Doulatram Chimandas Ramchandani V. Union Of India and Principal Chief Commissioner Of Income Tax (Nafac) and Principal Commissioner Of Income Tax - 1St and I.T.O., Ward-1(1)

CW/7017/2022

AI Insights

The case involves Doulatram Chimandas Ramchandani, represented by his power of attorney holder Mr. Vineet Ramchandani, who filed a writ petition against the Union of India and various income tax authorities. The petitioner challenged the order rejecting his objections to a notice under Section 148-A(b) of the Income Tax Act, which was issued for reopening an assessment based on an unexplained transaction of Rs.5,70,00,000 in a bank account during the financial year 2017-18. The petitioner contended that the notice was not properly served, and his subsequent reply was ignored by the I.T.O., leading to an unjust order.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 820380 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 25-05-2022
• Assessment Year: misc
• Other Referred Cases: Pankaj Vs. National e-Assessment Centre (Writ Petition No.1927/2021 decided on 19.01.2022)
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KAMAL KISHORE BISSA
• Assessee Lawyers: SHARAD KOTHARI; MAYANK TRIPATHI
• Keywords: Electronic Transmission; Income Tax; Natural Justice; Notice; Reopening of assessment
• Section: 147; 148(A)(b)

Judgement Text

"(1 of 7) [CW-7017/2022] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 7017/2022 Doulatram Chimandas Ramchandani, House No. 634 KC Bhavan, 11Th B Road Sardarpura, Jodhpur, Rajasthan Through His Power Of Attorney Holder Mr. Vineet Ramchandani S/o Lila Ram Ramchandani, Aged About 32 Years, R/o House No. 634 KC Bhavan, 11Th B Road Sardarpura, Jodhpur 342003 ----Petitioner Versus 1. Union Of India, Through Secretary Finance, Ministry Of Finance, North Block New Delhi 110001 2. Principal Chief Commissioner Of Income Tax (Nafac), North Block, New Delhi 110001 3. Principal Commissioner Of Income Tax - 1St, Aayakar Bhawan, Paota C Road, Jodhpur - 342010 4. I.T.O., Ward-1(1), Aaykar Bhawan Paota C Road, Jodhpur 342010 ----Respondents For Petitioner(s) : Mr. Sharad Kothari Mr. Mayank Tripathi For Respondent(s) : Mr. Kamal Kishore Bissa HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MR. JUSTICE VINOD KUMAR BHARWANI Order 25/05/2022 The petitioner has filed the instant writ petition for assailing the order (Annexure-8) dated 29.04.2022 passed by the I.T.O. W- 1(1), Jodhpur, rejecting the objections submitted by the petitioner to notice issued under Section 148-A(b) of the Income Tax Act (2 of 7) [CW-7017/2022] dated 13.03.2022 by ignoring the reply submitted by the petitioner. Mr. Sharad Kothari, learned counsel representing the petitioner, vehemently and fervently urged that the assessment in original was made about 3 to 4 years ago and it was sought to be reopened by the I.T.O. by taking recourse of Section 148-A(b) of the Income Tax Act. Notice (Annexure-2) was purportedly issued by the I.T.O. to the petitioner on 13.03.2022, giving time till 21.03.2022 to submit a response thereto electronically. The annexure to the notice indicated that there was a transaction of Rs.5,70,00,000/- in a bank account maintained at the Oriental Bank of Commerce, E Block, Harsha Bhawan, Connaught Place, New Delhi, Delhi India during the financial year 2017-18 and no Income Tax Return was filed for the said transaction and thus, the transaction remained unexplained. Mr. Kothari drew the Court’s attention to the copy of the dashboard of the income tax portal, (forming a part of Annexure-2) as per which, no recipient has been mentioned in the dashboard. With reference to the said document, Mr. Kothari contended that the notice was never transmitted electronically to the petitioner. He has also filed on record, copy of the tracking consignment received from the post office which indicates that the notice was also sent to the petitioner through registered post. The item was booked on 17.03.2022 and was received at the petitioner’s registered address on 21.03.2022 at 17:58:15 hrs. Mr. Kothari submits that by the time, said notice was received through post, the time period for filing reply as prescribed in the notice had already lapsed. Despite that, the petitioner, who is a NRI tried to collect all (3 of 7) [CW-7017/2022] the relevant information and submitted reply/objection dated 29.03.2022 wherein, it was specifically mentioned that the petitioner did not maintain the bank account mentioned in the notice and requested for being provided with requisite bank details/ time deposits. However, the said reply was not taken into account and was expressly eschewed while passing the order dated 30.03.2022 under clause (d) of Section 148-A of the Income Tax Act which reads as below :- “The SCN was issued on 13/03/2022 and duly served. The assessee’s compliance was requested on or before the given date. 1. Reply of the assessee: It is noticed that the assessee did not make any compliance and failed to furnish any details/reply till the given date. 2. Analysis of the assessee’ reply & finding of this office: From the above facts it is clear that the assessee has failed to comply to the SCN and to furnish the requisite details and supporting documents in this regard. Therefore, it is presumed that the assessee has nothing to say/ no details or explanation to offer in respect of the information conveyed through SCN to the assessee and also mentioned in earlier para, which suggests that income chargeable to tax has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961, in this case for the Assessment Year under consideration. As the assessee did not file any reply to the show-cause notice of this office, this office is left with only option to decide the case based on the material available on record.” Mr. Kothari submits that the observations made in the impugned order are totally incorrect and unjustified and hence, the impugned order is unsustainable in the eyes of law and should (4 of 7) [CW-7017/2022] be quashed. In support of his arguments, Mr. Kothari placed reliance on the Division Bench Judgment of Hon’ble the Bombay High Court in the case of Pankaj Vs. National e-Assessment Centre (Writ Petition No.1927/2021 decided on 19.01.2022). Mr. Kothari further referred to Section 148-A(b) of the Income Tax Act and urged that the period for filing reply to the notice is required to be not less than seven days and not exceeding thirty days from the date on which such notice is issued or such time as may be extended by the I.T.O. on the basis of an application filed in this behalf. Mr. Kothari submits that the impugned order was passed without following the mandate of Section 148-A of the Income Tax Act. The details of service of notice under Section 148-A(b) of the Income Tax Act as reflected in the impugned order are incorrect and as the order dated 29.4.2022 (Annex.8) has been passed by ignoring reply of the petitioner, which had admittedly been received by the I.T.O., the same is liable to be quashed as having been passed in sheer violation of principles of fair play and natural justice. In reply, the respondents have mentioned that the notice dated 13.03.2022 was forwarded to the registered email ID : [e-mail] on 14.03.2022 and was served on the same day. The hard copy of the show cause notice was dispatched through post on 13.03.2022 and was timely delivered at the petitioner’s address. Mr. Bissa, learned counsel representing the Department, urged that the notice (Annexure-2) dated 13.3.2022 was forwarded forthwith to the petitioner’s Chartered Accountant through email and thus, it can be presumed that (5 of 7) [CW-7017/2022] knowledge thereof was received by the petitioner on 13.03.2022 itself. However, reply was filed beyond the period of seven days stipulated in the notice (Annexure-2) dated 13.3.2022 and thus, it was rightly ignored while passing the impugned order (Annexure- 6) dated 30.3.2022. He urges that the petitioner is not prejudiced by the impugned order because he would have the opportunity to contest the proceedings even now. However, Mr. Bissa is not in a position to dispute that there is nothing on record to show that there existed any relationship of professional nature or otherwise, between the petitioner and the email addressee [e-mail] to whom, the notice (Annexure- 2) dated 13.3.2022 was sent electronically. Mr. Bissa was also not in a position to dispute the fact that as per the track details of the Post and Telegraph Department, which the petitioner has filed on record with the writ petition, envelop containing hard copy of the notice (Annexure-2) was served at the postal address of the petitioner on 21.03.2022 which was last date stipulated for filing the reply. Thus, we have no hesitation in holding that the notice (Annexure-2) dated 13.3.2022 was not served to the petitioner in time as claimed by the respondents. It is thus abundantly clear that the mandate of Section 148- A(b) of the Income Tax Act that the assessee shall be provided a minimum of seven days and maximum of thirty days, which may be extended by the I.T.O. for filing reply to the show cause notice, was not complied with. Furthermore, annexure to the notice (Annexure-2) indicates that the assessment was sought to be reopened in respect of a suspicious transaction which took place in a bank account maintained at the Oriental Bank of Commerce, (6 of 7) [CW-7017/2022] Connaught Place, New Delhi, Delhi India Branch in the year 2017- 18. In the reply (Annexure-5) dated 29.3.2022, the petitioner, pertinently asserted that he had no connection whatsoever with the said bank account and sought details thereof so that proper response could be filed. However, the I.T.O. expressly ignored the reply of the petitioner and passed the impugned order (Annexure- 6) dated 30.3.2022, wrongly mentioning therein that the petitioner did not file reply to the notice under Section 148-A(b) of the Act. The said finding in the impugned order is factually incorrect in view of the admitted material available on record. The response to the notice was unquestionably submitted by the petitioner within the timeline as provided under Section 148-A(b) of the Income Tax Act and thus, there was no reason whatsoever for the I.T.O. not to have provided the requisite details to the petitioner. Had the account details be provided and if the petitioner was able to establish that he had no connection with the suspected bank account, manifestly, the subsequent proceedings would not have been required. It is clear that the Income Tax Authorities were trying to cover up the default on their part in not having the notice served properly upon the petitioner. Since the impugned order (Annexure-6) came to be passed on 30.03.2022, there was no ostensible reason for the Tax authorities to ignore the reply dated 29.3.2022 filed by the petitioner. As a consequence, the impugned order (Annexure-6) dated 30.03.2022, does not stand to scrutiny, as the same is absolutely arbitrary and perverse and also suffers from the gross violation of the fair play and principles of natural justice. (7 of 7) [CW-7017/2022] Consequently, the impugned order (Annexure-6) dated 30.03.2022 is quashed and set aside. The Income Tax Officer shall provide requisite details to the petitioner in terms of communication (Annexure-5) dated 29.03.2022 provide him proper opportunity to file detailed reply and shall thereafter, proceed to pass a fresh reasoned order within a period of 15 days thereafter. It is made clear that the bar of limitation applicable by virtue of Section 153 of the Income Tax Act shall not come in way of the Tax Authority in proceeding further if so required. The writ petition is allowed in these terms. (VINOD KUMAR BHARWANI),J (SANDEEP MEHTA),J 109-/Pramod/Devesh/- "