &
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Traders & Ors. Vs. Deputy Commissioner of Income Tax in Writ
Petition No. 2934/2022, decided on 01.04.2025 submits, that the
matter does not need any interference.
5. Since the notice dated 31.3.2021 (page 139), seeks to
reopen the assessment for the assessment year 2014-15, on the
ground that it has escaped assessment within the meaning of
Section 147 of the Income Tax Act, the same ought to have been
issued within the time limit as indicated by Section 149 of the IT
Act. For the purpose of better understanding, the provisions of
Section 149 of the IT Act as were then prevailing are necessary to
be considered, which are reproduced as under :
"149. Time limit for notice - (1) No notice under
section 148 shall be issued for the relevant
assessment year -
(a) if four years have elapsed from the end of the
relevant assessment year, unless the case falls under
clause (b) or clause (c) ;
(b) if four years, but not more than six years, have
elapsed from the end of the relevant assessment
year unless the income chargeable to tax which has
escaped assessment amunts to or is likely to amount
to one lakh rupees or more for that year,
(c) if four years, but not more than sixteen years,
have elapsed from the end of the relevant
assessment year unless the income in relation to any
asset (including financial interest in any entity)
located outside India, chargeable to tax, has escaped
assessment."
6. It would, therefore, be apparent, that for the purpose of
issuance of the notice under Section 148 of the IT Act, the time
limit as contemplated under Section 149(1)(a to c) of the Act
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needs to be strictly followed as the Income Tax Act is a taxing
statute, and in case, assessment for years, which is barred to be
reopened, on account of passage of time, is sought to be
reopened then such an action will have to be assured to be
strictly in compliance with the statutory provisions in that regard.
Section 149(1) of the Act, starts with the negative clause
inasmuch as it mandates, that no notice under Section 148 of the
IT Act shall be issued for the relevant assessment year, if (a) four
years have elapsed from the end of the relevant assessment years
(b) if four years but not more than six years have elapsed from
the end of the assessment year, unless the income chargeable to
tax has escaped assessment or if the amount is exceeding Rs. One
Lakh for that year and (c) if four years but not more than sixteen
years have elapsed from the relevant assessment year in relation
to any asset located outside the country.
7. In the instant case, the assessment which is being
sought to be reopened is for the assessment year 2014-15 which
has come to an end on 31.3.2015. The notice in this case is
dated 31.3.2021, which apparently appears to be on the last date
of the sixth year period, as contemplated by clause (b) of Section
149(1) of the IT Act and, therefore, could be said to be within the
aforesaid time frame. However, what is material to note, is that it
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has been sent on 01.04.2021, at 3:58:33 AM as is indicated from
the email of the said date (page 140). The question, therefore,
revolves around the word "issue" and what is meant by it. While
considering the aforesaid expression, the learned Division Bench
in Daujee Abhushan Bhandar (P) Ltd. (supra), after considering
the various authorities on that point as well as the provisions of
Section 13(1) of the IT Act, 2000, has held as under :
"29. Thus, considering the provisions of s. 282
and 282A of the Act, 1961 and the provisions of s. 13
of the Act, 2000 and meaning of the word "issue" we
find that firstly notice shall be signed by the assessing
authority and then it has to be issued either in paper
form or be communicated in electronic form by
delivering or transmitting the copy thereof to the
person therein named by modes provided in s. 282
which includes transmitting in the form of electronic
record. Sec. 13(1) of the Act, 2000 provides that
unless otherwise agreed, the dispatch of an electronic
record occurs when it enters into computer resources
outside the control of the originator. Thus, the point
of time when a digitally signed notice in the form of
electronic record is entered in computer resources
outside the control of the originator i.e. the assessing
authority that shall the date and time of issuance of
notice under s. 148 r/w s. 149 of the Act, 1961."
8. It is also necessary to note that the challenge to Daujee
Abhushan Bhandar (P) Ltd. (supra) was decided by the Hon'ble
Apex Court in Union of India and others Vs. Rajiv Bansal (2014)
469 ITR 46, however, the question regarding issuance of notice
as contemplated under Section 149(1) of the IT Act, has not been
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considered therein, rather it has been held that the Taxation and
other Laws Amendment (Relaxation of Certain Provisions), Act,
2020, did not amend the time limits of four years and six years,
from the end of the relevant assessment years. The findings by
the learned Division Bench in Daujee Abhushan Bhandar (P) Ltd.
(supra) regarding the word "issuance" has not been set aside.
9. While considering the above word "issue" the learned
Division Bench of this Court in Toliram Vs State of Maharashtra
through the Secretary, Public Works Department 2024 SCC
Online Bom 2436, has held as under :
"17 As noted above, Rule 27(6)(a) states
that the departmental proceedings shall be
deemed to be instituted on the date of issuance
of charge sheet. It clearly does not state that the
departmental proceedings shall be deemed to be
instituted on the date the charge sheet is served
upon the Government servant. In service
jurisprudence, the phrases "issued" and 'served'
have often been subject matter of the discussion
by Hon'ble Supreme Court in various judgments.
In the case of Delhi Development Authority v.
H.C. Khurana, (1993) 3 SCC 196 : AIR 1993 SC
1488, the submission that the word 'issued' shall
mean by the Hon'ble Supreme Court in the said
judgment that the word 'issued' merely means
that decision to initiate departmental
proceedings is taken and translated into action
by despatch of the charge sheet leaving no doubt
that the decision has been taken. The Hon'ble
Supreme Court has further observed that 'issue'
of charge sheet in the context of decision to
initiate the disciplinary proceedings mean
framing of the charge sheet and taken of
necessary action to despatch the charge sheet to
the employee to inform him about the charges
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framed against him and further requiring his
explanation. The Hon'ble Supreme Court has
clearly held that 'issue' would mean the factum
of 'service' or charge sheet on the employee
concerned. The Hon'ble Supreme Court has to be
gathered from the context in which it is used,
and accordingly the Apex Court concluded that,
'issue' of a charge sheet would mean its despatch
to the Government servant and this act is
complete, the moment steps are taken for the
said purpose for framing the charge sheet and
despatch it to the Government servant. It has
clearly been held by the Hon'ble Supreme Court
that, the fact of actual 'service' of charge sheet
on the Government servant is not a necessary
part of the requirement of 'issuance' of charge
sheet".
10. We, however, find that in Toliram Vs State of
Maharashtra (supra), the question, was slightly different
inasmuch as what was under consideration, was whether
departmental proceedings were instituted against the petitioner
therein before he retired. Having considered what was held in
Delhi Development Authority Vs H.C. Khurana (1993) 3 SCC
196, it was held, that the word 'issued' merely means that
decision to initiate departmental proceedings is taken and
translated into action by dispatch of the charge-sheet, leaving no
doubt that the decisions has been taken and that issuance of the
charge-sheet in the context of the decision to initiate disciplinary
proceedings, meant framing of the charge-sheet and taking of
necessary action to despatch the charges framed against him and
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further requiring his explanation. It would not mean service of
the charge-sheet on the employee but mean its despatch to the
Government servant.
11. The word despatch, therefore, assumes significance and
since we are dealing with a case, where it has been dispatched
electronically, in terms of Section 13(1), the time and place of
despatch and receipt of electronic record, would occur when it
enters a computer resource outside the control of the originator.
This is already been considered in Daujee Abhushan Bhandar (P)
Ltd. (supra).
12. Considering the above dictum, the screen shot as
provided by the respondents to the petitioner (page 140) to
contend that the notice dated 31.3.2021 under Section 148 of the
Act had been issued on 31.3.2021 itself, has to be considered.
Considering the language of Section 13(1) of the IT Act, it would
be apparent, that the sent time stamp occurring on this document
is dated 01.04.2021, 03:58:33 AM and the delivered time stamp
reads 01.04.2021, 03:58:36 AM. This would indicates, that
within 3 micro seconds of the notice which was sent by email,
being put in the system, it was delivered to the petitioner.
However, the date of putting it into the system is material. The
document at page 140 is the only document according to both
the counsels which can demonstrate this position.
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13. Though it is contended by Mr. Mohata, learned counsel
for the respondents that the time the assessing officer signs it
which according to him it was done on 31.3.2021, at 18:36 PM
would be the time it was put in the system for delivery and
therefore was beyond the control of the Assessing Officer,
however, the notice dated 31.03.2021 (page 139), does not
indicate, that it was put in the system at the time when it was
signed. All that it indicates is that it was signed by the Officer on
31.3.2021 at 18:36 PM. We would, therefore, have to fall back on
the screen shot of the department as indicated at page 140,
which would point out to us that the 'sent time' will have to be
taken to be the time at which it was put in the system,
considering that it took only 3 micro seconds to delivery, which
would be on 01.04.2021.
14. Though a plea is being raised, that this was on account
of traffic congestion in the system we are unable to accept this for
the reason that it was open for the respondents to place on
record, material to that effect, indicating that the assessing
officer, apart from signing the notice on 31.3.2021 at 18:36 PM
had actually put it in the system. There is nothing on record to
indicate that this is the position. Though Mr. Mohata, learned
counsel for the respondent places reliance upon the manual
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prepared by the department in this regard, however, that is
merely a set of instructions, to be followed by the department,
which does not indicate, that it would have actually been
followed.
15. Though reliance is placed upon Balgopal Holdings &
Traders & Ors. Vs. Deputy Commissioner of Income Tax (supra),
it however, does not consider the expression "issue", in the light
of the mandate of Section 13(1) of the IT Act R/w language of
Section 149(1) of the Income Tax Act as then applicable and,
therefore, is of no assistance to us.
16. We are, therefore, unable to agree with Mr. Mohata,
learned counsel for the respondents that the notice dated
31.3.2021, was sent on the same date, which is in the teeth of the
screen shot provided by the department which states that the
sent time stamp is dated 01.04.2021 at 3:58:33 AM. It is also
necessary to note, that it is not the case of the respondents that
the same was due to traffic congestion and had it been a case,
nothing prevented it from placing on record the exact time at
which the concerned officer had put the email in the system so
that the presumption under Section 13(1) of the Act could have
been attracted.
17. The result of the aforesaid discussion is, that the
petition will have to be allowed by quashing the notice dated
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31.3.2021 under Section 148 of the Income Tax Act, as a result of
which, the consequent assessment orders would not survive. The
petition is allowed. No costs.
18. Though request is made by the learned counsel for the
respondents for staying of the present judgment, however since
we find that the notice under Section 148 of the IT Act has not
been issued within the time frame as indicated by the provisions
of Section 149(1) of the Income Tax Act R/w Section 13(1) of
the Information Technology Act, we do not see any reason to do
so. The request is declined.
Rule is made absolute in the above terms.
(ABHAY J. MANTRI, J.) (AVINASH G. GHAROTE, J.)
Deshmukh / MP Deshpande
Signed by: Mr. M.P. Deshpande
Designation: PA To Honourable Judge
Date: 07/05/2025 17:41:42
