M/S MUKESH OIL MILL PRIVATE LIMITED, V. ASSISTANT COMMISSIONER OF INCOME TAX

CW/24075/2018

AI Insights

The case involves M/s Mukesh Oil Mill Private Limited, which challenged the reassessment proceedings initiated by the Assistant Commissioner of Income Tax for the assessment years 2015-16 and 2016-17. The petitioner argued that the reassessment was conducted hastily and without proper verification of the audited books of accounts. The main legal contention was against the notice issued under Section 148 of the Income Tax Act, 1961, and the subsequent rejection of objections by the tax authorities. The High Court examined the maintainability of the writ petition under Article 226 of the Constitution of India, referencing several precedents and concluding that the writ petition was not maintainable at this stage, and the petitioner could seek redress in the appellate proceedings post-assessment.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 750866 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 01-11-2018
• Assessment Year: misc
• Other Referred Cases: Jeans Knit P. Ltd. Vs. DCIT, Commissioner of Income Tax Vs. Shree Rajasthan Syntex Ltd., Commissioner of Income Tax Vs. Shiv Ratan Soni, Rajath Leasing & Finance Ltd. Vs. Assistant Commissioner of Income Tax, Harikishna Sunderlal Virmani Vs. Deputy Commissioner of Income Tax, ACIT Vs. Dhariya Construction Co., BIR Arina Enterprises Pvt. Ltd. Vs. Income Tax Officer, Pr. Commissioner of Income Tax Vs. G & G Pharma India Ltd., Commissioner of Income Tax Vs. Radico Khaitan Ltd.
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: GUNJAN PATHAK
• Keywords: Extra-ordinary jurisdiction; Income Tax Act; Judicial review; Notice under section 148; Objections; Reassessment proceedings
• Section: 148; 44AB

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR S.B. Civil Writs No. 24075/2018 M/s Mukesh Oil Mill Private Limited, E-59, Industrial Area, Khairthal Alwar, Through Shri Anmol Kumar, S/o Shri Chhajuram, Aged About 54 Years ----Petitioner Versus Assistant Commissioner Of Income Tax, Circle -1, Income Tax Office, Alwar ----Respondent Connected With S.B. Civil Writs No. 24040/2018 M/s Mukesh Oil Mill Private Limited, E-59, Industrial Area, Khairthal Alwar, Through Shri Anmol Kumar, S/o Shri Chhajuram, Aged About 54 Years. ----Petitioner Versus Assistant Commissioner Of Income Tax, Circle-1, Income Tax Office, Alwar. ----Respondent For Petitioner(s) : Ms. Gunjan Pathak Adv. HON'BLE MR. JUSTICE ASHOK KUMAR GAUR Order 01/11/2018 The present writ petitions have been filed by the petitioner challenging the reassessment proceedings for the assessment year 2015-16 & 2016-17. Petitioner is also aggrieved by rejection of objections filed on reopening of the case under Section 148 of the Income Tax Act, 1961. (2 of 7) [CW-24075/2018] Counsel for the petitioner-Ms. Gunjan Pathak has submitted that the Assistant Commissioner of Income Tax, Circle-1, Income Tax Office, Alwar has acted in haste and without verifying the details provided by the ADIT (Inv.) Jaipur and Pr. DIT (Inv.) Chandigarh, issued notice under Section 148 of the Income Tax Act, 1961. Counsel for the petitioner has submitted that the respondent did not bother to investigate that the books of accounts of the petitioner were already duly audited by the Charted Accountant under Section 44AB of the Income Tax Act, 1961. Counsel for the petitioner submitted that the respondents by impugned order dt. 24th August, 2018 disposed of the objections, raised by the petitioner against issuance of notice under Section 148 of the Income Tax Act, 1961. Counsel submitted that the impugned order has been passed in causal manner and since there is no alternative and efficacious remedy open to the petitioner, the present writ petition has been filed by invoking the extra-ordinary jurisdiction of this Court, as provided under Article 226 of the Constitution of India. This Court asked learned counsel for the petitioner about maintainability of the writ petition under Article 226 of the Constitution of India against the order dt. 24th August, 2018, rejecting the objections of the petitioner, in response to notice issued under Section 148 of the Income Tax Act, 1961. Counsel for the petitioner has placed reliance on the following judgments of the Apex Court as well as different High Courts on maintainability of the writ petition:- 1. Jeans Knit P. Ltd. Vs. DCIT [2017] 77 Taxmann.com 176 (SC). (3 of 7) [CW-24075/2018] 2. Commissioner of Income Tax Vs. Shree Rajasthan Syntex Ltd. (2009) 313 ITR 0231 Raj.HC. 3. Commissioner of Income Tax Vs. Shiv Ratan Soni (2008) 217 CTR 0222 Raj.HC. 4. Rajath Leasing & Finance Ltd. Vs. Assistant Commissioner of Income Tax (1995) 129 CTR 0377 Guj.HC. 5. harikishna Sunderlal Virmani Vs. Deputy Commissioner of Income Tax (2017) 394 ITR 0146 (Guj.). 6. ACIT Vs. Dhariya Construction Co. (2010) 328 ITR 515. 7. BIR Arina Enterprises Pvt. Ltd. Vs. Income Tax Officer (1993) 204 ITR 0258 JKHC. 8. Pr. Commissioner of Income Tax Vs. G & G Pharma India Ltd. (2016) 384 ITR 0147 (Delhi). 9. Commissioner of Income Tax. Vs. Radico Khaitan Ltd. (2017) 96 ITR 0644 (Delhi). This Court has considered the scope of Article 226 of the Constitution of India, in respect of proceedings taken by the Income Tax Department by initiating the reassessment proceedings by invoking Section 147/148 of the Income Tax Act, 1961 in the case of S.B. Civil Writ Petition No. 23500/2018 (Vishnu Aggarwal vs. Income Tax Officer) decided on 26th October, 2018. It would be appropriate to quote relevant paras of S.B. Civil Writ Petition No. 23500/2018, which read as under:- 19. “The purpose of sections 147 & 148 of the Act, 1961 is to ensure that the assessees, who have suppressed the fact at the time of filing of their income tax returns or if the Department is in possession of certain new materials in respect of the assessment of a particular year, then the assessee must be informed (4 of 7) [CW-24075/2018] about the decision to reopen the assessment and after such information is provided, the procedure is required to be followed for the purpose of concluding the reassessment. 20. This Court finds that very initiation of procedures under Sections 147 & 148 of the Income Tax Act, 1961 cannot be interfered with by the Courts in a routine manner and judicial review against such initiation is limited. 21. It is found that Section 147 requires that the reasons must be recorded in the notice and in the absence of any reason communicated along with notice under Section 148 of the Act, the entire procedures can become null and void. The intention of the statute is that the authorities on the receipt of new material facts or any suppression of materials by the assessee, is bound to initiate proceeding in invoking under Section 147 & 148 of the Act of 1961. 22. The phraseology of “reasons to believe” has to be interpreted that the Assessing Officer on receipt of any such new material or materials in relation to suppression of fact by the assessee, has made out a prima-facie opinion that it is a case for reopening of the assessment and then issue notice under Section 148 and thereafter, the procedure of furnishing the reasons, receiving objections and conducting scrutiny and all other procedures contemplated under the provisions of the Income Tax Act, 1961 will follow. 23. This Court finds that when notices were issued based on certain material available with the Department and on receipt of the notice, assessee has got right to seek for the reasons from the Department and the Department is bound to provide reasons, enabling the assessee to submit his explanation/objections in order to defend his case. 24. This Court finds that there is a provision for check on the Income Tax officials under the Act and the word “reasons to believe” indicate that officials cannot reopen the assessment in a routine and mechanical manner. The Assessing officer in the event of receipt of new material information or suppression, must have “reason to believe” and the reasons must be recorded in the files. The issuance of notice to the assessee and after supplying the reason, the Income (5 of 7) [CW-24075/2018] Tax Officer is to adjudicate the matter in the manner known to law. 25. This Court finds that High Court cannot use the power of the Appellate Authorities in respect of the objections on the merits and demerits of the matter and the High Court cannot appreciate the question of law and facts at the initial stage, when notice under Section 148 of the Income Tax Act, 1961 is issued to the assessee for reopening the assessment. The complex facts and circumstances are required to be adjudicated by producing the documents and adducing evidences by the parties concerned and such an exercise can never be done by the High Courts under Article 226 of the Constitution of India. 26. This Court is also conscious of the legal principle that writ petition can be entertained, when the notices are issued by the Competent Authority having no jurisdiction or if the allegations of mala-fides are leveled or if the same is in violation of any statutory rules. 27. This Court after going through the ingredients of Section 147 of the Act, 1961 finds that the Assessing Officer has wider power, in respect of covering the escaped assessments for the purpose of reopening the assessment. The power under Section 147 of the Act, 1961, is to be exercised in various circumstances enabling the Assessing Officer to assess or reassess such income other than the income involved in the matters, which are the subject matters of any appeal, reference or revision. 31. The judgment cited by learned counsel for the petitioner in the case of Jeans Knit P. Ltd. Vs. DCIT (Supra), the Apex Court has though remanded the matter back to the High Court where it did not entertain the writ petition against issuance of notice & also made it clear that each case is to be examined on its own merits keeping in view the scope of judicial review while entertaining such matters. 32. This Court finds, that in the instant case, in the notice which was communicated to the petitioner, it was informed to the petitioner that he was the actual beneficiary owner of some bank account in the case of one Munna Lal Pareek. This Court finds that the Assessing Officer has further given sufficient material to the petitioner by furnishing copy of assessment (6 of 7) [CW-24075/2018] order of Munna Lal Pareek and order passed by the CIT (Appeals) in the case of Munna Lal Pareek. The said material or information available with the Assessing Officer has led the Assessing Officer to think that petitioner is required to be confronted by giving notice to explain the income, which was to be assessed in the hands of petitioner as the same is correct or not. 33. The submission of learned counsel for the petitioner that the writ petition would lie even against the show cause notice, if it suffers from illegality & error is apparent on the face of record, this Court finds that the exercise of writ jurisdiction may lie even against the show cause notice but the self imposed restriction to substitute its opinion on the view taken by the authorities, is also an important factor. 34. The submission of learned counsel for the petitioner that the case of Co-ordinate Bench of this Court in the case of Cheer Sagar Vs. CIT (Supra) has entertained a petition against notice issued under Section 148 of the Income Tax Act, this Court finds that in the case of Cheer Sagar Vs. CIT (supra), the issue was with respect to the bar of limitation and the same was projected as the issue of ‘jurisdiction’. This Court considering the bar of limitation as an issue of jurisdiction, directed the Income Tax Authorities to decide the objections as preliminary objection. 35. This Court finds in the instant case that there is no issue of jurisdiction which can be said to be raised by the petitioner and it is only allegation in respect of cryptic order passed by the Assessing Officer without having any reasons to believe or to initiate the proceedings under Section 148 of the Act, 1961. 36. This Court further finds that the petitioner, who is given notice under Section 142 (1) to further explain and to place before the Assessing Officer the relevant facts relating to income which is now sought to be assessed, can always satisfy the authorities that the income which is now taken to be the income of the petitioner instead of one Shri Munna Lal Pareek, is well explained by their own sources. 37. Considering, all the facts, this Court finds that there is no infirmity in the orders passed by the Income Tax Authorities and if any order of assessment/reassessment is passed, petitioner is always free to file an appeal contemplated under the (7 of 7) [CW-24075/2018] Income Tax Act, 1961. The present writ petition is not maintainable before this Court and accordingly, the present writ petition stands dismissed. No orders as to costs.” This Court, following the view expressed in the case of Vishnu Aggarwal vs. Income Tax Officer (supra), dismiss the present writ petitions. Accordingly, the present writ petitions stand dismissed. (ASHOK KUMAR GAUR),J Monika "