Madhya Pradesh High Court
M/S Diksha Polymers Pvt. Ltd. Through ... vs Union Of India on 19 February, 2025
Author: Anand Pathak
Bench: Anand Pathak, Hirdesh
1
IN THE HIGH COURT OF MADHYA PRADESH
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE ANAND PATHAK
&
HON'BLE SHRI JUSTICE HIRDESH
ON THE 19th OF FEBRUARY, 2025
WRIT PETITION No. 9252 of 2024
M/S DIKSHA POLYMERS PVT. LTD. THROUGH ITS DIRECTOR VIVEK
KUMR MANDELIYA
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Yogesh Chaturvedi - Advocate for petitioner.
Shri Harshavardhan Topre- Advocate for respondent Nos. 2 & 3/Income Tax.
ORDER
Per: Justice Anand Pathak
With the consent of parties, matter is heard finally.
2. The present petition is preferred under Article 226 of the Constitution
seeking following reliefs:-
"7. It is there most humbly prayed that the petition may kindly be allowed and the
suitable Writ in the nature of mandamus or any other suitable writ or order may
kindly be issued and the impugned order Annexure-P/1 dated 12.03.2024 passed
by respondent No.3 and the impugned notice Annexure-P/2 dated 12.03.2024 may
kindly be quashed in the interest of justice."
3. Precisely stated facts of the case are that petitioner is a Private Limited
Company registered under the Companies Act. The petitioner-Company is
engaged in the production of plastic bottles and containers.
4. It appears that Income Tax Department conducted search and seizure in
residential premises of Shri Alok Kulshreshtra (Accountant of the Gupta Group,
Morena) purportedly under Section 132 of Income Tax Act, 1961 (hereinafter
referred as "the Act of 1961") and found two hundis belonging to present
petitioner in which one was amounting to Rs.40 lacs dated 19.08.2017 and
another was Rs.20 lacs dated 20.11.2017 (total amounting to Rs.60 lacs).
During the course of post search enquiry, it further appears that Shri Narayan
Hari Gupta while in his statements dated 22.02.2018 and 20.04.2018 accepted
that all the hundis belong to him and the transactions mentioned in the paper
was the loan given to various parties in cash by him.
5. According to him, petitioner-company received cash loan amounting to
Rs.20 lacs and 40 lacs (total Rs. 60 lacs) from Narayan Hari Gupta on hundis
during the Assessment Year 2018-19. Therefore, notice under Section 148A(b)
of the Act of 1961, was given to the petitioner as assessee in respect of escape
assessment (as provided under Section 148 of the Act of 1961). Petitioner
submitted its reply and raised the point of limitation on the basis of date of
borrowing of amount mentioned in hundis. Petitioner also raised the point that
the statements of Narayan Hari Gupta were not provided to the petitioner so as
to contest the said statement.
6. As alleged, Income Tax Department considered the submissions and took
permission from prescribed authority Principal Chief Commissioner Income
Tax (PCCIT) and passed the order for initiation of assessment vide order dated
12.03.2024 (Annexure-P/1). Therefore, petitioner is before this Court.
7. It is the submission of learned counsel for petitioner that issuance of
proceedings for assessment pertaining to year 2018-19 suffers from limitation.
He refers Section 149(1)(b) of the Act of 1961 in this regard and submits that
actually assessment year was 2017-18 because in one of the hundis pertaining
to Rs.40 lacs the date of borrowing was 19.02.2017, therefore, it was a case of
Financial Year 2016-17 and therefore, assessment year would be 2017-18.
8. Another hundi amounting to Rs.20 lacs which indicates period of
borrowing from 20.11.2017 to 20.05.2018, therefore, assessment year of that
hundi would be 2018-19, therefore, both hundis are of different assessment
years and as per the mandate of Section 149 of the Act of 1961, if amount of
escape assessment is below Rs.50 lacs, then limitation prescribed is only three
years. Beyond three years, no assessment can be carried out. Here, Assessment
Year 2017-18 (amount Rs.40 lacs) suffers from limitation and said aspect has
been ignored by the department. If both the hundis are bifurcated, then in both
the cases, department is proceeding beyond three years.
9. Another ground raised by counsel for petitioner is in respect of sanction
to be granted in such cases by the specified authority as per Section 148A of the
Act of 1961. According to him, specified authority needs to apply his mind
before granting sanction and it cannot be mechanical sanction. He refers the
documents and the tabular representation of sanction granted by Principal Chief
Commissioner Income Tax (PCCIT) in which it has been mentioned that no
reply has been received from petitioner, whereas according to counsel for
petitioner, reply was filed and same was available on record.
10. He further points out that on 12.03.2024, sanction was granted by PCCIT
and on same day, impugned order has been passed for initiation of assessment
proceedings. This constitutes arbitrariness and amounts to mala fide. In support
of his submissions, he relied upon the judgment of Bombay High Court in the
cases of Vodafone India Ltd. vs. Deputy Commissioner of Income Tax [2024]
161 taxmann.com 609, Kartik Sureshchandra Gandhi vs. Assistant
Commissioner of Income Tax [2023] 154 taxmann.com 193 (Bombay) and
another order of Division Bench of this Court in the case of Commissioner of
Income Tax, Jabalpur vs. S. Goyanka Lime & Chemicals Ltd. [2015] 56
taxmann.com 390 (Madhya Pradesh).
11. Per contra, learned counsel for respondents/revenue vehemently opposed
the prayer. According to him, the date of payment of hundi amounting to Rs.40
lacs is 19.08.2017 and date of payment of hundi amounting to Rs.20 lacs is
20.11.2017. Therefore, as per Section 69D of the Act of 1961, it can be
construed as transaction of assessee falling in Financial Year 2017-18
(Assessment Year 2018-19). Since both the transactions are of same assessment
year and are of same assessee, therefore, they can be clubbed together and since
clubbing together makes the amount Rs. 60 lacs, which is more than Rs. 50 lacs
as stipulated in Section 149 of the Act of 1961, therefore, beyond Rs.50 lacs,
limitation is up to 10 years.
12. According to learned counsel for respondents so far as providing copy of
statement of third party at the stage of Section 148A(b) of the Act of 1961, such
supply of statement is not necessary. He relied upon the decision of Division
Bench of this Court in the case of M/S Amrit Homes Private Limited vs.
Deputy Commissioner of Income Tax & Anr. passed in WP No.15244/2023
dated 09.08.2023.
13. It is further submitted that Section 148A(d) of the Act of 1961, specified
authority has to pass an order thereby denoting whether case deserves to be
proceeded or not. Prescribed authority need not to pass detail order in this
regard. He refers Annexure R-1 and annexures accompanied to it to submit that
PCCIT although considered the documents and thereafter, given consent after
due application of mind which is reflected from annexure attached with the said
document. For the purpose of granting sanction, PCCIT is not required to give
reasons. It is for the assessing authority to give reasons while passing order
under Section 148A(d) of the Act of 1961. Assessing Officer has considered all
these aspects and passed a reasoned order vide order dated 12.03.2024
(Annexure P-1) which is under challenge.
14. Since assessment proceedings have initiated, therefore, petitioner has to
participate in the assessment proceedings and he has remedy to raise all the
grounds as mentioned here in assessment proceedings and thereafter, if
required, then in appellate proceedings till ITAT. He prayed for dismissal of
petition.
15. Heard learned counsel for the parties at length and perused the
documents appended thereto.
16. This is a case of escaped assessment. Petitioner has taken certain grounds
on procedural aspects and some grounds on merits.
17. So far as procedural aspect is concerned, it was the submission of learned
counsel for the petitioner that approval by the PCCIT was not proper because in
column 15 in response to the question regarding reply received from the
assessee under Section 148A(b) of the Act of 1961, PCCIT mentioned as NO.
Hence, the entire proceedings are vitiated. Said contention is to be seen in the
light of the provisions as contained under Section 292B of the Act of 1961
which reads as under:
292B. Return of income, etc., not to be invalid on certain
grounds.-
No return of income, assessment, notice, summons or other
proceeding, furnished or made or issued or taken or purported to
have been furnished or made or issued or taken in pursuance of
any of the provisions of this Act shall be invalid or shall be deemed
to be invalid merely by reason of any mistake, defect or omission
in such return of income, assessment, notice, summons or other
proceeding if such return of income, assessment, notice, summons
or other proceeding is in substance and effect in conformity with
or according to the intent and purpose of this Act.
18. The term "other proceeding" used in Section 292B of the Act of 1961
is wide enough to include proceedings of approval. Therefore, any procedural
error/omission/defect in the approval under Section 151 of the Act of 1961 shall
not vitiate the entire proceedings of search or notice issued under Sections
148A and 148 of the Act of 1961. Even Sections 148, 148A and 151 of the Act
of 1961 do mandate a specified authority to consider the reply of
petitioner/assessee and to pass a reasoned order for the simple reason that all
these things have to be considered during the proceedings under Section
148A(d) of the Act of 1961 by the Assessing Officer and that has been
considered by the Assessing Officer while passing the order dated 12-03-2024
which is under challenge.
19. So far as issuing approval and order under Section 148A(d) of the Act of
1961 on the same date is concerned, this may be an act of haste, but certainly
does not attract interference because all these grounds can be raised by the
petitioner in assessment proceedings also. Submission of respondents/revenue
appears to be logical that nowadays, all the notices are issued electronically on
the web portal and the date on which any notice is uploaded on the web portal
is considered to be the date of notice. However, the same does not mean that the
Approving Authority failed to apply its mind earlier. The file is usually put
forth before the concerned authority in advance and thereafter, approval is
given which is uploaded on the web portal subsequently.
20. Not only this petitioner has assessment proceedings to face and to present
his case, even after passing of the assessment order he has legal remedy to file
appeal before the appellate authority i.e. Commissioner, Income Tax (Appeal)
and Income Tax Appellate Tribunal. Petitioner can also approach PCIT under
Section 264 of the Act of 1961 for revision of the assessment order if situation
warrants so.
21. The Act of 1961 provides complete machinery for assessment,
reassessment of tax and imposition of penalty and for obtaining relief in respect
of any improper orders passed by the Revenue Authorities, assessee could not
be permitted to abandon that machinery and to invoke the jurisdiction of the
High Court under Article 226 of the Constitution {See: Commissioner of
Income Tax and others Vs. Chhabil Dass Agarwal, (2014) 1 SCC 603}.
22. Scope of judicial review of interference under proceedings under
Sections 148 and 148A of the Act of 1961 is discussed in the judgment of Apex
Court in the case of Phool Chand Bajrang Lal Vs. ITO, (1993) 4 SCC 77.
23. This Court has considered the technical aspect of the matter and
permitted the petitioner to raise all the grounds before the Assessing Authority,
therefore, other questions including regarding Section 69D of the Act of 1961
as well as other grounds on merits are not touched otherwise it may affect the
case of petitioner in assessment proceedings.
24. The Division Bench of this Court in the case of M/S Amrit Homes
Private Limited vs. Deputy Commissioner of Income Tax & Anr. (2023)
SCC Online MP 2359 has discussed in detail about the non-furnishing of
documents/statements/information for initiation of proceedings of escaped
assessment. This Court intends to tread on the same path. Non-furnishing of
such information/statement does not vitiate the proceedings.
25. Petitioner has to appear before the Assessing Officer and raise all the
grounds as available to him in accordance with law. Petitioner shall participate
and cooperate in the assessment proceedings and respondent - Assessment
Officer shall complete the assessment within the time frame at the earliest.
26. Petition stands disposed of accordingly.
(ANAND PATHAK) (HIRDESH)
JUDGE JUDGE
VJ
