Gujarat High Court

Pratul Krishnakant Shroff vs Deputy Commissioner Of Income ... on 27 January, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

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                            C/SCA/8348/2022                              JUDGMENT DATED: 27/01/2025

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                                    IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                      R/SPECIAL CIVIL APPLICATION NO. 8348 of 2022


                       FOR APPROVAL AND SIGNATURE:

                       HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                       and
                       HONOURABLE MR.JUSTICE D.N.RAY
                       ==========================================================
                                   Approved for Reporting               Yes           No

                       ==========================================================
                                      PRATUL KRISHNAKANT SHROFF
                                                 Versus
                       DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE 2(1)(1), AHMEDABAD
                       ==========================================================
                       Appearance:
                       MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
                       MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
                       ==========================================================

                         CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                               and
                               HONOURABLE MR.JUSTICE D.N.RAY

                                                    Date : 27/01/2025

                                            ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. B.S.Soparkar for the petitioner

and learned Senior Standing Counsel Mr.Varun Patel for the

respondent.

2. Rule returnable forthwith. Mr.Varun Patel, learned

Senior Standing Counsel waives service of notice of rule on behalf

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of the respondent. Since the controversy involved is short, the

matter is finally heard and disposed of.

3. By this petition under Article 226 of the Constitution of India,

the petitioner has challenged the orders dated 30 th March, 2022

passed under Section 148A(b) of the Act, 1961 (for short "the Act")

and the notice dated 31.3.2022 issued under Section 148 of the Act

on the ground that the reply filed by the petitioner is not considered

while passing the impugned order holding that it is a fit case to

reopen the assessment for the Assessment Year 2018-19.

4. The brief facts of the case are as under:-

4.1 The petitioner filed return of income on 24.08.2018 offering

total income at Rs.588,10,15,830/- for the Assessment Year 2018-

19. The return of the income was scrutinized and the assessment

order under Section 143(3) of the Act was passed at the return

income on 17.03.2021.

4.2 Thereafter, the petitioner received the show cause notice under

Section 148A(b) of the Act issued on 08.03.2022 along with the

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details of information that income chargeable to tax has escaped

assessment for the Assessment Year 2018-19 requiring the petitioner

to file reply before 15th March, 2022.

4.3 The petitioner made an application for adjournment on 15 th

March, 2022 indicating that the detailed reply is under preparation

and sought time for 15 days to file the reply on merits. The petitioner

also sought certain materials/documents to file the reply as stated in

the said application.

4.4 The petitioner thereafter filed a detailed response on 22 nd

March, 2022 running into 500 pages explaining as to why there is

no income which has escaped assessment and why the proceedings

are required to be dropped.

4.5 The respondent-Assessing Officer disposed off the objections

filed by the petitioner by the impugned order under Section 148A(d)

of the Act dated 30th March, 2022 and issued the impugned notice

dated 31st March, 2022 under Section 148 of the Act. Being

aggrieved the petitioner has preferred this petition.

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5. Learned advocate Mr.B.S.Soparkar appearing for the

petitioner stated that the respondent -Assessing Officer ought to

have granted the adjournment sought for by the petitioner on 15 th

March, 2022 and could not have ignored the voluminous reply filed

by the petitioner on 22nd March, 2022. It was submitted that on

perusal of the impugned order issued under Section 148A(d) of the

Act, the respondent-Assessing Officer has not referred to the reply

filed by the petitioner though the impugned order is passed on 30 th

March, 2022 on the ground that the petitioner did not submit the

reply within the stipulated time to the notice under Section 148A(b)

of the Act.

5.1 It was further submitted that the respondent -Assessing Officer

has also not provided the information sought for and the information,

details and the documents sought for by the petitioner in the letter of

adjournment dated 15th March, 2022.

5.2 It was submitted that it was incumbent upon the respondent-

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Assessing Officer to provide the details and the information in his

possession along with the notice issued under Section 148A(b) of

the Act so as to enable the petitioner to file effective reply and non-

furnishing of such information in possession of the Assessing

Officer would result into the breach of principles of natural justice

by not providing an opportunity to the petitioner for filing the reply

in relation to the information which is the basis for reopening the

assessment.

5.3 In support of his submissions, the reliance is placed on the

decision of this Court in case of Yuva Trading Co. (P) Ltd. Vs.

Income Tax Officer reported in [2023] 150 taxmann.com 187

(Gujarat) as well as the decision of the Bombay High Court in the

case of Anurag Gupta Vs. Income Tax Officer reported in [2023]

150 taxmann.com 99 (Bombay).

6. Per contra learned Senior Standing Counsel Mr. Varun K.Patel

for the respondent submitted that it is not in dispute that the

petitioner did not file any reply nor sought any adjournment till 15 th

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March, 2022 and on the last date, has sent a letter for adjournment.

It was therefore, submitted that the impugned order is rightly passed

under Section 148A(b) of the Act, as the petitioner failed to file the

reply within the stipulated time and accordingly, the Assessing

Officer was justified in passing the impugned order ignoring the

reply dated 22nd March, 2022 filed by the petitioner.

6.1. In support of his submissions, the reliance was placed on the

following averments made in affidavit-in-reply filed on behalf of

the respondent :-

"5. It is further submitted that it was contended by the petitioner that the impugned order u/s 148A(d) is passed in violation of provisions of section 148A which necessitates the respondent to consider the reply of the petitioner filed against the notice issued u/ s 148A(b) of the Act as his reply dated 22.03.2022 is not considered. In this regard, it is submitted that the notice referred by the petitioner was issued on 04.03.2022 and in response to this notice the assessee/petitioner was requested to file his submission/clarification in this regard by the 15.03.2022. The assessee, however, by letter dated 15.03.2022 sought an adjournment of 15 days in the case without any sufficient cause. It is further submitted that this action on the part of the petitioner is nothing but a ploy to delay the proceedings. Instead, by seeking adjournment, was in a way trying to delay the on going proceedings. For want of any response or clarification in this regard from the petitioner's end even after a considerable time from the date of issue of notice u/s 148A(b) of the Act, the respondent relied on the information which stated that the petitioner is a beneficiary of such transaction and that he had not fully and truly

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disclosed all material facts in his return of income for year under consideration. Hence, such amount (Rs 60,68,33,883/-), the genuineness of which was not proven by the petitioner had escaped from being assessed to tax within the meaning of section 147 of the IT Act, 1961.

7 Having heard the learned advocates appearing for the

respective parties and considering the materials available on the

record, it is not in dispute that the petitioner sought the time of 15

days for furnishing the reply. The petitioner also sought for various

information and documents which are relevant for the reasons

recorded in notice under Section 148A(b) of the Act. The petitioner

required the copies of the statement of JM Financial Asset

Management Limited recorded during or after such survey as

stated in the reasons and various other documents.

7.1 However, the respondent-Assessing Officer did not grant

adjournment nor communicated the denial of adjournment to the

petitioner after 15th March, 2022 and without considering the reply

dated 22nd March, 2022 which was filed by the petitioner on merits

after referring to the information sought for by the petitioner as no

reply was given by the Assessing Officer passed the impugned order.

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7.2 It appears that the impugned order under Section 148A(d) of

the Act was passed on 30th March, 2022 though, the petitioner has

filed the reply dated 22nd March, 2022. Thus, there is a clear breach

of principle of natural justice on the part of the respondent-

Assessing Officer for not considering the reply filed by the

petitioner on the ground that the petitioner did not file the reply

within the stipulated time i.e. on or before 15 th March, 2022. On

perusal of the provision of under Section 148A(b) of the Act as it

existed at the relevant point of time, the respondent -Assessing

Officer is required to grant time to the petitioner to file the reply if

the petitioner prays for the adjournment. Section 148A(b) reads as

under :-

Section 148A(b) in The Income Tax Act, 1961

(b)provide an opportunity of being heard to the assessee, [***] by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment

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year and results of enquiry conducted, if any, as per clause