Delhi High Court

Naresh Bahl vs Union Of India on 18 February, 2011

Author: Sanjiv Khanna

3.
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      W.P. (C) No. 4309/2007

       NARESH BAHL                                ..... Petitioner
                             Through Mr. Samrat K. Nigam & Mr.
                             Raghu Tandon, Advocates.

                         Versus

       UNION OF INDIA                  ...... Respondent
                Through Ms. Suruchi Aggarwal, Advocate.

        CORAM:
        HON'BLE THE CHIEF JUSTICE
        HON'BLE MR. JUSTICE SANJIV KHANNA

                    ORDER

% 18.02.2011

The petitioner Naresh Bahl has filed the present petition

for quashing of the notice dated 1st November, 2007 for the

assessment year 2002-03 issued under section 148 of the

Income Tax Act, 1961 (Act, for short) and the notice under

section 143(2) of the Act dated 4th April, 2007 directing him to

attend the office of the assessing officer and for other

consequential reliefs. The allegation is that the aforesaid

proceedings have been malafidely instituted, are repetitive and

are illegal being in violation of law.

2. The petitioner is self employed and engaged in the trade

of sale of ball bearings. He is operating from his office located at

G.B. Road, New Delhi and he is regularly filing his income tax

returns. In 1999, sister of the petitioner got married to one Satish

Mal. In 2003, she left her matrimonial home and came back to

reside with her parents. She filed a complaint against the family

of Satish Mal in the Crime Against Women cell. The allegation in

the writ petition is that the family of Satish Mal has some

connection and their relatives are working in the Income Tax

department and that the family of Satish Mal, in view of the

influence and contacts, has been filing frivolous complaints to

put pressure on the petitioner and his family.

3. Documents placed on record show that during the period

between 2004 till 2007 the petitioner had received the following

notices and has complied with the directions issued by different

officers of the income tax department from time to time:

i) Notice dated 18th May 2004, seeking information under

Section 133(5) of the Act for assessment year 2000-01 in

respect of marriage expenses of the petitioner's sister. This

notice was duly replied and answered.

ii) Thereafter, statement of the petitioner was recorded under

section 133(5) of the Act on 30th June, 2004. He answered the

questions put to him by Mr. Mohan Lal, Income Tax Officer,

Ward 28(1). Proceedings thereafter were closed and nothing

further was heard.

iii) Notice under Section 131 of the Act on 17th May, 2006 was

again issued by the Income Tax Officer, Ward 28(1) to

personally attend the office on 22nd May, 2006. The notice

required the petitioner to furnish copy of income tax returns for

the period 2000-01 onwards, list of family members, details of

expenditure on family members and marriages and list of

movable and immovable properties, personal deposits etc. In

response to the said notice a reply dated 5th June, 2005 was

sent enclosing the required documents. In the reply it was stated

that the petitioner had earlier, in 2004, furnished document and

answered the queries and his statement was recorded.

Reference was also made to the matrimonial dispute between

the petitioner's sister and her in-laws. It was further stated that

the petitioner had deposited an FDR of Rs. 2 lakhs in the court

of the metropolitan magistrate in connection with the matrimonial

discord between him and his wife. Funds for the deposit were

procured from the petitioner's mother, relatives and friends. The

said FDR was not related to the petitioner's firm account. He

wrote another letter dated 30th June, 2006 making allegations

that he was being harassed because of the disputes between

his sister and her in-laws. He also submitted his latest electricity

and telephone bills along with the said letter as these were

required to be furnished.

iv) A detailed statement of the petitioner was recorded by Mr.

N.D. Khatter, Income Tax officer, Ward 28(1) on 19th June,

2006. As many as twenty four questions were asked including

questions with regard to payment to advocates, marriage

expenses, business of father etc. Questions were also asked

with regard to the FDR of Rs. 2 lakhs which were answered and

it was stated that the FDR was given to secure bail for the

petitioner himself and his family members in terms of orders

passed by the High Court. The funds, it was stated, were

contributed by his mother, relatives and friends.

v) The petitioner received another notice under section 131(1A)

of the Act dated 3rd August, 2006 from the Mr. T.P. Shukla,

Additional Director of Income Tax (Inv.), Unit 1, Jhandewalan,

New Delhi. The petitioner was asked to personally attend the

office of the said officer on 18th August, 2006 with details of bank

accounts, passbooks and details of moveable and immovable

properties. His statement on oath were again recorded by Mr.

T.P. Shukla on 21st August, 2006, 24th August, 2006, and on 29th

August, 2006. The petitioner has applied for copies of the said

statements under the Right to Information Act, 2005 but these

have not been made available to him. On 5th September, 2006

the petitioner furnished several documents including copies of

balance sheets from 2000 onwards, details of bank accounts

etc. Some more documents were also furnished to Additional

Director, Income Tax Department on 4th October, 2006.

vi) Income Tax Officer, Ward 27(2), New Delhi issued notice

under Section 133(6) dated 3rd January 2007 calling upon the

petitioner to furnish the details of the ward where he was

assessed, his PAN, copy of bank accounts maintained by him in

last three years, list of moveable and immoveable properties in

his and his family members' names, nature of business and

source of income. The petitioner was warned that in case

information was not furnished on or before 9th January, 2007, it

would lead to action under Section 272 A(2)(c) of the Act and

penalty of Rs. 100 for each day of default shall be imposed upon

him. This notice was again replied by the petitioner.

4. Thereafter the impugned notices under Section 147 and

143(2) dated 11th January 2007 and 4th April, 2007 have been

issued for the assessment year 2002-03.

5. The facts stated above show the harassment suffered by

the petitioner for the last nearly four years. One after the other

he is being asked to repeatedly appear and respond to notices.

His statements have been recorded on five occasions, once in

2004 and four times in 2006. The original file produced before us

show that the entire action had been initiated on a complaint

dated 23rd April, 2004 by R.C.Mal. It also appears from the file

that proceedings under Section 147 have been initiated against

the father of the petitioner, A.N.Bahl for assessment year 2000-

01. We are not concerned with the said proceedings.

6. The reasons recorded for reopening of assessment by the

assessing officer are as under:

"In response to Tax Evasion Petition in the case of Shri Naresh Bahl, Investigation Wing has made enquiries and sent a report to the Commissioner of Income Tax, Delhi- X, New Delhi. It has been suggested by the Investigation Wing that Shri Naresh Bahl is leading a lavish life, maintaining a luxury car (Wagon R) and maintain all other luxury items at his residence. He had paid Rs. Rs. 2 Lakhs FDR for obtaining bail in the court for

himself and his family members u/s 498A and 406 I.P.C. in the court of Addl Session Judge during the financial year 2000-02. Shri Naresh Bahl has explained that the funds were contributed by his mother in cash and by his friends and relatives in cheque. Obviously his mother is only a house wife and has no source of income of her own. The explanantion given by Shri Naresh Bahl appears to be a self serving one and source is not explained. The Investigation Wing has suggested that proceedings u/s 147 may be initiated against Shri Naresh Bahl for the financial year 2001-02 relevant to the assessment year 2002-03.

In view of the above I am of the opinion that Rs. 2 Lakhs has escaped assessment in the hand of Shri Naresh Bahl for the financial year 2001-02 relevant to the assessment year 2002-03. It is therefore proposed to issue notice u/s 148 in the above mentioned case. Your kind permission may be accorded to issue notice u/s 148."

(emphasis supplied)

7. It is well settled that the reason to believe has to be

something more than mere suspicion or apprehension though at

the stage of issue of notice only tentative opinion is required to

be formed. In the present case we are not satisfied that the

preconditions under Section 147 read with Section 148 of the

Act are satisfied. In the present case, it is apparent from the

aforesaid facts that the respondents are not acting in just, fair

and equitable manner. They have exceeded the jurisdiction, thus

causing harassment and prejudice to the petitioner. The reasons

recorded are nothing but repetition of the enquiry which was

earlier initiated and examined but nothing substantial was found.

8. The first portion of the reasons is factually incorrect as the

report of the Deputy Director of Income Tax Investigation states

that the petitioner denied owning any car or Wagon R. Further

enquiries from the transport department had revealed that the

car was in the name of a third person who was a resident of

Pitampura. The report does not suggest that the petitioner was

the benami or the actual owner of the car. With regard to the

FDR of Rs. 2 lakhs, the reasons recorded show that the amount

contributed by the petitioner's mother in cash and, relatives and

friends by cheque. Detailed statement of the petitioner was

recorded with regard to the FDR of Rs. 2 lakhs on 19th June,

2006 and then twice/thrice by the Investigation Wing. No