M/S ESTER INDUSTRIES LTD. V. ASSISTANT CIT, NEW DELHI AND ANR.

W.P.(C)/7889/2022

AI Insights

The case involves M/S Ester Industries Ltd., the petitioner, challenging a notice under Section 148 of the Income Tax Act, 1961, and subsequent orders and demand notices issued by the Assistant CIT, New Delhi. The petitioner argued that these were issued illegally and without proper consideration of their detailed replies during the assessment proceedings. The main contention was regarding the treatment of a short term capital loss and the procedural validity of the notice under the old Section 148, which was later converted to fall under the new Section 147/148 read with Section 148A. The respondent argued that the petitioner had already filed an appeal and a rectification application, which was pending. The court dismissed the writ petition, emphasizing the availability of statutory remedies and the inappropriateness of invoking Article 226 for such challenges.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 746088 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 24-05-2022
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax and Ors. Vs. Chhabil Das Agarwal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ZOHEB HOSSAIN; VIPUL AGRAWAL; PARTH SEMWAL
• Assessee Lawyers: R SANTHAN AM; ARJUN PRASAD SINHA
• Keywords: Assessment; Business loss; Income Tax; Notice; Reassessment; Short Term Capital Loss; Tax demand
• Section: 147; 148; 72; 144B; 148A; 156

Judgement Text

"W.P.(C) 7889/2022 Page 1 of 3 $~A-11 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 7889/2022 & CM APPLs.24093-24094/2022 M/S ESTER INDUSTRIES LTD. ..... Petitioner Through: Mr. R. Santhanam, Advocate with Mr.Arjun Prasad Sinha, Advocate. versus ASSISTANT CIT, NEW DELHI AND ANR. ..... Respondents Through: Mr.Zoheb Hossain, Sr.Standing Counsel with Mr.Vipul Agrawal and Mr.Parth Semwal, Jr.Standing Counsel. % Date of Decision: 24th May, 2022 CORAM: HON’BLE MR. JUSTICE MANMOHAN HON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1. Present writ petition has been filed challenging the Notice under Section 148 of the Income Tax Act, 1961 (‘the Act’) dated 31st March, 2021, Order under Section 147 read with Section 144B and the demand notice issued under Section 156 of the Act dated 30th March, 2022. 2. Learned Counsel for the Petitioner states that the impugned order and notice have been issued and passed illegally, mechanically and without application of mind. This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/002037 W.P.(C) 7889/2022 Page 2 of 3 3. He states that the impugned Order has been passed without considering the detailed reply submitted by the petitioner during the assessment proceedings. He states that the short term capital loss of Rs.35,11,525/- can only be carried forward for set off against short term capital gain in subsequent years and, therefore, the question of disallowing the loss so computed and reducing the same from the business loss of the assessee entitled to be carried forward under Section 72 for set off in future does not arise and the impugned order is liable to be quashed. 4. He also states that the respondents have committed grave error in issuing the notice under old Section 148 without complying with the mandatory requirements of the statute and thereafter converting the case as falling under the new section 147/148 read with Section 148A when no enquiry was conducted and no notice under Section 148A was issued and no effective opportunity of hearing provided to the assessee. 5. He states that as against a returned loss of Rs.5,71,43,593/-, the respondents have raised a tax demand of Rs.43,43,36,124/-. 6. Per contra, learned counsel for the respondent-revenue, who appears on advance notice, states that the petitioner has already filed an appeal challenging the impugned order. He further states that the petitioner has also filed a rectification application which is pending consideration. 7. Having heard learned counsel for the parties and having perused the paperbook, this Court finds that the Petitioner has not brought on record anything to prove that the impugned notice issued shall be governed by the amended procedure under Section 148A of the Act. 8. This Court is also of the view that Petitioner is basically challenging the impugned order on merits. The Supreme Court in Commissioner of This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/002037 W.P.(C) 7889/2022 Page 3 of 3 Income Tax and Ors. Vs. Chhabil Das Agarwal, (2014) 1 SCC 603 has held that as the Income Tax Act, 1961 provides complete machinery for assessment/reassessment of tax, assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226. 9. This Court is further of the view that the present case does not fall under the exceptional grounds on which a writ petition is maintainable at the interim stage in tax matters. 10. In view of the above, the present writ petition and applications are dismissed with liberty to raise all contentions and submissions in the appeal and rectification proceedings. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J MAY 24, 2022 TS This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/002037 "