SANTOSH SONI V. UNION OF INDIA

CW/14084/2021

AI Insights

The case involves Santosh Soni, the proprietor of M/s Mahalaxmi Jewellers, who challenged an assessment order passed by the Income Tax Department under Section 143(3) of the Income Tax Act, 1961. The assessment was based on documents impounded during a survey at her business premises. The petitioner argued that the assessment was made without providing her copies of the impounded documents and without a personal hearing, thus violating the principles of natural justice. The respondents contended that the petitioner had been given multiple opportunities to respond but failed to provide satisfactory explanations. The court found that the respondent did not adequately address the petitioner's requests for documents and a personal hearing, leading to the quashing of the assessment order.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 725534 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 28-11-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K K BISSA
• Assessee Lawyers: SHARAD KOTHARI; MAYANK TAPARIA
• Keywords: Assessment Order; Impounded documents; Income Tax; Natural Justice; Quashed summons
• Section: 143(3); 142(1); 156; 131(1A); 133-A

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 14084/2021 Santosh Soni W/o Shri Rajendra Verma, Aged About 47 Years, Proprietor Of M/s Mahalaxmi Jewellers, Resident Of Sunaron Ka Bas, Ghoron Ka Chowk, Jodhpur. ----Petitioner Versus 1. Union Of India, Through Secretary Finance, Ministry Of Finance, North Block, New Delhi 110001. 2. Principal Commissioner Of Income Tax, Central Circle Jaipur, Jaipur. 3. Deputy/assistant Commissioner Of Income Tax, Central Circle-2, Aaykar Bhawan, Paota, Jodhpur. ----Respondents For Petitioner(s) : Mr. Sharad Kothari with Mr. Mayank Taparia For Respondent(s) : Mr. K.K. Bissa HON'BLE THE CHIEF JUSTICE MR. PANKAJ MITHAL HON'BLE MR. JUSTICE DINESH MEHTA Order 28/11/2022 1. The present writ petition preferred under Article 226 of the Constitution of India impugns the assessment order dated 28.09.2021, which has been passed by the respondent No. 3 under the provisions of Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act of 1961”). 2. The facts relevant for the purpose of present petition are that a survey under Section 133(A) of the Act of 1961 was conducted at the business premises of the petitioner on 01.03.2019 and various documents were impounded and her statements were recorded. A summons under Section 131(1A) of (2 of 8) [CW-14084/2021] the Act of 1961 was thereafter issued to the petitioner on 05.03.2019. 3. The petitioner preferred a writ petition challenging the summons dated 05.03.2019, in which the respondent – Income Tax Department filed a reply and took a plea that due to inadvertence, wrong provision had been mentioned in the summons. The petitioner’s writ petition came to be allowed vide order dated 23.04.2019 and impugned summons was quashed. The respondents were, however, given a liberty to take appropriate proceedings against the petitioner in accordance with law. 4. Petitioner did not hear anything until, the respondent No. 3 issued a notice under Section 142(1) of the Act of 1961 on 13.02.2021 and called upon her to furnish various information by 19.02.2021. 5. Though, a detailed reply along with desired information was submitted but the respondent No. 3 remained dissatisfied and issued a series of notices to the petitioner, which were duly complied with. 6. Lastly, a notice dated 27.09.2021 came to be issued to the petitioner calling upon her to furnish information as per the annexure enclosed with the notice by 4.50 p.m. on 28.09.2021, According to the petitioner, the same was sent late night at 9.37 p.m. and on receipt of the notice aforesaid, the petitioner responded by email dated 27.09.2021 and contended that in absence of the information regarding contentious documents and copies thereof, the petitioner would not be in a position to furnish clarification/information. (3 of 8) [CW-14084/2021] 7. The respondent No. 3 thereafter proceeded to pass the assessment order dated 28.09.2021 and assessed the petitioner’s income at Rs. 3,00,17,581/- and created a huge demand of Rs.3,05,50,996/-. A demand notice of even date under Section 156 of the Act of 1961 came to be issued to the petitioner. 8. Feeling aggrieved of the above assessment order dated 28.09.2021, the petitioner has approached this Court invoking its extraordinary writ jurisdiction and surpassing the statutory remedy of appeal on the premise that impugned assessment order has been passed in violation of the principles of natural justice and thus, her case falls within the exceptions carved out by Hon’ble the Apex Court. 9. Mr. Bissa, learned counsel for the respondent - Income Tax Department at the outset raised objection about maintainability of the writ petition and contended that the petitioner has wrongly invoked writ jurisdiction of this Court. He argued that since an efficacious remedy of appeal under the provisions of Section 246(A) of the Act of 1961 is available, the petitioner cannot maintain the present petition. 10. It was emphatically submitted by learned counsel for the respondents that as many as four notices were issued/served upon the petitioner and as she failed to file satisfactory explanation/response pursuant to notice dated 27.09.2021, the Assessing Officer was left with no option but to pass the assessment order as the matter was getting time barred (on 30.09.2021). 11 Mr. Kothari, learned counsel for the petitioner responded to the preliminary objection by submitting that exercise of writ jurisdiction is a discretion of the Court and in the present factual (4 of 8) [CW-14084/2021] matrix, when the infraction of principles of natural justice is writ large, the High Court should use such discretion in petitioner’s favour instead of non-suiting her on the ground of availability of alternative remedy. 12. Navigating the Court through the proceedings and more particularly, the assessment order, Mr. Kothari highlighted that after acceptance of petitioner’s earlier writ petition on 23.04.2019, the respondent No. 3 came into action only on 13.02.2021 and even after receiving the reply, the Assessing Officer went in hibernation for seven months and came into action on 13.09.2021. 13. He argued that indisputably, in response to all the subsequent notices i.e. 19.09.2021, 26.09.2021 and 27.09.2021, the petitioner had timely responded and that in reply/response so filed, the petitioner had prayed that copies of impounded documents etc. be provided so that she can file proper reply/explanation to the queries raised by the department, yet nothing was done by respondent No. 3. 14. Learned counsel elaborated his stand by expressing his concern that on receipt of notice dated 27.09.2021, the petitioner again made request to provide copies of the impounded documents and also prayed that personal hearing be provided but the respondent No. 3 turned a blind eye towards such requests and has proceeded to pass the assessment order, whereby a huge demand of tax, interest & penalty has been slapped against the petitioner. 15. Learned counsel invited Court’s attention towards the Notes on E-proceedings (Page 35 of the paper book) to buttress his contention that even in case of e-proceedings, hearing may be (5 of 8) [CW-14084/2021] conducted manually in a case, where provision under Section 131 of the Act of 1961 has been invoked. 16. Having invited the Court’s attention towards factual matrix of the case, learned counsel submitted that if the petitioner is relegated to avail the remedy of appeal, she would be required to comply with the condition of depositing 20% of the demand as a condition of maintainability of appeal and the same would render the remedy of appeal as illusory, rather, impossible. 17. Heard learned counsel for the parties and perused the material on record. 18. There is no gain saying of the fact that the proceedings initiated against the petitioner vide summons dated 05.03.2019 in furtherance of the survey that was held on 01.03.2019, has been quashed by a Single Bench of this Court vide its judgment and order dated 23.04.2019. 19. While quashing the earlier summons, this Court had granted liberty to the respondents to take up fresh proceedings in accordance with law. Since April, 2019 upto 13.02.2021, respondent No. 3 simply slept over the matter. It is noteworthy that in response to notice dated 13.02.2021 along with questionnaire appended therewith, the petitioner had filed reply/written submissions on 19.02.2021 and while joining the issue parawise detailed reply/explanation, she had requested that scanned copies of the impounded documents be provided to her. 20. It is also to be noted that in her reply dated 17.09.2021, the petitioner had requested to provide reasonable opportunity of being heard but, the respondent No. 3 neither provided the copies of the impounded documents nor has he chosen to hear the petitioner personally. (6 of 8) [CW-14084/2021] 21. It is also undisputed fact that impugned proceedings emanated from a survey conducted at petitioner’s business premises, during which various documents were impounded. The assessment in question is essentially based on such incriminating material/evidence, which were purportedly unearthed during the survey proceedings. 22. The proceedings kick-started against the petitioner by way of summons dated 05.03.2019 came to be quashed by a Single Bench of this Court vide judgment and order dated 23.04.2019 passed in petitioner’s writ petition (S.B. Civil Writ Petition No. 4585/2019). Though, a liberty was granted to the respondents, but no proceedings worth the name were undertaken by the respondent No. 3 for considerable period of 2 years and first notice came to be issued as late as on 13.02.2021. 23. The petitioner has made compliance of the notice so issued on 13.02.2021 by way of filing parawise reply on 19.02.2021. The respondent No. 3 thereafter rested on his oars. 24. It was only on 13.09.2021, the respondent No. 3 resumed the proceedings. The said notice was duly responded by the petitioner and the same was followed by another identical notice dated 26.09.2021 requiring the petitioner’s response on the very next date i.e. 27.09.2021. On 27.09.2021, though the respondent No. 3 had received the petitioner’s request/reply, he again issued a notice requiring the petitioner to appear and furnish above information on 28.09.2021 by 4.50 p.m. 25. Even on 28.09.2021, the petitioner requested to adjourn the hearing and provide copies of the documents and accord opportunity of personal hearing, but the same was not acceded to. (7 of 8) [CW-14084/2021] 26. A perusal of the notes on e-proceedings reveals that in case of proceedings under Section 131 of the Act of 1961, a manual hearing may take place. In the facts of the present case, when the assessment proceedings were triggered in furtherance of a survey conducted at petitioner’s business premise, during which various incriminating material was found against the petitioner and documents were impounded, it was incumbent upon the respondent No. 3 to have atleast provided copies of the impounded documents so as to enable her to defend her case. 27. It is a matter of great concern that such genuine request of the petitioner has not been heeded to by the respondent No. 3 let alone providing personal hearing. 28. In our opinion, the respondent No. 3 has passed the impugned order in flagrant violation of the principles of natural justice, which are fundamental to the rule of law. 29. It is a settled proposition of law that grant of opportunity of hearing is not an empty formality. In the present case, respondents’ stand that opportunity of hearing was afforded to the petitioner, is not correct – such opportunity is a farce. Issuance of notices dated 13.09.2021, 19.09.2021, 26.09.2021 & 27.09.2021 by the respondent No. 3 is like reinventing the wheel. 30. The impugned assessment order dated 28.09.2021 which has been passed in utter disregard to the principles of natural justice, clearly falls foul to Article 14 of the Constitution of India. The same deserves to be and is hereby quashed. 31. Having regard to the telling facts and considering the issue flagged by the respondent No. 3 and the notes on e-proceedings, we deem it proper to direct the respondent No. 3 to provide (8 of 8) [CW-14084/2021] opportunity of personal hearing to the petitioner, after providing copies of the desired documents. 32. The respondent No. 3 is directed to provide scanned copies of the impounded documents and other documents to the petitioner within a period of 7 days from today. 33. While providing copies of the documents, the respondent No. 3 would allow atleast 7 days time to the petitioner to file her explanation / reply to the questionnaire/notice. On receipt of the documents/reply, the respondent No. 3 shall provide personal hearing to the petitioner and her authorised representative/ counsel and finalize the proceedings within a period of 15 days. 34. With the directions aforesaid, the writ petition stands allowed. 35. The stay application also stands disposed of accordingly. (DINESH MEHTA),J (PANKAJ MITHAL),CJ 46-Inder/- "