Shri Pradyot K. Misra vs Assistant Commissioner Of ...
2014 Latest Caselaw 872 Del

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*            IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Date of decision: 17th February, 2014

+      W.P. (C) 7977/2011

       SHRI PRADYOT K. MISRA                             ......Petitioner
                       Through: Ms. Kavita             Jha with Ms.
                                Bhoomika                      Choudhury,
                                Advocates.
                versus

       ASSISTANT COMMISSIONER OF
       INCOME-TAX CIRCLE 40(1)                 ..... Respondent

Through: Dr. Rakesh Gupta with Ms. Rani Kiyala, Mr. Rishabh Kapoor and Ms. Khushbu Upadhyay, Advocates.

CORAM:

MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR

R.V. EASWAR, J. (OPEN COURT)

1. This petition filed under Section 226 of the Constitution of India

seeks a writ quashing the notice dated 31.03.2011 issued by the Assistant

Commissioner of Income Tax, Circle 40(1), New Delhi (first

respondent) under Section 148 of the Income Tax Act, 1961 („Act‟, for

short) and the letter dated 02.11.2011 issued by him fixing the

proceedings for further hearing on 16.11.2011.

2. The facts are not much involved. The petitioner is a retired officer

of the Indian Revenue Service and served in various capacities

including, inter alia, the position of Chief Commissioner of Income Tax,

Director General of Vigilance, Chief Vigilance Officer of the Central

Board of Direct Taxes and Income Tax Ombudsman. In respect of the

assessment year 2004-05, he filed a return of income declaring a total

income of Rs.4,10,917/- consisting of salary income, property income

and income from other sources. It was processed under Section 143(1)

of the Act. On 31.03.2011 a notice was received by him under Section

148 of the Act seeking to reopen the assessment on the ground that

income chargeable to tax had escaped assessment. The petitioner

appears to have filed a return of income in response thereto and sought

the reasons recorded to reopen the assessment. The reasons were

furnished on 27.06.2011 to which the petitioner filed objections

questioning the jurisdiction of the respondent No.1 to issue the notice. It

was contended that the reasons recorded were not sufficient in law to

entertain the belief that there was escapement of income, that the

allegations levelled in the tax evasion petition on the basis of which the

assessment was reopened were factually incorrect and further that the re-

assessment proceedings were barred by limitation. The first respondent

did not agree with the objections and dismissed them vide order dated

25.07.2011. Against the said order the petitioner filed W.P.(C)

No.6011/2011 on 17.08.2011, impugning both the notices issued under

Section 148 and the order dismissing the objections of the petitioner. By

order dated 23.08.2011 this Court allowed the writ petition and directed

the first respondent to pass a fresh order dealing with the petitioner‟s

objections, particularly the objection that the tax evasion petition on the

basis of which the assessment was reopened contained factually

incorrect allegations.

3. On 30.09.2011, the first respondent passed an order accepting the

legal objections raised by the petitioner on the ground that there was no

evidence to connect him with certain properties which were alleged in

the tax evasion petition to have been acquired by him out of his

undisclosed sources of income and further that the contents of the tax

evasion petition were found to be factually incorrect. The first

respondent wrote the following letter to the petitioner: -

"To,

Sh. P.K. Misra C/o. Sh. Y. Das B-367, New Friends Colony, New Delhi - 110025

Sir,

Sub.: Objections to the re-opening of assessment year 2004-2005 - directions of Hon'ble Delhi High Court

- regarding.

Hon'ble High Court, Delhi quashed the order of the undersigned dated 25.07.2011 and directed to pass fresh order after affording an opportunity of being heard. It was further directed that you or your authorized representative shall appear before the Assessing Officer on 19.09.2011.

The present re-assessment proceedings were initiated vide notice U/s 148 dated 31.03.2011 after recording the reasons and after obtaining approval from the Addl. Commissioner of Income Tax, Range-40, New Delhi. Objections were filed by you for the re-opening of assessment on 18.07.2011. The objections filed were disposed off vide this office order dated 25.07.2011 which were challenged by you by way of writ petition before the Hon'ble High Court, Delhi.

On 19.09.2011 your authorized representatives Sh. Rohit Garg, Chartered Accountant & Sh. Amit Sachdeva, Advocate appeared in this office and filed submissions dated 19.09.2011 and discussed the matter. It was pointed out by your A.R's that initiation of re-assessment proceedings were bad in law and void ab initio on the following grounds: -

1) There was no reason to believe that income of the assessee had escaped the assessment;

2) The reasons recorded were factually incorrect inasmuch as the assessee has no connection whatsoever with the property, being Plot B-8, Cosmopolitan Cooperative Housing Society Ltd., Hauz Khas, May Fair Garden; and

3) The present reassessment proceedings are barred by limitation prescribed in section 149 of the Act inasmuch as the reasons recorded have been supplied to the assessee after the expiry of period of 6 years from the end of the relevant assessment year.

I have considered the objections raised by you. The objection mentioned at "1 & 3" above, the same were disposed off by me vide order dated 25.07.2011. It is only with respect to objection "2" above for which the Hon'ble High Court has quashed the order dated 25.07.2011.

There was Tax Evasion Petition in which it was alleged that you had acquired the property bearing no.B-8 ground floor flat with basement and back garden made on 600 sq. yds. Plot, Cosmopolitan Cooperative Housing Society Ltd., Hauz Khas, (Shahpur Jat known as May Fare Garden), New Delhi costing not less than 20 crores. Since there were allegations against your goodself w.r.t. purchase of the said property and the enquiries w.r.t. alleged purchase of the said property were not complete and the time limit for issuing notice U/s 148 was getting time barred on 31.03.2011 and to safeguard the interest of revenue there was no alternative but to issue notice U/s 148 of the Income Tax Act, 1961. In order to verify veracity/ genuineness of the contents of T.E.P. w.r.t. acquisition of aforesaid property, detailed investigations were carried out. Enquiries were made from the occupants of the aforesaid property w.r.t. ownership. Enquiries were also made from the sub-registrar's office.

The results of enquiries do not connect the assessee with the property in question. It has been established on the basis of enquiries and documents gathered that the contents of the tax evasion petition w.r.t. purchase of May Fare Garden property are not substantiated or corroborated. The contents of the tax evasion petition

w.r.t. alleged purchase of the property no.B-8, Cosmopolitan Cooperative Housing Society Ltd., Hauz Khas (Shahpur Jat known as May Fare Garden), New Delhi by you are factually incorrect.

In view of above, the objections filed by the assessee on 18.07.2011 and again filed during the course of hearing on 19.09.2011 are disposed of.

Yours faithfully Sd/-

(A.K. Dang) Asstt. Commissioner of Income Tax, Circle 40(1), New Delhi"

4. One would have thought that the matter ended there but on

02.11.2011 the respondent No.1 issued a letter to the petitioner in the

following terms: -

"To,

Sh. P.K. Misra C/o. Sh. Y. Das B-367, New Friends Colony, New Delhi - 110025

Sir,

Sub.: Tax Evasion Petition in your case - regarding.

Kindly refer to on going proceedings for A.Y. 2004- 2005 in your case.

Sh. S. K. Srivastava who is the complainant in this case is proposed to be examined as a witness in support of his allegations against you upon his written request in this regard. Sh. Srivastava has informed this office that he will

examine himself as his witness as well as other witness in support of his allegations against you and lead other evidences in the case. The case is fixed for hearing on 16.11.2011.

You are hereby informed that you may if you so desire, be present in this office on 16.11.2011 at 11:00 am sharp when the evidence of Sh. S.K. Srivastava is to be taken by this office and if you so want cross examine the witness as per law.

Considering the shortage of time available for conclusion of proceedings, it is informed that adjournment may kindly be not sought.

Yours faithfully Sd/-

(A.K. Dang) Asstt. Commissioner of Income Tax, Circle 40(1), New Delhi"

5. It is necessary to mention here that on 16.11.2011 this Court had

stayed all further proceedings pursuant to the notice dated 31.03.2011

issued under Section 148 of the Act.

6. The contentions of the petitioner deserve acceptance. Once the

first respondent found, after due inquiries, that there was no basis to

connect the petitioner with the May Fair Garden property, he ought to

have dropped the reassessment proceedings. Nothing survived

thereafter. He was, therefore, acting outside jurisdiction when he issued

a letter on 02.11.2011 calling upon the petitioner to avail of the

opportunity, if so advised, given to him to cross-examine the

complainant - i.e., the person who was the author of the tax evasion

petition. The only order which could have been passed by the first

respondent, after finding that there was no basis for the tax evasion

petition connecting the petitioner with the May Fair Garden property,

was to drop the proceedings initiated under Section 148. Surprisingly

one month after the first respondent wrote to the petitioner conceding

that there was no basis for the tax evasion petition, he invited the

petitioner to cross-examine the complainant, if so advised. Such a

procedure is unknown to the Act. Instead of terminating the proceedings

initiated under Section 148 of the Act by dropping them the first

respondent chose inexplicably to keep those proceedings alive. This is

illegal and impermissible in law. This amounts to nothing but

harassment of the petitioner. There appears to be some vested interest in

keeping the proceedings against the petitioner pursuant to the notice

dated 31.03.2011 alive. The tax evasion petition and the present

proceedings seem to be the result of a personal vendetta between two

officers of the Indian Revenue Service (IRS) (the complainant being one

of them). This unfortunately has resulted in multiple proceedings before

this Court.

7. The respondents have to act in accordance with law and not under

any pressure. The AO, being a responsible officer should not be party or

pressurised by someone to personal vendetta. Being statutory officers

they have to act independently and in accordance with law.

8. The notice dated 31.03.2011 issued under Section 148 of the Act

as well as the impugned letter dated 02.11.2011 are hereby quashed.

The writ petition is accordingly allowed.

(R.V. EASWAR) JUDGE

(S. RAVINDRA BHAT) JUDGE FEBRUARY 17, 2014 hs