Chattisgarh High Court
U.S. Associates vs Principal Commissioner Of Income ... on 1 December, 2022
-1-
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
Writ Petition (T) No.254 of 2022
1. U.S. Associates 3, Isha Complex, Churi Line, Gole Bazar Raipur (C. G.)
Through Its Proprietor Umesh Kumar Jain, S/o Late Mannalal Jain Aged
About 49 Years R/o H. No. 51/723, Near Davda International School
Davda Colony, Raipur (C.G).
---- Petitioners
Versus
1. Principal Commissioner of Income Tax Raipur-2, Aayakar Bhavan Civil
Lines, Raipur, Chhattisgarh.
2. The Income Tax Officer Ward -4 (1), Civil Lines Raipur, Chhattisgarh.
---- Respondents
For Petitioner : Shri Moolchand Jain and Shri Vijay Shankar
Mishra, Advocates.
For Respondents : Smt. Naushina Ali and Shri Ajay Kumrani,
Advocates on behalf of Shri Amit Choudhary,
Advocate.
Hon'ble Shri Justice P. Sam Koshy
Order on Board
01.12.2022
1. Challenge in the present writ petition is notice under Section 148 of the
Income Tax Act, 1961 (in short, the Act of 1961) dated 22.07.2022 and
also the order dated 22.07.2022 under Section 148A(b) of the Act, 1961.
2. The primary contention of the counsel for the petitioner is that the
authorities while passing the order under Sections 148A(b) and Section
148 of the Act of 1961 on 22.07.2022 have considered certain transactions
which were not part of the notice that was originally issued to the petitioner
under Section 148 of the old Act and also under Section 148A(b) of the
new Act.
3. The contention of the petitioner further is that if the said 14 Lakh rupees
transaction which has been considered by the Department is excluded
from the proceedings then the amount would be less than 50 Lakh rupees
and would therefore be outside the purview of the assessment
proceedings as per circular dated 11.05.2022.
4. The contention of the petitioner is that the authorities concerned have
taken into consideration the transaction of an amount of Rs.14 Lakhs
made by one Smt. Rekha Soni while carrying out the assessment, but the
said 14 Lakhs transaction was not the contents of the notice that was
issued. Therefore, the petitioner never had an opportunity to submit his
explanation at the first instance. That, it is only during the assessment
proceeding that the officers of the Department had taken this aspect and
have also added the said amount while passing the order under Section
148A(b)(d). This, according to the petitioner is not otherwise permissible
as the authorities could have proceeded to assess in respect of a
transaction which did not form part of the notices that were issued initially
under Section 148 of the old Act on 29.06.2021 nor did it form part of the
notice that was subsequently issued under Section 148A(b) of the new Act
that was issued on 25.05.2022.
5. It is the further contention of the petitioner that if the said 14 Lakhs rupees
is excluded from the proceedings then the income that has escaped
assessment would be of an amount of Rs.36,99,555 which is less than 50
Lakhs rupees and in terms of the circular dated 11.05.2022 wherein it has
been specifically held that notice under Section 148 could be issued only if
the case is one where the amount escaping the assessment of an
asseessee in that year is likely to be more than 50 Lakhs rupees. In the
instant case the amount minus (-) 14 Lakhs added by the Department
which did not form part of the notice would bring the total amount to less
than 50 Lakh rupees. Thus, prima facie the proceedings would have been
attracted by the circular dated 11.05.2022 and it could not had been
initiated itself.
6. It is also glaringly visible from the two notices that were issued on
29.06.2021 as also on 25.05.2022 i.e. the notice initially issued under
Section 148 of the old Act and under Section 148A(b) of the new Act that
the department has not disclosed the fact in its notice of the petitioner
having suppressed this 14 Lakh rupees transaction and this has also
escaped assessment of the Department. In the absence of the same being
reflected in the notice, the assessment yet being made of the said amount
would be prima facie bad in the light of the judgment of the Supreme Court
in case of Commissioner of Customs, Mumbai Vs. Toyo Engineering India
Ltd. 2006(7) SCC 592 wherein in paragraph 16 the Supreme Court has
emphatically held that the Department cannot travel beyond the show
cause notice.
7. There is another judgment rendered by the Bombay High Court in this
respect in N.D. Bhatt, Inspecting Assistant Vs. I.B.M. World Trade
Corporation, 1995 216 ITR 811 Bom, wherein in paragraph 18 it has been
held as under:
"18. It is also well settled that the reasons for reopening are
required to be recorded by the assessing authority before
issuing any notice under Section 148 by virtue of the
provisions of s. 148(2) at the relevant time. Only the reason
so recorded can be looked at for sustaining or setting aside a
notice issued under s. 148. In the case of Equitable
Investment Co. (P.) Ltd. vs. ITO (1988) 174 ITR 714 (Cal) a
Division Bench of the Calcutta High Court has held that
where a notice issued under Section 148 of the IT Act, 1961,
after obtaining the sanction of the CIT, is challenged, the only
document to be looked into for determining the validity of the
notice is the report on the basis of which the sanction of the
CIT has been obtained. The IT Department cannot rely on
any other material apart from the report. In the case before it,
the Calcutta High Court refused to take into consideration the
affidavit filed by the IT Department giving some additional
reasons. In the present case, the reasons which are given by
the IAC for reopening the assessments which are annexed to
the affidavit in rejoinder of the appellants are to the effect that
in respect of the Assessment Year 1967-68 to 1973-74 there
are errors in the principle of allocating headquarters
expenses to India which have been deducted. The net effect
is that there has been an excess charge of headquarters
expenses allocated to India. Each of the notices sets out the
relevant error for the accounting year. The reasons, therefore,
do not indicate in any manner any deliberate omission or
suppression of any fact or of this error, on the part of the
assessee at the time of the original assessment. Nor do
these reasons allege that the assessee was in possession of
the facts which it has failed to prove. In these circumstances,
the provision of s. 147(a) are not attracted.
8. Similar view has also been taken by the Division Bench of this High Court
in a bunch of Writ Appeals which were decided on 17.05.2018, the leading
of which being M/s Kishan Lal and Company and Another Vs. Additional
Commissioner of Commercial Tax & Another, wherein in paragraph 8 it has
been mentioned as under :
"8. It is settled by the Supreme Court in Commissioner of
Customs, Mumbai Vs.Toyo Engineering India Ltd. 1 at para 16
that the department/ Revenue cannot travel beyond the show-
cause notice. Thus, the argument advanced by the learned
counsel appearing for the State that as a matter of fact what is
sought to be revised was the reassessment order and not the
original assessment order need not be considered, as the
same is not permissible in view of what has been held by the
Supreme Court."
9. Given the aforesaid facts and circumstances of the case and also keeping
in view the circular of the Department dated 11.05.2022, this court is of the
opinion that the order under Section 148A(b) and order Section 148 of the
Act of 1961 dated 22.07.2022 in the given factual backdrop would not be
sustainable. The same therefore deserves to be and is hereby set aside
reserving the right of the Department, if the law permits, to take
appropriate recourse available in accordance with law.
10. The writ petition accordingly stands allowed and disposed of.
Sd/-
(P. Sam Koshy)
Judge
inder
