RENU SINGH V. THE PRINCIPAL COMMISSIONER OF INCOME TAX

WPC/2670/2023

AI Insights

Renu Singh, the petitioner, challenged the final order of assessment and various notices issued under sections 148 and 148-A of the Income Tax Act, 1961, by the Income Tax Department. The assessment pertained to the financial year 2017-18, where significant additions were made to her income based on allegations of bogus sales bills. The petitioner argued that the notices and the subsequent assessment were vague, cryptic, and unreasonable, and violated principles of natural justice as they were issued without adequate opportunity for her to respond. The Revenue countered that the notices were based on credible information regarding bogus transactions and that the petitioner had adequate remedies under the Income Tax Act to contest these actions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 756509 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 29-01-2024
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Chhabil Dass Agarwal, Anshul Jain Vs. Principal Commissioner of Income Tax and another, Union of India Vs. Kunisetty Satyanarayana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ANURAG VIJAY
• Assessee Lawyers: NITIN PASARI
• Keywords: Bogus sales bills; Efficacious Remedy; Income tax assessment; Natural Justice; Notice of demand
• Section: 148; 143(2); 271B; 270A; 148A(b); 148A(d); 271A; 148A(a); 148-A

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 2670 of 2023 Renu Singh, aged about 53 years, Daughter of Shri Kaushal Kishor Singh, Resident of – 12 Saraswati Nagar, Purulia Road, Chas, P.O. and P.S. – Chas, District – Bokaro – 827013, Jharkhand, Proprietor of M/s. Renu Raj Enterprises, having its Office at – Purulia Road, Chas, Saraswati Nagar, Bansidih, Bokaro – 827013, P.O. and P.S. – Chas Jharkhand ......Petitioner Versus 1. The Principal Commissioner of Income Tax, Ranchi, having his office at 8th Floor, Central Revenue Building (Annexe), 5A, Main Road, P.O. – G.P.O., P.S. – Chutiya, Ranchi – 834001, Jharkhand 2. The Income Tax Officer, Ward – 3 (1), Bokaro, having its office at Income Tax Office, Sector – 1, Bokaro Steel City, P.O. & P.S. – Bokaro Steel City, Bokaro – 827001, Jharkhand. 3. The National Faceless Assessment Center, having its office at 4th Floor, Mayur Bhawan, Connaught Lane, P.O. & P.S. – Connaught Place, New Delhi – 110001. ... Respondents --------------- CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY For the Petitioner : Mr. Nitin Kumar Pasari, Advocate For the Respondents : Mr. Anurag Vijay, SC (Income Tax) --------------- 29th January 2024 Per, Shree Chandrashekhar, A.C.J. The petitioner is aggrieved by the final order of assessment passed on 28th March 2023 vide DIN: ITBA/AST/S/147/2022- 23/1051538698(1) and the consequent demand notice dated 28th March 2023 contained in DIN-ITBA/AST/S/156/2022-23/1051539284(1). 2. In the above context, the petitioner has also challenged the very basis for issuing notices under sections 148 and 148-A of Income Tax Act, 1961. 3. The petitioner has made the following prayers: “a. For issuance of an appropriate writ, order or direction for quashing and setting aside the Order of Assessment dated 28.03.2023 bearing DIN: ITBA/AST/S/147/2022-23/1051538698(1) (Annexure- 12) along with Notice of Demand 28.03.2023 bearing DIN- ITBA/AST/S/156/2022-23/1051539284(1) (Annexure-13)both being vague, cryptic and unreasonable; b. For issuance of an appropriate writ, order or direction for quashing and setting aside the Penalty Notices issued under Section 270A, 271A and 271B of the Act, all dated 29.03.2023 bearing DIN: ITBA/PNL/S/270A/2022-23/1051535419(1)(Annexure-14), ITBA/ PNL/S/271A/2022-23/1051535420(1)(Annexure-15) and ITBA/ PNL / S/271B/2022-23/1051535370(1) (Annexure-16) respectively; 2 W.P.(T) No. 2670 of 2023 c. For issuance of an appropriate writ, order or direction for quashing and setting aside the Order passed by Respondent No. 2 purportedly under Section 148A(d) dated 29.03.2022 bearing DIN ITBA/AST/F/148A/2021-22/1041896525(1) (Annexure-4) and Notice issued under Section 148 of the Income-tax Act, 1961, dated 29.03.2022 bearing DIN ITBA/AST/S/148_1/2021-22/ 1041938561(1) (Annexure-5); d. For issuance of an appropriate writ, order or direction for quashing and setting aside the Notice under Section 148A(a) of the Act dated 11.03.2022 bearing DIN ITBA/AST/F/17/2021-22/1040617942(1) (Annexure-1) and Notice under Section 148A(b) of the Act dated 22.03.2022 bearing DIN ITBA/AST/F/148A(SCN)/2021- 22/1041212932(1) (Annexure-3) respectively for being beyond jurisdiction; e. For issuance of any other appropriate writ(s)/ order(s)/ direction(s) as Your Lordships may deem just and proper in the facts and circumstances of the case for imparting substantial justice to the Petitioner.” 4. A counter affidavit filed on behalf of the Revenue has been placed on record. 5. At the outset, Mr. Anurag Vijay, the learned counsel for the Revenue has raised an objection to maintainability of the present writ petition on two-fold grounds. The learned counsel would submit that a notice issued by the statutory authority cannot be challenged in a writ proceeding except on the grounds that (a) the notice is illegal or (b) the notice is without jurisdiction. The learned counsel for the Revenue further submits that the petitioner has an efficacious remedy of appeal under section 246 of the Income Tax Act, 1961 to challenge the order of assessment dated 28th March 2023. 6. The petitioner has pleaded that she is running a proprietary concern in the name and style of M/s Renu Raj Enterprises which is engaged in the trade of iron and steel. For the assessment year 2018-19, a notice dated 11th March 2022 under section 148-A(a) of the Income Tax Act, 1961 was issued to her. The said notice was issued to her on the ground that informations were received from the office of ADIT (Investigation), Jamshedpur on the basis of which an inquiry has been initiated against her. According to the petitioner, the notice dated 11th March 2022 was in the teeth of section 148-A which provides that the assessee shall be given time not less than 7 days for reply. The petitioner further states that the informations which were received by the Income Tax Department was under scrutiny before this Court in WP(T) No. 94 of 2021. Notwithstanding that, another notice was issued to her on 22nd March 2022 under section 148-A(b) requiring her to show cause 3 W.P.(T) No. 2670 of 2023 why a notice under section 148 not be issued on the ground that bogus sales bills were issued to M/s Sidhi Vinayaka Metal & Salt Company Private Limited and M/s P.K. Traders without movement of goods. However, before a reply could be made by the petitioner, an order under section 148-A(d) was passed on 29th March 2022. Consequently, a notice dated 29th March 2022 was also issued under section 148 requiring her to furnish a return of income within 30 days of receipt of the notice. To the utter surprise of the petitioner, she was served another notice on 27th October 2022 under section 142(1) which was objected to by a reply dated 7th November 2022. 7. The case set-up by the petitioner is that there can be no second proceeding for the same period and on the same issue which was the basis for the previous proceeding in which a final order passed on 20th April 2021 and the said order is a subject matter of challenge in Appeal No. NFAC/2017-18/10081359. Even so, a show cause notice under section 147 was issued on 1st March 2023 requiring the petitioner to show cause as to why the proposed variation should not be made and assessment should not be completed accordingly. This is the case pleaded by the petitioner that objection put-forth by her through reply dated 3rd March 2023 was not considered by the Assessing Officer. Furthermore, the order passed in WP (T) No. 94 of 2021 whereby the proceedings initiated and demand of tax imposed by the GST Department were quashed by the High Court. This fact has also been highlighted to lay a challenge to the purported second round of proceedings on the ground that the very basis, that is, the informations received from ADIT (Investigation) no longer exists. 8. The Assessing Officer has passed an assessment order on 28th March 2023 whereby Rs. 18,14,38,820/- has been added to the total income and demand notice of even date was issued. 9. The main grounds to challenge the assessment order dated 28th March 2023 and the penalty notices issued under sections 270(A), 271(A) and 271(B) all dated 29th March 2023 are pleaded in paragraph no. 17 of the writ petition, as under: “17. At this juncture it is most pertinent to mention at this stage that, for the period in question i.e., the Assessment Year 2018-19 corresponding to Financial year 2017-18, the Appellant Assessee 4 W.P.(T) No. 2670 of 2023 had filed e-return on 26.03.2019 which was selected for scrutiny in terms of section 143(2) of the Act and for which notices were issued along with detailed questionnaire which were duly replied by the Appellant Assessee and the proceedings was completed, invoking best judgment assessment, wherein the Ld. Assessing Officer added back an amount of Rs. 18,02,29,508/- to the total income of the Appellant Assessee by estimating gross profit @ 8% of total turnover vide order dated 20.04.2021 against which the petitioner has already preferred an appeal before the Commissioner of Income Tax (Appeals) way back on 18.08.2021 and subsequently, initiated penalty proceedings under sections 270A, 271A and 271B, against which appeal has been preferred before the Income Tax Appellate Tribunal on 12.04.2023.” 10. The scheme of the Indian Income Tax Act, 1961 indicates that the determination of facts and of law is entrusted to the Income Tax Officers and to question the assessment otherwise than by the use of machinery contemplated thereunder shall be incompatible with the scheme of the Act. 11. In “CIT Vs. Chhabil Dass Agarwal (2014) 1 SCC 603 the Hon’ble Supreme Court held that the Income Tax Act provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper order passed by the revenue authorities. 12. The learned counsel for the Revenue has relied on the judgment in “Anshul Jain Vs. Principal Commissioner of Income Tax and another” 2022 SCC OnLine SC 1756. 13. The powers exercised by the writ Court under Article 226 of the Constitution of India are plenary in nature. It is now well-settled that a technical objection or technicality of any nature shall not be an obstruction in exercise of such powers by the writ Court, except the self- imposed restriction by the writ Court. However, this is also too well- settled that it shall be a sound exercise of judicial discretion if the writ Court keeps in mind the statutory remedy to the aggrieved person and declines to entertain the petition. This restriction is followed by the writ Courts with more rigors in the matters relating to fiscal matters. Furthermore, in a catena of judgments, the Hon’ble Supreme Court has indicated that without a pre-deposit as provided under the statute for preferring an appeal or for seeking an order of stay, the writ petition shall not be entertained. Recently, in the context of Micro, Small and 5 W.P.(T) No. 2670 of 2023 Medium Enterprises Development Act, 2006, the Hon’ble Supreme Court has held that without pre-deposit of 75% of the awarded amount as provided under section 19 of Micro, Small and Medium Enterprises Development Act, 2006 the writ petition was not maintainable [refer, Order dated 6th November 2023 in Civil Appeal No. 7491 of 2023 titled “M/s India Glycols Limited Vs. Micro and Small Enterprises Facilitation Respondents Council, Medchal – Malkajgiri”]. Under the Income Tax Act, there is a similar provision for deposit in cases where the assessee seeks an order of stay. 14. Secondly, this is also no longer in the realm of doubt that a notice issued by a statutory authority cannot be made the subject matter of challenge before the writ Court. The assessing officer who issued the notice under sections 148 and 148-A of Income Tax Act, 1961 is the authority vested with the power to issue a notice under these provisions. However, the plea put forth by the petitioner is that the notice under section 148-A has been issued in breach of natural justice inasmuch as no opportunity of hearing was provided to the assessee. On this issue, all that we intend to indicate is that the requirements of natural justice are not inflexible and its applicability shall be determined on the basis of the facts in each case. 15. In “Union of India Vs. Kunisetty Satyanarayana” (2006) 12 SCC 28 the Hon’ble Supreme has observed as under: “13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge-sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board v. Ramesh Kumar Singh, Special Director v. Mohd. Ghulam Ghouse, Ulagappa v. Divisional Commr., Mysore, State of U.P. v. Brahm Datt Sharma, etc. 14. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show- cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ petition lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance. 15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge-sheet. 16. No doubt, in some very rare and exceptional cases the High Court 6 W.P.(T) No. 2670 of 2023 can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter.” 16. In the counter-affidavit, the Revenue has taken a specific objection that the previous assessment for the assessment year 2018- 2019 would clearly indicate that some part of entries made by the assessee for the financial year 2017-2018 were found not genuine and expenses incurred thereon were disallowed under section 40-A(3) of the Income Tax Act, 1961; details thereof have been provided in the assessment order itself. Mr. Anurag Vijay, the learned counsel for the Revenue would submit that the notice under section 148 and the subsequent proceedings by issuing the notice under section 148-A(a) have been issued on the basis of informations provided by the Commercial Taxes Department, Jharkhand in course of a search at the premises of M/s Sidhi Vinayaka Metal & Salt Company Private Limited and M/s P.K. Traders. According to the Revenue, this has been found that bogus sales bills were issued to these companies and they had mutually indulged in the bogus transactions to suppress their gross profit. 17. However, we refrain from making any observation on the merits of the matter as the petitioner may prefer an appeal against the order of assessment dated 28th March 2023 and would clarify that the present writ petition has been dismissed on the ground that the petitioner has efficacious remedy under the Income Tax Act, 1961. 18. W.P.(T) No.2670 of 2023 is dismissed. (Shree Chandrashekhar, A.C.J.) (Anubha Rawat Choudhary, J.) Saurav/ - "