M/S SCANIA STEELS AND POWER LIMITED V. UNION OF INDIA

WPT/64/2023

AI Insights

The case involves M/s Scania Steels and Powers Limited, which challenged the validity of an order and notice issued under Sections 148A(d) and 148 of the Income Tax Act, 1961, respectively. The petitioner argued that the respondent-department failed to provide necessary information and material relied upon for the issuance of these orders, as mandated by a CBDT circular and a Supreme Court judgment. The respondents did not contest the absence of this information during the proceedings. The court found procedural lapses in the issuance of the notice and order, leading to the decision to quash them and remand the case for re-evaluation in accordance with legal standards.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 685000 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 09-05-2023
• Assessment Year: misc
• Other Referred Cases: Union of India vs. Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961, Companies Act, 2013
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AJAY KUMRANI
• Assessee Lawyers: APURV GOYAL
• Keywords: Central Board of Direct Taxes; Procedural irregularities; Quashing of order; Show cause notice; Supreme Court judgment
• Section: 148; 148A(b); 148A(d)

Judgement Text

" 1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR WPT No. 64 of 20 23 • M/s Scania Steels and Powers Limited. A Company Registered under Companies Act, 2013, through its Director Sanjay Gadodia having its registered officer at 22-KM Mile Stone, Village Punjipatra, Gharghoda Road, Raigarh, Chhattisgarh. ------Petitioner VERSUS 1. Union of India through its Secretary, Ministry of Finance, (Department of Revenue), No. 137, North Block, New Delhi-110001. 2. Assistant Commissioner of Income Tax Central Circle-1 (1), Aayakar Bhawan, Vyapar Vihar, Bilaspur, Chhattisgarh. 3. Joint Commissioner of Income Tax Range-1, Bilaspur Mahima Complex, Income Tax Office, Vyapar Vihar Road, Bilaspur, Chhattisgarh. 4. Deputy Commissioner of Income Tax Circle-1 (1), Shriram Plaza, Vyapar Vihar, Bilaspur, Chhattisgarh. -------Respondents (cause title is taken from Case Information System) For Petitioner : Mr. Apurv Goyal, Advocate For Respondents : Mr. Ajay Kumrani, Advocate on behalf of Mr. Amit Choudhary, Advocate Single Bench: Hon'ble Shri Parth Prateem Sahu, Judge ORDER 09 /05/2023 1. Petitioner has filed this writ petition seeking following reliefs. “10.1 That, this Hon’ble Court may kindly be pleased to issue a writ/writs, direction/ directions, order/orders quashing the impugned order dated 27.07.2022 issued by Respondents under Section 148A(d) of the Act and proceedings initiated pursuant thereto; 10.2 That, this Hon’ble Court may kindly be pleased to issue a writ/writs, direction/ directions, order/orders quashing the notices dated 27.07.2022 and 27.07.2022 issued by respondents under Section 148 of the Act and proceedings initiated pursuant thereto; 10.3 That, this Hon’ble Court may kindly be pleased to grant any other relief(s), which is deemed fit and proper in the aforesaid facts and circumstances of the case. 2 2. Learned counsel for petitioner submits that the petitioner is a company registered under the provisions of Companies Act, 2013. Petitioner was served with a show-cause notice under Section 148 of the Income Tax Act, 1961 (henceforth “Act of 1961) dated 28.06.2021. During pendency of proceedings under Section 148 of the Act, Hon’ble Supreme Court delivered a judgment in the case of Union of India vs. Ashish Agarwal reported in (2023) 1 SCC 617; (2022) 444 ITR 1 SC and pursuant to that petitioner was served with a notice under Section 148A(b) of the Act of 1961 mentioning as to why the order under Section 148A(d) of the Act be not passed. Petitioner submitted response to the show-cause notice under Section 148A(b) and made demand of books of account and other documents as evidence which was not responded by the respondent-department and thereafter on the same day petitioner again sent a reminder request that was also not responded and therefore petitioner was forced to submit a third reminder on 18.06.2022 reminding the dictum of Hon’ble Supreme Court and also provisions of Act of 1961. Respondent-authority without responding to the request letter of the petitioner and supplying the information and material passed the order under Section 148A(d) of the Act 1961 on 27.07.2022 and has issued a notice under Section 148 of the Act of 1961. He contended that the Central Board of Direct Taxes issued a circular/ instructions dated 01.08.2022 for issuance of notice under Section 148 of the Act directing the Assessing Officer to enclose copy of all the relevant information available on which reliance is being placed along with supporting documents if any which was also not followed and therefore the notice issued was bad in law. The order passed under Section 148A(d) of the Act of 1961 and consequent notice under Section 148 be quashed. 3. Learned counsel for respondents opposes the submission of learned counsel for petitioner and submits that notice under Section 148 of the 3 Act of 1961 was issued and thereafter order under Section 148A(d) was passed. There is no procedural irregularities in passing the order. He however does not dispute the submission of learned counsel for petitioner that along with notice under Section 148A(b) was not supplied the information and the material relied upon by the Revenue, as per his oral instructions received from the respondent-department. 4. I have heard learned counsel for the parties and also perused the record. 5. Petitioner has taken the specific ground that the petitioner was not served with the information and material relied upon by the Revenue along with notice under Section 148A(b) of the Act of 1961. This submission is not opposed by the counsel for respondent-department. The Circular/ instructions dated 01.08.2022 issued by the Central Board of Direct Taxes (CBDT) is extracted below for ready reference: “enclose copy of all the relevant information” * available on which reliance is being placed, along with supporting documents (if any). In the cases where information is received from the Investigation Wing or any other law enforcement agency, details of letter, brief summary of information along with relevant portion of such report and details of relied upon documents may be enclosed. Such a portion as does not bear reference to the assessee concerned may be appropriately redacted. Details of enquiry conducted, if any, be shared if reliance is being placed by the AO on it. Judicial order (ie. case laws) on which reliance is being placed, if any.” 6. Hon’ble Supreme Court in the case of Ashish Agrawal (supra), has further observed with regard to procedure to be followed by the respondent-department for issuance of notice under Section 148A(b), relevant portion(s) of the said judgment is reproduced below. “28. In view of the above and for the reasons stated 4 above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: 28.1 The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the showcause notices within two weeks thereafter; 28.2 The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure vis àvis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. 28.3 Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; 28.4 The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); 28.5 All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.” 7. In view of the specific grounds taken by the learned counsel for petitioner, the instruction/ guidelines issued by the CBDT on 01.08.2022 and the decision of Hon’ble Supreme Court in the case of Ashish Agrawal (supra) and considering the submission of counsel for petitioner that information and material relied upon by Revenue was not supplied to petitioner is not disputed by counsel for respondent, I am 5 inclined to allow this writ petition. 8. Accordingly this writ petition is allowed and the order Annexure P-1 dated 27.07.2022 passed under Section 148A(d) as also the notice issued under Section 148 of the Act of 1961 are hereby quashed. The matter is remitted back to Respondent No. 2 for passing the orders afresh, in accordance with law, on the notice under Section 148A(b) of the Act after supplying all the relevant materials and information in terms of guidelines dated 01.08.2022 issued by CBDT and keeping in mind the observation made by Hon’ble Supreme Court in Ashish Agrawal (supra). 9. Writ petition is disposed of with the aforesaid observation and direction. Sd/- (Parth Prateem Sahu) Judge /pāwān "