JITENDRAKUMAR SHANTILAL SHETH V. INCOME TAX OFFICER, WARD-1 , PALANPUR

SCA/19285/2021

AI Insights

The case involves Jitendrakumar Shantilal Sheth, the writ applicant, who challenged a notice under Section 148 of the Income Tax Act, 1961, issued by the Income Tax Officer, Ward-1, Palanpur, for reopening his assessment for the assessment year 2017-18. The notice was based on the allegation that the applicant had deposited a substantial amount of cash during the demonetization period, which was reportedly linked to his partnership in a firm named Tapas Elegance. The applicant denied these allegations, leading to the legal challenge. The court, after reviewing the submissions and evidence presented, including bank statements, found that the notice was issued based on incorrect facts and thus quashed it.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 749135 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 11-01-2022
• Assessment Year: misc
• Laws Referred To: Article 226 of the Constitution of India, Section 148 of the Income Tax Act, 1961, Section 143(1) of the Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M R BHATT
• Assessee Lawyers: JIMI PATEL
• Keywords: Cash deposit; Certiorari; Certiorari; Demonetization; Incorrect facts; Mandamus; Reopening of assessment; Writ application
• Section: 148; 143(1)

Judgement Text

"C/SCA/19285/2021 ORDER DATED: 11/01/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 19285 of 2021 ========================================================== JITENDRAKUMAR SHANTILAL SHETH Versus INCOME TAX OFFICER, WARD-1 , PALANPUR ========================================================== Appearance: MR JIMI S PATEL(10578) for the Petitioner(s) No. 1 MR MR BHATT FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 11/01/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. By this writ application under Article 226 of the Constitution of India, the writ applicant – an assessee has prayed for the following reliefs: “14. In the premises aforesaid, the petitioner prays that: (A) this Hon’ble Court may be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned 148 notice at Annexure B and the order disposing the objections at Annexure-G. (B) this Hon’ble Court may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction asking the respondent not to proceed further in pursuance of Section 148 notice at Annexure-B and the order rejecting the objections at Annexure-G. (C) Pending the hearing and final disposal of this application, this Hon’ble Court may be pleased to stay further proceedings in pursuance of section Page 1 of 5 C/SCA/19285/2021 ORDER DATED: 11/01/2022 148 notice at Annexure-B. (D) This Hon’ble Court be pleased to grant any further or other relief of this Hon’ble Court deems just and proper in the interest of justice, and (E) This Hon’ble Court be pleased to allow this application with costs against the respondent.” 2. We need not delve much into the facts of this case as our two orders dated 04.01.2022 and 10.01.2022 respectively would make the picture abundantly clear. The order passed by this Court dated 04.01.2022 reads thus: “1. We have heard Mr. Jimi Patel, the learned counsel appearing for the writ applicant. 2 The writ applicant seeks to challenge the notice of reopening issued under Section 148 of the Income Tax Act, 1961 for the A. Y. 2017-18. The assessment is sought to be re-opened on the ground that the assessee filed his return of income on 13th September 2017 declaring total income of Rs.42,65,501/-. The return was processed under Section 143(1) of the Act. The Assessing Officer received information during the course of the assessment proceedings of one another assessee namely Tapas Elegance (a partnership firm in which the writ applicant himself is one of the partners) that the writ applicant herein had deposited cash of Rs.26,50,000/- during the demonetization in the current account No.1070006437127 of the partnership firm maintained with the Ahmedabad District Cooperative Limited. It is the case of the writ applicant that the ground on which the assessment is sought to be reopened is incorrect. It has been very strongly asserted that no such amount referred to above was deposited by the writ applicant at any point of time in the current account maintained by the partnership firm. While passing an order overruling the objections raised by the writ applicant – assessee, the Assessing Officer observed as under: “(A) Re-opening of assessment on wrong facts:- At the outset, in para 3, it is stated in your objection Page 2 of 5 C/SCA/19285/2021 ORDER DATED: 11/01/2022 that the re-opening is factually incorrect as the assessee did not deposit cash of Rs.26,50,000/- in the bank account. In your objection, it is stated that the cash of Rs.26,50,000/- was not deposited into the bank account during the F.Y. 2016-17. In this regard, it may be noted the information on which the notice u/s. 148 of the Act is issued is obtained from the jurisdictional AO of Tapas Elegance LLP, having PAN: - AALFT4736H. During the assessment proceedings of the said firm, that AO found that the assessee, being a partner in the above firm introduced capital in the said firm during the F.Y. 2016-17. Further, it was also found that cash of Rs.26,50,000/- was deposited during the demonitization period relevant to A.Y. 2017- 18. It has become clear that the assessee entered into certain financial transactions during the period with Tapas Elegance LLP. Thus, if we combine all the facts, it can be alleged that there has been some nexus between the assessee and Tapas Elegance LLP and not merely nexus, there occurred certain financial transactions between these two person. Therefore, in view of the above fact, the AO has rightly issued notice u/ s 148 of the Act which is correct, legal and valid. In view of the above facts, the question raised by the assessee is not acceptable as neither the notice is factually incorrect nor it is bad in law. As far as the gravity of the case will be viewed during the assessment proceedings.” 3. Let Notice be issued to the respondent, returnable on 10th January 2022. Mr. Jimi Patel, the learned counsel appearing for the writ applicant, at the earliest, shall furnish one set of his entire paper book to Mr. Karan Sanghani, the learned counsel who would be assisting Mr. M. R. Bhatt, the learned Senior Counsel appearing for the Revenue. 4. We request Mr. Sanghani to call for the necessary information as regards the assertion on the part of the writ applicant that the entire premise on which the assessment is sought to be reopened is incorrect. Page 3 of 5 C/SCA/19285/2021 ORDER DATED: 11/01/2022 5. On the returnable date, notify this matter on top of the Board.” The order dated 10.01.2022 passed by this Court reads thus: “1. We have heard Mr. Jimi Patel, the learned counsel appearing for the writ applicant and Mr. M.R. Bhatt, the learned Senior Counsel appearing for the Revenue. 2. Mr. Bhatt, brought to our notice that the writ applicant herein has a savings account in his individual name maintained with the Adarsh Co-operative Bank Limited. The bank statement of the Adarsh Co-operative Bank Limited, which has been produced before us, would indicate that the cash to the tune of Rs.26,50,000/- during the F.Y. 2016-17 relevant to the A.Y. 2017-18 was deposited by the writ applicant herein in his savings account maintained with the Adarsh Cooperative Bank Limited. 3. In view of the aforesaid, prima facie, the reasons assigned by the AO in the Notice dated 19.05.2021, Annexure - D, at Page 44 does not seem to be correct. In the Notice, it has been stated that the writ applicant in his capacity as one of the partners of a partnership firm deposited amount of Rs.26,50,000/- in cash in the current account of the partnership firm, maintained with the Ahmedabad District Cooperative Bank Limited. It is further clarified that the current account referred to in the order assigning reasons is also infact the personal account of the writ applicant and not that of the partnership firm. 4. Mr. Bhatt, made a request to keep this matter tomorrow to enable him to take appropriate further instructions. 5. Post this matter on 11.01.2022 on top of the Board.” 4. Today, when the matter was taken up for further hearing, Mr. M.R. Bhatt, learned senior counsel appearing for the Revenue fairly submitted that a mistake has been committed in issuing the impugned notice under Section 148 of the Income Tact Act for Page 4 of 5 C/SCA/19285/2021 ORDER DATED: 11/01/2022 reopening of the assessment. 5. In view of the aforesaid, the impugned notice dated 31.03.2021, Annexure B is hereby quashed and set aside. This writ application stands disposed of accordingly. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) Y.N. VYAS Page 5 of 5 "