Adwealth Stock Broking Private Limited vs Union Of India And Ors
2025 Latest Caselaw 67 Cal/2

Calcutta High Court

Adwealth Stock Broking Private Limited vs Union Of India And Ors on 5 May, 2025

Author: T.S Sivagnanam

Bench: T.S Sivagnanam

                                             1



O - 17
                              IN THE HIGH COURT AT CALCUTTA
                               CIVIL APPELLATE JURISDICTION

                                       ORIGINAL SIDE

PRESENT :
THE HON'BLE CHIEF JUSTICE T.S SIVAGNANAM
          And
THE HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS)

                                 APO/186/2023
                               IA NO: GA/1/2023
                    ADWEALTH STOCK BROKING PRIVATE LIMITED
                                      VS
                           UNION OF INDIA AND ORS.

For Appellant        :        Mr. Pranit Bag, Advocate
                              Ms. Pooja Jewrajka, Advocate

For Respondent       :        Mr. Soumen Bhattacharjee, Advocate

Mr. Ankan Das, Advocate Ms. Shradhya Ghosh, Advocate

Heard on : May 5, 2025

Judgment on : May 5, 2025

1. T.S. SIVAGNANAM, CJ : This intra-court appeal by the writ petitioner is directed

against the order dated 14th August, 2023 in WPO No.1478 of 2023 by which the

writ petition was dismissed giving liberty to raise all the points raised before the

assessing officer in the course of the proceedings subsequent to the order passed

under Section 148A(d) of the Income Tax Act, 1961 dated 19 th April, 2023.

2. During the pendency of the proceedings the assessment has been completed and

the assessment order has been passed on 13.03.2025 which is sought to be brought

on record by the appellant/assessee by way of a supplementary affidavit. This

aspect would be considered in the later part of this judgment.

3. The assessee filed the writ petition challenging the order passed under Section

148A(d) on the ground that the assessing officer has sought to reopen the

assessment in question on the very same ground and on the very same issue which

is the subject-matter of the pending appeal in respect of the same assessment year

wherein an appeal was filed before the Commissioner of Income Tax (Appeals)

[CIT(A)] on 07.01.2019 challenging the assessment order dated 30.12.2018 passed

under Section 143(3) of the Act. The learned Single Bench perused the grounds of

appeal which have been filed before the CIT(A) and formed that the prima facie

reasons set out in the notice issued under Section 148A(d) dated 25.03.2023 are

different and, therefore, the contention raised by the assessee was not accepted.

Apart from that, the learned Single Bench was of the view that there was no

procedural irregularity committed by the assessing officer while issuing the notice

under Section 148A(d) of the Act and, therefore, the writ court was not entitled to

interfere with the order dated 19.04.2023.

4. Before us, Mr. Bag, learned advocate appearing on behalf of the appellant has raised

certain other issues which appear to have not been canvassed in the writ petition in

the same form as placed before us. Nonetheless, since we have elaborately heard the

learned advocate for the appellant on the said submissions as well as the learned

senior standing counsel for the revenue, we proceed to discuss the same and take a

decision on those points which have been urged.

5. The first contention is that as against the order of assessment as passed under

Section 143(3) dated 30.12.2018 the assessee filed statutory appeal before the CIT(A)

on 07.01.2019 and several grounds were urged and the appeal is pending. During

the pendency of the matter, the department filed a rectification application under

Section 154 of the Act and an order was passed on 08.04.2019. Subsequent thereto,

the assessee had filed an application under Section 154 of the Act for rectification on

13.04.2020 which is still pending and not disposed of. Several e-mails were sent to

the assessing officer to decide such rectification application filed by the assessee.

However, they were not favoured with any reply and, therefore, the assessee filed a

grievance petition before the Grievance Redressal Authority and though it was

stated that the matter is being looked into, nothing happened thereafter and,

therefore, the notice issued under Section 148A(b) of the Act could not have been

issued by the assessing officer.

6. The second contention is that a notice under Section 148 of the Act was issued on

27.03.2021 for which the assessee submitted three replies on 04.05.2021, 06.08.2021

and 24.09.2021 and also filed a return pursuant to the said notice and no decision

was taken on the return and subsequently, a notice under Section 143(2) of the Act

was issued on 23.11.2021 for which a reply was submitted on 08.12.2021 by the

assessee. However, no orders were passed. Therefore, a notice under Section

148A(b) of the Act could not have been issued.

7. Apart from that, the other issues were raised in the reply submitted by the

petitioner to the notice issued under Section 148A(b) of the Act which was not

considered in the proper manner and, therefore, the order passed under Section

148A(d) of the Act dated 19.04.2023 is vitiated.

8. In support of his contention, learned advocate for the appellant has referred to the

decision in the case of Principal Commissioner of Income-tax -versus- Coal India

Ltd., reported in (2023) 146 taxmann.com 546 (Calcutta) as well as the decision of

the learned Single Bench of this Court in the case of Indian Tubes Co. Ltd. -versus-

Income-tax Officer reported in (2005) 272 ITR 439 (Calcutta) and the Single Bench

decision of the High Court of Karnataka in EIT Services India (P.) Ltd. -versus-

Deputy Commissioner of Income-tax reported in (2024) 159 taxmann.com 424

(Karnataka) and also for the other propositions reliance was placed on the decision

of the High Court of Bombay in Metro Auto Corporation -versus- Income-tax

Officer and Others reported in (2006) 286 ITR 618 and the decision of the High

Court of Delhi in Kamdhenu Enterprises Ltd. -versus- Income-tax Officer reported

in (2023) 146 taxmann.com 417 (Delhi). Reference was also made to the decision of

the Hon'ble Supreme Court of India in the case of M/s. S.M. Overseas Pvt. Ltd. -

versus- Commissioner of Income Tax in Civil Appeal Nos.3612-3613 of 2012 dated

07.12.2022 for the proposition that during the pendency of the proceedings under

Section 154 of the Act, it was not permissible on the part of the revenue to initiate

the proceedings under Section 147/148 of the Act.

9. We have elaborately heard the learned senior standing counsel on the above

submissions. The learned senior standing counsel has relied upon the decision in

the case of T.S. Balaram, Income-tax Officer -versus- Volkart Brothers, reported in

(1971) 82 ITR 50 (SC); Commissioner of Income-tax -versus- Sardari Lal & Co.,

reported in (2002) 120 Taxman 595 (Delhi) and the decision of the Division Bench of

this Court in Principal Commissioner of Income Tax, Kolkata-III, Kolkata -versus-

M/s. West Bengal Fisheries Corporation Ltd. In ITA/71/2018 dated 21.05.2024 to

explain the circumstances under which the power under Section 148A(d) of the Act

could be invoked.

10. We have elaborately heard the learned Advocates for the parties and carefully

perused the materials placed on record.

11. Before we go into the judgments, we need to be clear on the facts. The assessment

was completed and an order under Section 143(3) was passed on 30.12.2018 and a

consequential demand was also issued under Section 156 of the Act against which a

statutory appeal is pending before the CIT(A). The department filed a rectification

application and an opportunity was granted to the assessee to appear before the

authority who sought to rectify the assessment as it was found that the addition on

account of unexplained cash credit under Section 68 of the Act was wrongly

adjusted with the business loss and the tax on addition under Section 68 is to be

calculated as per the provisions of Section 115BBE which is required to be rectified.

Despite opportune, the assessee did not respond and the assessing officer came to

the conclusion that it is an inadvertent mistake which is apparent from the record

and, accordingly, passed an order dated 08.04.2019 under Section 154 of the Act.

Thereafter, the assessee filed an application for rectification on 13.04.2020

requesting the assessing officer to rectify the rectification order dated 08.04.2019 by

allowing set off loss against addition under Section 68 read with Section 115BBE of

the Act. As rightly pointed out by the learned senior standing counsel for the

revenue, the prayer sought for in the application filed by the assessee for

rectification of the rectification order dated 08.04.2019 is a contention which is

raised on the merits of the matter and it is doubtful as to whether at all prayer is

maintainable under Section 154 of the Act. However, we find that certain other

facts which have come to our notice would make this issue academic in the case on

hand. We say so because the notice issued under Section 148 of the Act dated

27.03.2021 was on certain grounds and the assessee sought for reasons by

representation dated 04.05.2021 filed return of income and subsequently also filed

their reply dated 06.08.2021, copy of the said reply is annexed at page 146 of the

stay petition and on a reading of the same, we find that the reply is by referring to

certain legal issues and decisions and circular of the CBDT and nothing appears to

have been stated on merits. Nonetheless, no order was passed under Section 147 of

the Act as proposed in the notice dated 27.03.2021. The question would be whether

the notice under Section 148A(b) of the Act dated 25.03.2023 which was challenged

by the assessee after the order was passed under Section 148A(d) dated 19.04.2023

was maintainable on the aforementioned grounds raised by the learned Advocate

for the appellant. To get an answer we have perused the notice issued under

Section 148A(b) dated 25.03.2023 and we find that the information was received by

the department in the insight portal regarding search and seizure action under

Section 132 of the Act carried out in the business and residential premises of one

Kailash Kumar Pattowari and his key persons and entities controlled and managed

by Kailash Kumar Pattowari on 8.3.2022.

12. The reasons as set out in the said notice dated 25.3.2023 is by alleging that the

assessee is a beneficiary of transactions accommodated by Kailash Kumar

Pattowari. Thus, we find the reasons which have been set out for initiating the

proceedings under Section 148A(b) are completely different and has no bearing

upon in any of the proceedings which are pending or was disposed of. Therefore,

the department was well within their jurisdiction to issue notice under Section

148A(b) of the Act and thereafter proceeded to pass order under Section 148A(d). So

far as the decisions which have been referred to by the learned advocate appearing

for the appellant/assessee which is suffice to note the earliest of the decisions of the

Hon'ble Supreme Court in the case of CIT -versus- S. Raman Chettiar, reported at

[1965] 55 ITR 630 (SC) which decision has been followed in the case of Indian Tubes

Co. Ltd. and also noted in EIT Services India (P.) Ltd. In the said case the decision

was to the effect that when a notice under Section 148 of the Act is issued, the

original assessment proceedings are entirely opened up or left open and the finality

which had occurred in the first assessment order does not exist any longer.

Therefore, it was held that without disposing of the return of income filed by the

assessee in response to the first notice, the assessing officer could not have issued a

second notice for reopening of the assessment which, at the relevant point of time,

did not exist in the eye of law. To the same effect with the decision of the Hon'ble

Supreme Court of India in M/s. S.M. Overseas Pvt. Ltd., in our considered view,

these decisions can be of no assistance to the case of the assessee as on facts we find

that no proceedings under Section 148A(b) of the Act was initiated pursuant to the

search and seizure operations which were conducted against the abovenamed

person and his entities and the allegation is that the assessee was a beneficiary.

Therefore, we are of the view that the reopening proceedings would not suffer from

any jurisdictional error for the writ court to interfere in exercise of its powers under

Article 226 of the Constitution of India. At this juncture, it would be relevant to

take note of the decision in Sardari Lal & Co., wherein the Hon'ble Division Bench

held that whether the question of taxability of income from a new source of income

is concerned, which had not been considered by the assessing officer, the

jurisdiction to deal with the same in an appropriate cases may be dealt with under

Section 147/148 and under Section 263 of the Act, if requisite conditions are

fulfilled.

13. With regard to the assessment order which is sought to be brought on record by the

assessee by way of a supplementary affidavit dated 20.03.2025, we are unable to

entertain any challenge to the assessment order for the reasons which have set out

in the preceding paragraphs and it will be well open to the assssee to work out his

rights and remedies available under the provisions of law.

14. Thus, for the above reasons, we find no grounds to interfere with the impugned

order. Accordingly, the intra-court appeal stands dismissed and the connected

application stands closed.