M/S. R N Fashion vs Union Of India And Ors
2022 Latest Caselaw 1643 Cal/2

OD-4
                                   APOT/85/2022
                                  IA No.GA/1/2022

                         IN THE HIGH COURT AT CALCUTTA
                         Civil Appellate Jurisdiction
                                 ORIGINAL SIDE


                                         M/S. R N FASHION
                                               -Versus-
                                         UNION OF INDIA AND ORS.


                                                                        Appearance:
                                                    Mr. Pratyush Jhunjhunwala, Adv.
                                                              Mr. Samit Rudra, Adv.
                                                              ...for the appellant.

                                                     Mr. Soumen Bhattacharyya, Adv.
                                                               ...for the respondent.

BEFORE:

The Hon'ble JUSTICE T.S. SIVAGNANAM

-And-

The Hon'ble JUSTICE HIRANMAY BHATTACHARYYA

Date : 20th May, 2022.

The Court : This intra Court appeal, at the instance of

the petitioner/appellant, is directed against the order dated 7th

April, 2022 in WPO/1943/2022. The appellant had filed the writ

petition challenging the order dated 23rd March, 2020 (wrongly

noted by the learned writ Court as 23rd June, 2022) passed under

Section 148A(d) of the Income Tax Act, 1961. The learned Single

Judge was of the view that the appellant did not file their

objection to the notice issued under Section 148A(b) of the Act

within the time permitted and, therefore, the Court was not

inclined to interfere with the order dated 23rd March, 2022. The

correctness of the order passed in the writ petition is challenged

before us.

We have heard Mr. Pratyush Jhunjhunwala, learned Advocate

appearing for the appellant and Mr. Soumen Bhattacharyya, learned

standing Counsel for the respondent. At the very outset we need to

point that the assessing officer, in the instant case, Sri Niladri

Kumar Ghosh, ITO, Ward 44(1), Kolkata acted in utmost haste for

reasons best known to him. We support such conclusion with the

following reasons:

The appellant was issued notice under Section 148A(b) of

the Act calling upon them to show cause as to why action should be

initiated for reopening the assessing by invoking the power under

Section 184A of the Act. The notice stipulated that the reply be

submitted by the appellant not later than 18th March, 2022. The

appellant bad uploaded their reply/response on 21st March, 2022.

This cannot be disputed by the Department as the screen shot has

been provided in page 71 of the memorandum of appeal. The ITO

proceeded to pass the order dated 23rd March, 2022 stating that the

assessee did not file any response within the stipulated time and,

therefore, concluded that the assessee has nothing to submit in

their response. Admittedly, 18th March, 2022 was a public holiday

on account of the Holi festival. It is not clear as to whether

the concerned ITO had attended office or he was enjoying the

holiday. In any event, a purposive interpretation needs to be

given to the statutory provision. The opportunity provided under

Clause (b) of Section 184A of the Act should be a meaningful

opportunity. The statute provides for granting time to submit

reply within seven days, but not exceeding 30 days from the date

on which the notice is issued. Thus, a reasonable view ought to

have been taken by the ITO in the instant case as admittedly the

reply cannot be submitted on 18th March, 2022 if it was required to

be submitted in physical form because the Income Tax Department

was closed on account of a public holiday. Therefore, the

interpretation given by the ITO is a thoroughly narrow

interpretation and a perverse outlook.

It was argued on behalf of the respondent that had the

assessee made a request for extension of time as provided in

clause (b) of Section 148A, then in all probabilities, there could

have been a chance for grant of extension of time. However, the

assessee did not make any such request. This argument also has

to fail for the simple reason that it is on record that the

reply/objection had been filed online on 21st March, 2022 and if

that is the factual position, it is deemed that the assessee had

sought for extension of time. It was further argued on behalf of

the revenue that the Court has to interpret the time line

stipulated in Clause (b) of Section 148a strictly in accordance

with statutory provision and, if any latitude is granted it will

be open flood gates of litigation. We are clear in our mind that

we are not adjudicating a public interest litigation but an

aggrieved assessee is before us. Therefore, if there are other

similar cases where the ITOs had taken a perverted approach in the

matter, those assessee would also be entitled to seek for legal

remedy. To support the contention on behalf of the revenue

reliance was placed on the decision of the Hon'ble Supreme Court

in the case of Rajendra Singh vs. State of Madhya Pradesh & Ors.

reported in 1996 SCALE (5) 793. Going through the decision, we

find the facts are entirely different and the decision is wholly

inapplicable to the facts and circumstances of the appeal on hand.

The learned Advocate appearing for the appellant has

drawn our attention to a recent decision of the Delhi High Court

in the case of Divya Capital One Private Limited vs. Assistant

Commissioner of Income Tax, Circle-7(1), Delhi & Anr. in WP(C)

No.7406/2022 dated 12th May, 2022. We find that the facts in the

said case are identical to that of the case before us. The

Hon'ble Division Bench had taken note of the new re-assessment

scheme introduced by the Finance Act, 2021 and pointed out that

the safeguards were brought in the amended re-assessment scheme in

accordance with the judgment of the Hon'ble Supreme Court in GKN

Driveshafts (India) Ltd. vs. ITO, reported in (2003) 259 ITR 19

(SC) before any exercise of jurisdiction to initiate reassessment

proceedings under Section 148 of the Act. Further, the Court held

that the term "information" as contained in Explanation-1 to

Section 148 cannot be lightly resorted so as to reopen assessment

and this information cannot be a ground to give unbridled powers

to the revenue. Further the Court took into consideration the

order which was impugned therein and found the same to be cryptic.

The next aspect which the Court considered was whether

the petitioner therein was denied effective opportunity to file

reply and it was held that the petitioner therein had a right to

get adequate time in accordance with the provisions of the Act to

submit its reply and the assessing officer in the said case had

passed an order under Section 148A(d) of the Act in great haste

and in gross violation of the principles of natural justice as the

assessee therein was not given reasonable time to file reply.

Further the Court noted that Section 148A(b) permits the assessing

officer to suo motu provide upto 30 days period to an assessee to

respond to a show cause notice issued under Section 148A(b) which

period may, in fact, be further extended upon an application made

by the assessee in this behalf and such period given to the

assessee is excluded in computing the period of limitation for

issuance under Section 148A of the Act in terms of the 3rd proviso

under Section 149 of the Act. In the said case also, the assessee

had file their reply by 31st March, 2022 and the same was available

on record. However, the reply was not considered as per the

mandate contained in Section 148A(c) thereby violating the duty

cast upon the assessing officer. In paragraph 16 of the said

decision the significance of issuance of show cause at a stage

prior to issuance of reassessment notice under Section 148 of the

Act has been pointed out in the following terms:

"This Court is of the opinion that significance of issuance of a show cause notice at a stage prior to issuance of a reassessment notice under Section 148 of the Act has been lost on the Respondents. This Court takes judicial notice that in a majority of reassessment cases post 1st April, 2021, the orders under Section 148A(d) of the Act use a template/general reason to reject the defence of the assessee on merits, namely, "found devoid of any merit because the assessee company has failed to produce the relevant documents in respect of transactions mentioned in show case notice . . . . it is established that the assesssee has no proper explanation. . ." Consequently, this Court is of the opinion that a progressive as well as futuristic scheme of re-assessment whose intent is laudatory has in its implementation not only been rendered nugatory but has also had an unintended opposite result."

As mentioned above, the facts of the case on hand are

identical to that of the facts in Divya Capital (supra). In fact,

the present facts are slightly better in the sense that the reply

was uploaded online by the assessee on 21st March, 2022 and the

time limit for filing the reply in terms of notice expired on 18th

March, 2022 which was a public holiday and the following two days

namely, 19th March, 2022 and 20th March, 2022 were Saturday and

Sunday. Therefore, the next working day was 21st March, 2022. It

appears that the assessing officer is not aware of the provisions

of the General Clauses Act and, therefore, needs to be appraised

of the same. Thus, we have no hesitation to hold that the

assessing officer acted in great haste and virtually reduced the

procedure under the amended provision to a nullity. We have

queried the learned Advocate appearing for the assessee as to

whether the assessment was getting time-bared. The prompt reply

was that the power to re-assess is available to the authority till

the year 2023 if permissible under law. Therefore, we fail to

understand as to what was the great hurry on the part of the

assessing officer, Sri Niladri Kumar Ghosh to pass the order dated

23rd March, 2022 by ignoring the reply given by the assessee and

uploaded in the department's portal on 21st March, 2022. In order

to ensure that the other officers who are also similarly placed

should not reduce the provisions of the Act in an empty formality,

we are inclined to impose cost on the authority to serve as a

deterrent. For all the above reasons, the appeal is allowed and

the order dated 23rd March, 2022 passed under Section 148A(d)and

the notice dated 11th March 2022 are quashed and the matter is

remanded to the assessing officer to take note of the reply given

by the assessee dated 21st March, 2022 and consider the same.

According to the learned Advocate for the appellant, the assessee

sought for certain information. Hence, this reply should be

considered in a meaningful manner and action be initiated in

accordance with the law. There will be an order directing the

respondent/department to pay costs of Rs.15,000/- to the West

Bengal State Legal Services Authority within three days from the

date of which the server copy is made available and the department

is granted liberty to recover the said amount from the concerned

Income Tax Officer, Sri Niladri Kumar Ghosh, Ward 44(1), Kolkata

in the manner provided above.

Consequently, the order passed in the writ petition is

set aside and the writ appeal is allowed and the order dated 23rd

March, 2022 as well as the notice issued under Section 148 of the

Act dated 11th March, 2022 are quashed.

After we have dictated the order imposing cost on the

department recoverable from the concerned ITO, Mr. Niladri Kumar

Ghosh, learned standing counsel for the department had made a

prayer saying that cost need not be imposed on the

department/officer and he will take the responsibility of

conveying the message as to what would mean by 'reasonable

opportunity to the assessee'.

Accepting the said submission, we delete that portion of

the direction imposing cost on the department/officer.

(T.S. SIVAGNANAM, J.)

(HIRANMAY BHATTACHARYYA, J.)

As/S.Das