Virendra Kumar Chourasia vs Income Tax Officer
2023 Latest Caselaw 4661 MP

IN THE HIGH COURT OF MADHYA PRADESH
                    AT JABALPUR
                      BEFORE
       HON'BLE SHRI JUSTICE SHEEL NAGU
                          &
     HON'BLE SHRI JUSTICE VIRENDER SINGH
          WRIT PETITION No.22628 of 2022
      BETWEEN:-

      VIRENDRA KUMAR CHOURASIA S/O SHRI
      BHAGWAT DAYAL CHAURASIA, AGED
      ABOUT    54    YEARS,     OCCUPATION:
      PROPRIETOR M/S SHAKTI TRADERS
      HOUSE NO. 66, WARD NO. 9, OUT OF SARNI
      GATE, CHHATARPUR (M.P.) (MADHYA
      PRADESH)
                                               .....PETITIONER

(BY SHRI G.N. PUROHIT - SENIOR ADVOCATE WITH SHRI ESHAN
      TRIPATHI - ADVOCATE)

                         AND

     INCOME TAX OFFICER CHHATARPUR
     INCOME TAX OFFICE, CHHATARPUR (M.P.)
     (MADHYA PRADESH)

                                           .....RESPONDENT

(BY SHRI SANJAY LAL- ADVOCATE)
___________________________________________________________
Reserved on     :     18.01.2023

Pronounced on   :     27.03.2023
_______________________________________________________
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      This petition having been heard and reserved for orders, coming
on for pronouncement this day, the Court pronounced the following:

                                 ORDER

Challenge in this petition filed under Article 226 r/w 227 of the Constitution is to the following:-

(i) Order dated 30.06.2022 (Annexure P/12) passed u/S.148A(d) of the Income-Tax Act, 1961 (for brevity "IT Act"), and;.

(ii) Notice dated 30.06.2022 (Annexure P/13) issued u/S.148 of IT Act qua the assessment year 2014-15.

2. The fundamental ground of challenge to the aforesaid order and notice, Annexures P/12 and P/13 respectively, is non consideration of reply of petitioner before passing the order u/S.148A(d) of the Amended IT Act and non compliance of order dated 04.05.2022 passed in Civil Appeal Nos.3005 to 3020 and 3602 to 3611 of 2022 by the Apex Court in Union of India and Ors. Vs. Ashish Agarwal, wherein following findings were rendered:-

"10. In view of the above and for the reasons stated above, the present appeals are allowed in part. The impugned common judgments and orders [Ashok Kumar Agarwal v. Union of India, 2021 SCC OnLine All 799] passed by the High Court of Judicature at Allahabad in WT No. 524 of 2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:

(i) The impugned Section 148 notices issued to the respective assessees which were issued under unamended Section 148 of the IT Act, which were the subject-matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148-A of the IT Act as substituted by the Finance Act,

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2021 and construed or treated to be show-cause notices in terms of Section 148-A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the show-cause notices within two weeks thereafter:

(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under Section 148-A(a) is hereby dispensed with as a one-time measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the assessing officers concerned to hold any enquiry, if required.

(iii) The AOs shall thereafter pass orders in terms of Section 148- A(d) in respect of each of the assessees concerned; Thereafter after following the procedure as required under Section 148-A may issue notice under Section 148 (as substituted).

(iv) All defences which may be available to the assessees including those available under Section 149 of the IT Act and all rights and contentions which may be available to the assessees concerned and Revenue under the Finance Act, 2021 and in law shall continue to be available.

11. The present order shall be applicable Pan India and all judgments and orders passed by the different High Courts on the issue and under which similar notices which were issued after 1-4- 2021 issued under Section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that the present order shall also govern the pending writ petitions, pending before various the High Courts in which similar notices under Section 148 of the Act issued after 1-4-2021 are under challenge."

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3. Bare facts giving rise to the present case are detailed below in chronological manner:-

S.No. Date Event

1. w.e.f. 01.04.2021 Finance Act, 2021 inter alia inserts Sec.148A in the IT Act affording additional opportunity of being heard besides the one prescribed in Sec.148 IT Act in cases pertaining to income escaping assessment.

2. 16.04.2020 Show-cause notice u/S.148 of IT Act (Unamended) issued in respect of assessment year 2014-15.

3. 10.11.2021 Notice u/S.142(1) of IT Act qua assessment year 2014-15 is issued.

4. 04.05.2022 The Apex Court in Union of India and Ors. Vs. Ashish Agarwal invoking its powers under Article 142 directs for treating all Section 148 notices issued under unamended IT Act, to be notices issued u/S.148A(d) of amended IT Act.

5. 19.05.2022 In due deference of order of Apex Court, fresh show-cause notice u/S.148A(b) of amended IT Act is issued by Revenue asking petitioner to respond within two weeks.

6. 09.06.2022 Petitioner submitted reply in its show-cause notice dated 19.05.2022 seeking supply of legible copies since the material supplied alongwith show-cause notice dated 19.05.2022 was illegible.

7. 07.06.2022 Revenue supplied legible copies sought by petitioner.

8. 18.06.2022 Petitioner submitted detailed reply to show-cause notice dated 19.05.2022.

9. 30.06.2022 Revenue passed the order u/S.148A(d) of IT Act (Impugned order) after observing that no reply to show-cause notice has been filed by petitioner.

10. 30.06.2022 Notice u/S.148 of IT Act is issued to petitioner.

(Impugned notice)

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3.1 Aforesaid factual details palpably reveal that fresh notice u/S.148A(d) was issued on 19.05.2022 in compliance of order of Apex Court. It is also not disputed that material supplied to petitioner alongwith the said show-cause notice dated 19.05.2022 was not legible, which is evident from the admission of Revenue that legible copies in support of show-cause notice dated 19.05.2022 were supplied to petitioner vide Annexure P/10 dated 07.12.2022. However, the bone of contention between the rival parties is that reply to show-cause notice dated 19.05.2022 submitted by petitioner on 08.06.2022 vide Annexure P/11 was not considered before passing the impugned order dated 30.06.2022 u/S.148A(d).

4. Bare perusal of impugned order dated 30.06.2022 (Annexure P/12) reveals that Revenue after having given show-cause notice dated 19.05.2022, two weeks time was afforded to the assessee/petitioner to submit reply. The said order dated 30.06.2022 (Annexure P/12) further reveals that when no reply came-forth in response to show-cause notice dated 19.05.2022, the Assessing Officer passed order u/S.148A(d) of amended IT Act, whereafter notice u/S.148 on the very same day i.e.30.06.2022 was issued due to time constraint.

4.2 Facts reveal that Revenue does not dispute that legible copies of foundational material behind show-cause notice dated 19.05.2022, were supplied as late as on 07.06.2022. However, the contention of petitioner

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that pursuant to receipt of legible copies on 07.06.2022, petitioner submitted reply on 18.06.2022 vide Annexure P/11, is denied by the Revenue by contending that neither soft nor hard copy of any reply to show-cause notice dated 19.05.2022 was received in the office of respondents, and therefore, the Assessing Officer was well within his rights to pass the impugned order u/S.148A(d) and issue the consequential notice u/S.148 of amended IT Act.

5. At first blush, this contention of petitioner appears to be tenable. However, looking from the angle of concept of affording reasonable opportunity which is the foundational object behind Sec.148A, it is seen that presently proceedings u/S.148 have commenced in which the petitioner is being afforded reasonable opportunity of being heard.

5.1 Pertinently, amendment to the IT Act w.e.f. 01.04.2021 introduced an additional opportunity for being heard by prescribing issuance of show-cause notice u/S.148A before commencing proceedings u/S.148 of amended IT Act. Thus, after introduction of Sec.148A under the amended IT Act, the assessee is vested with statutory right of being heard by way of issuance of notice followed by affording of reasonable opportunity to submit reply and corresponding obligations on the part of Assessing Officer to consider reply and thereafter pass orders u/S.148A(d).

6. What comes out loud and clear from the aforesaid discussion is that the Assessing Officer either did not receive the reply filed by

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petitioner to show-cause notice dated 19.05.2022 after receiving legible copies of documents from the Revenue, or the petitioner did not successfully upload the reply on the website of Revenue.

6.1 To resolve the aforesaid dispute, the traditional way out is to quash the impugned order and notice (Annexures P/12 and 13) and remand the matter to the Assessing Officer for considering the reply filed by petitioner to show-cause notice dated 19.05.2022 and thereafter pass fresh order. However, doing so would delay and prolong the proceedings which have commenced by issuance of show-cause notice u/S.148 of IT Act.

7. This Court thus, deems it appropriate and in fitness of things to adopt middle path for the sake of expediency by direccting the Assessing Officer to consider the reply of petitioner to show-cause notice dated 19.05.2022 and only thereafter proceed with the case u/S.148 of IT Act.

8. Consequently, present petition stands disposed of in the following terms:-

(i) The Assessing Officer is directed to consider the reply of petitioner to show-cause notice dated 19.05.2022, submitted after receiving legible copies and on consideration if it is found that reply is satisfactory, then the Assessing Officer is directed to drop proceedings u/S.148A and recall the order u/S.148A(d).

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(ii) In case, the reply to Sec.148A is not found satisfactory, then the Assessing Officer will be well within his powers to proceed u/S.148 of amended IT Act.

(iii) While complying with the aforesaid direction No.1, the Assessing Officer shall not be influenced or prejudiced by the impugned order u/S.148A(d) and impugned notice issued u/S.148 of amended IT Act.

(iv) No order as to cost.

               (SHEEL NAGU)                                         (VIRENDER SINGH)
                  JUDGE                                                  JUDGE

Sateesh

 Digitally signed by SATEESH
 KUMAR SEN
 Date: 2023.03.31 12:04:17
 +05'30'