KISHORE THANAJI HASBE, V. ASSISTANT COMMISSIONER OF INCOME TAX,

WP(C)/24826/2021

AI Insights

The case involves Kishore Thanaji Hasbe, a jeweler from Sangli, Maharashtra, who challenged the jurisdiction and the assessment orders issued by the Income Tax Department following the seizure of Rs.1,46,45,000 from him and another individual during a customs inspection. The money was allegedly unaccounted for, and subsequent investigations led to the issuance of notices under various sections of the Income Tax Act for the assessment years 2015-16 to 2020-21. The petitioner contested the transfer of his case from Sangli to Kozhikode, arguing that the transfer was not justified and lacked proper notice and reasoning. However, the court found that the transfer was valid and that the petitioner had not adequately responded to the procedural notices.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 761669 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 21-03-2024
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Brandix Mauritius Holdings Ltd
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K RAVINDRANATHA MENON; P B AJOY JOSEPH
• Assessee Lawyers: P RAGHUNATHAN NAGENDRAN
• Keywords: Assessment years; Income Tax; Income Tax Act; Jurisdiction transfer; Seizure of cash; Writ petition
• Section: 144; 142(1); 143(2); 153A; 131; 132A; 127(2)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 21ST DAY OF MARCH 2024 / 1ST CHAITHRA, 1946 WP(C) NO. 24826 OF 2021 PETITIONER/S: KISHORE THANAJI HASBE, AGED 36 YEARS MAHALAKSHMI JEWELLERS, HARBHAT ROAD, SANGLI, MAHARASHTRA - 416416. BY ADVS. P.RAGHUNATHAN PREMJIT NAGENDRAN RESPONDENT/S: 1 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, AAYAKAR BHAVAN, NORTH BLOCK, NEW ANNEXE BUILDING, MANANCHIRA, CALICUT 673 001 2 INCOME TAX OFFICER AAYAKAR BHAVAN, SANGLI 414 416 3 PRINCIPAL COMMISSIONER OF INCOME TAX 12, SADHU VASWANI SQUARE PUNE 411 001 4 DIRECTOR GENERAL OF INCOME TAX AARYA BHANGI PINNACLE S.A ROAD, KOCHI 682 020 5 THE ASSISTANT COMMISSIONER OF CUSTOMS: CUSTOMS PREVENTIVE DIVISION: KANNUR - 670009 W.P.(C) No.24826/2021 -2- BY ADVS. P.K.RAVINDRANATHA MENON (SR.) P.B.AJOY JOSE JOSEPH, SC, FOR INCOME TAX OTHER PRESENT: SMT. SUSIE B. VARGHESE -SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.24826/2021 -3- J U D G M E N T The petitioner, an assessee under the provisions of the Income Tax Act 1961 (for short, ‘IT Act’) and Rules made thereunder has filed the present writ petition impugning notices under Section 153A of the IT Act issued to the petitioner in respect of the Assessment Years 2015-16 to 2020- 21 in Exts.P7 to P12. The petitioner has also impugned notices issued under Section 142(1)/143(2) of the IT Act in Exts.P14 to P16 in respect of the Assessment Years for which notices under Section 153A were issued to the petitioner. By way of amendment, the petitioner has impugned the assessment orders passed under Section 144 read with Section 153A of the IT Act for the Assessment Years 2015-16 to 2020-21 in Exts. P25 to P29 and P24 respectively. 2. The facts of the case are that the Officers of the Customs Preventive Division Kannur seized a sum of W.P.(C) No.24826/2021 -4- Rs.1,46,45,000/- from the petitioner and Shri Sagar Balaso Khilare on 19.01.2020, who were travelling in a Car from Mumbai to Calicut. It was informed that the vehicle met with an accident at 5.30 a.m. on 09.01.2020 at Nileshwar, Kasaragod and the vehicle was detained by the Valapattanam Police at the Valapattanam Police Station. The officials of the Customs Preventive Division Kannur reached the spot and carried out a joint inspection of the above vehicle at Valapattanam Police Station, which resulted in the detection and seizure of Rs.1,46,45,000/- from the petitioner. The petitioner and Mr Sagar Balaso Khilare could not offer any explanation regarding the source of the seized money. Accordingly, the amount was handed over to the Income Tax Department on the execution of the Warrant of Authorization under Section 132A of the IT Act issued by the Pr.DIT(Inv.), Kochi on 23.06.2020. 2.1 Summons under Section 131 was issued to the W.P.(C) No.24826/2021 -5- petitioner. In his sworn statement recorded by the DDIT(Inv.), Kozhikode on 24.08.2020, the petitioner stated that the entire cash seized belonged to him. He also said that he was residing at Kishore Niwas, Kolathur Road, Villiappally, Vadakara, Kozhikode and was engaged in the jewellery business at Vadakara in the name and style ‘M/s Kavya Jewellers’. 2.2 He further stated that he went to Mumbai to purchase antique jewellery from the Mumbai market with cash of Rs.39 lakhs, 1 Kg 337 gm of pure gold and 1Kg 305 gm of melted gold. He has stated that the gold was sold in Mumbai for Rs.1,04,00,000/-. The said money was arranged by Mr Monty, a friend of the petitioner. The petitioner did not produce the sale invoices to substantiate his claim, nor could he give the whereabouts of Shri Monty before the DDIT (Inv.) Kozhikode. The cash component of Rs.39 lakhs involved was explained as the money procured through a hand loan of W.P.(C) No.24826/2021 -6- Rs.15,00,000/- each from Mr Namdev, DamuKadam, Proprietor of Bombay Jewellery, Vadakara and from Mr Appaso Mahadev Irkar, Proprietor of Shreya Jewellery, Vadakara. It was further said that the remaining Rs.9 lakhs was out of his accumulated savings. 2.3 Summons under Section 131(1A) were issued to the above two persons but they neither appeared nor produced any supporting documents. Later, before the DDIT(Inv.) Kozhikode, the petitioner could produce four invoices for a total amount of Rs.61,08,768/- and had no explanation for the rest of the sum. Out of the four invoices, three were seen to be unsigned and the entire amounts were stated to be received in cash in all invoices. It was also noted that the entity named Daksh Gold Mysuru was a concern of the petitioner’s sister, Smitha. The petitioner did not produce any books of accounts in respect of his business to prove the cash in hand or W.P.(C) No.24826/2021 -7- borrowings in cash from others. The authenticity of the documents was doubtful, therefore the Investigation Wing presumed that the said documents were fabricated. 2.4 The petitioner had filed returns of income in his individual status from the Assessment Year 2015-16 to 2020- 21, the details of which have been noted in the Assessment Orders. The petitioner was issued notices under Section 153A for the Assessment Years 2015-16 to 2020-21, but he did not file any return under Section 153A. In the meantime, the petitioner had challenged the transfer of jurisdiction of the case in this writ petition. 3. The petitioner contended that the petitioner was an assessee before the 2nd respondent at Sangli and therefore, the jurisdictional Assessing Authority would be the 2nd respondent only. The petitioner was issued the notice by the Principal Commissioner at Pune seeking objection to the proposal to W.P.(C) No.24826/2021 -8- transfer the files to the 1st respondent. However, the petitioner did not file any objection to the said notice and therefore an order under Section 127(2) of the IT Act was passed by the Principal Commissioner at Pune transferring the assessment proceedings from the 2nd respondent to the 1st respondent. 3.1 The learned Counsel for the petitioner has submitted that the files of the petitioner were transferred from Sangli to Kozhikode without the mandatory notice and hearing as provided by Section 127(2) of the IT Act. He further submits that the reasons for the transfer of the assessment proceedings from Sangli to Kozhikode are not discernible in the orders passed under Section 127(2) of the IT Act which has been placed on record as Annexure R1(B). Furthermore, the third submission which has been raised by the learned Counsel for the petitioner is that the said order passed by the Principal W.P.(C) No.24826/2021 -9- Commissioner of Income Tax-1, Pune does not have the Document Identification Number (DIN) and therefore, the said order should be treated as illegal. 4. From the record and the pleadings, it can be noted that after receipt of the centralization proposal dated 15.01.2021 from the 4th respondent/Director General of Income Tax (DGIT) (Inv.) Kochi, a notice was sent to the petitioner by the 3rd respondent/ Principal Commissioner of Income Tax, Pune in Annexure R1(A) dated 26.02.2021 giving an opportunity to the petitioner to convey his objections, if any, to the proposed centralization of his case with Deputy Commissioner of Income Tax (DCIT), Central Circle, Kozhikode. The said notice was duly delivered on the e-filing portal as well as the registered e-mail ID of the petitioner. In the notice, it was categorically mentioned that in the event of not receiving any reply from the petitioner within ten days of W.P.(C) No.24826/2021 -10- receipt of the notice, an order under Section 127(2) of the IT Act shall be passed transferring his case to the 1st respondent/Assessing Officer, DCIT, Central Circle, Kozhikode. 4.1 Despite the service of notice on the petitioner on the e-filing portal as well as the registered e-mail ID, the petitioner chose not to file any reply to the said notice. The petitioner's contention that the notice was not received by him cannot be accepted in view of the aforesaid facts. As the petitioner did not choose to file a reply, the order in Annexure R1(B) dated 09.04.2021 has been passed transferring the proceedings from Sangli to Kozhikode, as mentioned above. 5. The question of whether in the absence of DIN, the order becomes inoperative, is pending consideration before the Supreme Court in Special Leave Petition (Civil) Diary No.46964/2023 arising out of the judgment of the Delhi High Court in Commissioner of Income Tax v. Brandix Mauritius Holdings W.P.(C) No.24826/2021 -11- Ltd1, wherein the learned Division Bench of the Delhi High Court in judgment dated 20.03.2023 has held that in the absence of DIN any communication, order should be treated invalid. However, the Supreme Court has stayed the said judgment vide interim order passed on 03.01.2024 in the said Special Leave Petition. 6. So far as the question of no reasons in the order passed under Section 127(2) in IT Act in Annexure R1(B) is concerned, it may be said that the petitioner chose not to file any reply to the notice issued to him. Even otherwise, the facts would disclose that the petitioner is a resident within the jurisdiction circle of Kozhikode. The money was recovered here. The petitioner’s place of business is within the jurisdiction limit and therefore valid reasons are available for transferring the proceedings from Sangli to Kozhikode. 1 Judgment dated 20.03.2023 in ITA 163 of 2023 W.P.(C) No.24826/2021 -12- 7. In view thereof, I do not find any error in the proceedings as contended by the learned Counsel for the petitioner. Thus, the writ petition has no merit which is hereby dismissed. 7.1 However, if the petitioner is aggrieved by the assessment orders, he may take recourse to the appropriate remedy available to him under the provisions of the Income Tax Act and if the petitioner chooses to file the appeal under the IT Act against the assessment orders impugned in the present writ petition, time spent in prosecuting this petition should be excluded while computing the limitation period by the Appellate Authority. The writ petition stands dismissed. Sd/- DINESH KUMAR SINGH JUDGE jjj W.P.(C) No.24826/2021 -13- APPENDIX OF WP(C) 24826/2021 PETITIONER EXHIBITS Exhibit P1 PHOTOCOPY OF STATEMENT OF INCOME FOR A.Y 2017- 18 Exhibit P2 PHOTOCOPY OF STATEMENT OF INCOME FOR A.Y 2018- 19 Exhibit P3 PHOTOCOPY OF STATEMENT OF INCOME FOR A.Y 2019- 20 Exhibit P4 PHOTOCOPY OF STATEMENT OF INCOME FOR A.Y 2020- 21 Exhibit P5 PHOTOCOPY OF STATEMENT FILED BEFORE FIFTH RESPONDENT ON 10-03-2020 Exhibit P6 PHOTOCOPY OF SCN DT 26-02-2021 BY THIRD RESPONDENT. Exhibit P7 PHOTOCOPY OF NOTICE U/S.153A DT 22-07-2021 FOR A.Y 2015-16 Exhibit P8 PHOTOCOPY OF NOTICE U/S 153A FOR 2016-17 Exhibit P9 PHOTOCOPY OF NOTICE U/S 153A FOR 2017-18 Exhibit P10 PHOTOCOPY OF NOTICE U/S 153A FOR 2018-19 Exhibit P11 PHOTOCOPY OF NOTICE U/S 153A FOR 2019-20 Exhibit P12 PHOTOCOPY OF NOTICE U/S 153A FOR 2020-21 Exhibit P13 SCREEN SHOT OF E-PROCEEDINGS MODULE Exhibit P-14 PHOTOCOPY OF NOTICE U/S 142[1] OF IT ACT DT. W.P.(C) No.24826/2021 -14- 04.02.2022 FOR AY 2021.22 Exhibit P-15 PHOTOCOPY OF NOTICE U/ 143[2] OF IT ACT DT. 04.02.2022 FOR A.Y. 2021.22 Exhibit P-16 PHOTOCOPY OF NOTICE U/S 142[1] OF IT ACT DT. 09.02.2023 FOR AY 2021.22 Exhibit P-17 PHOTOCOPY OF INT. ORDER DT. 02.12.2021 IN WP(C) NO.:24826/2021 Exhibit P-18 PHOTOCOPY OF PRE-ASSESSMENT LETTER DT. 18.03.2022 FOR A.Y. 2020.21 Exhibit P-19 PHOTOCOPY OF REPLY DT. 12.02.2022 FILED BEFORE FIRST RESPONDENT IN CONNECTION WITH ASSESSMENTS FOR 2015.16 TO 2020.21 Exhibit -P-20 PHOTOCOPY OF I.A APPLICATION FOR EXTENSION OF STAY DATED 08.04.2023 Exhibit-P-21 PHOTOCOPY OF INT. ORDER DT 24.05.2023 Exhibit -P-22 PHOTOCOPY OF SHOW CAUSE NOTICE FOR 2020.21 DT 29.11.2023 Exhibit-P-23 PHOTOCOPY OF REPLY TO EXT.P-22 UPLOADED ON 19.12.2023 Exhibit -P-24 PHOTOCOPY OF ASSESSMENT ORDER U/S 144 R/W 153A DT 20.12.2023 FOR 2020.21 Exhibit -P-25 PHOTOCOPY OF ASSESSMENT ORDER U/S 144 R/W 153A DT 20.12.2023 FOR 2015.16 Exhibit -P-26 PHOTOCOPY OF ASSESSMENT ORDER U/S 144 R/W 153A DT 20.12.2023 FOR 2016.17 Exhibit -P-27 PHOTOCOPY OF ASSESSMENT ORDER U/S 144 R/W W.P.(C) No.24826/2021 -15- 153A DT 20.12.2023 FOR 2017.18 RESPONDENT ANNEXURES Annexure R1(b) True copy of the order passed U/S .127(2) of the I.T.Act by the 3rd Respondent PCIT, Pune dt.9.4.2021 PETITIONER EXHIBITS Exhibit -P-28 PHOTOCOPY OF ASSESSMENT ORDER U/S 144 R/W 153A DT 20.12.2023 FOR 2018.19 Exhibit-P-29 PHOTOCOPY OF ASSESSMENT ORDER U/S 144 R/W 153A DT 20.12.2023 FOR 2019.20 RESPONDENT ANNEXURES Annexure R1(a) True copy of the letter of the 3rd Respondent dated 26- 02-2021 order passed U/S .127 of the I.T.Act Annexure R1(c) True copy of the relevant extract of the Dispatch Register of lTO, Ward-3, Sangli "