SHREE CEMENT LIMITED V. THE DEPUTY COMMISSIONER OF INCOME TAX

CW/7702/2023

AI Insights

The case involves Shree Cement Limited, which filed a writ petition against the Deputy Commissioner of Income Tax and the Principal Commissioner of Income Tax, challenging the reassessment proceedings initiated for the Assessment Year 2019-2020. The petitioner contested the validity of the reassessment notice issued under Section 148-A(b) of the Income Tax Act, 1961, claiming that the proceedings were based on incorrect information and that their objections were not adequately considered. The court found that the objections raised by the petitioner were not addressed and that the material relied upon for the reassessment was not properly disclosed to the petitioner, leading to the setting aside of the impugned order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 671928 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 20-02-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SIDDHARTH BAPNA; MEHYUL MITTAL
• Assessee Lawyers: SANJAY JHANWAR; RAJAT SHARMA; AKSHAY SHARMA
• Keywords: Income Tax; Objections; Reassessment; Show cause notice; Suspicion; Material
• Section: 148A; 148(A)(b)

Judgement Text

"[2025:RJ-JP:7695-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 7702/2023 Shree Cement Limited, Having Its Office At Bangur Nagur, Andheri Deori, Masuda Road, Beawar, Ajmer- 305901, Rajasthan Through Its Joint President Shri Arvind Khicha S/o Shri Indermal Khicha, Aged About 58 Years R/o 5-6, Nanesh Nagar, Near Jawahar Bhawan, Vinod Nagar, Beawar, Rajasthan- 305901. ----Petitioner Versus 1. The Deputy Commissioner Of Income Tax, Acit/ Dcit Circle 2, Cr Building, Opp. Sessions Court, Jaipur Road, Ajmer, Rajasthan-305001. 2. The Principal Commissioner Of Income Tax, Udaipur, Rajasthan-313002. ----Respondents For Petitioner(s) : Mr. Sanjay Jhanwar, Sr. Adv. assisted by Mr. Rajat Sharma & Mr. Akshay Sharma For Respondent(s) : Mr. Siddharth Bapna with Mr. Mehyul Mittal HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE ASHUTOSH KUMAR Order 20/02/2025 AVNEESH JHINGAN, J.[ORAL]:- 1. This petition is filed seeking quashing of the order dated 17.04.2023 passed under Section 148-A(b) of the Income Tax Act, 1961 (for short ‘the Act’). 2. The relevant facts are that the petitioner-Company filed the returns for the Assessment Year 2019-2020. A notice dated 27.03.2023 under Section 148-A(b) was issued annexing the reasons for initiating reassessment proceedings. The petitioner [2025:RJ-JP:7695-DB] (2 of 8) [CW-7702/2023] filed objections dated 11.04.2023 filed by petitioner were rejected vide order dated 17.04.2023. Hence, the present petition. 3. Learned senior counsel for the petitioner submits that the initiation of the reassessment proceedings is on the basis of suspicion. In the chain made out by the Investigation Wing, relying upon the information from the Goods and Services Tax department, the transactions by one of the dealers was found doubtful. The contention is that there is no material for initiating the reassessment proceedings. 3.1 The grievance is that the petitioner in the objections had specifically stated that the information received by the department is wrong. As per the department, petitioner made purchases from Mr. Saswata Bhattacharya of Rs.1,45,45,088/- and of Rs.10,23,309/- from Mr. Sunil Sharma, whereas as per returns of the petitioner, the purchases were of Rs.8,26,000/- (including GST) from Mr. Saswata Bhattacharya and Rs.9,66,912/- (including GST) from Mr. Sunil Sharma. 3.2 The argument is that the material relied upon by the department for arriving at the figures mentioned in the notice was demanded but without supplying the material and dealing with the objections raised, the impugned order passed. 4. Learned counsel for the respondents submits that the information was received from the Investigation Wing and the figures were taken from the inside portal. Provisions & Guidelines: Section 148A: [Conducting inquiry, providing opportunity before issue of notice under section 148. [2025:RJ-JP:7695-DB] (3 of 8) [CW-7702/2023] The Assessing Officer shall, before issuing any notice under section 148:- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee,[***], by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or [2025:RJ-JP:7695-DB] (4 of 8) [CW-7702/2023] (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.] Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.] [Prior approval for assessment, reassessment or recomputation in certain cases.” Relevant clauses of guidelines dated 01/08/2022 for issuance of notice u/s 148 of the Act. xxxxxxxxxxxxxxxxxxxxxx “iv. The “specified authority” for the seeking approval for conducting enquiry u/s 148A(a), passing order u/s 148A(d) and issuance of notice u/s 148 shall be: Specified Authority for sanction for issue of notice u/s 148, 148A(a) and 148A(d) Time limit (Calculated from the end of the relevant AY) PCIT or PDIT or CIT or DIT (ref. Section 151(i) Upto 3 years -PCCIT or PDGIT or- where there is no PCCIT or PDGIT then approval from CCIT or DGIT (ref. Section 151(ii)) More than 3 years but upto 10 years v. Explanation 2 to section 148 of the Act provides that if a survey u/s 133A of the Act (other than under section 133A (2A)) was conducted in the case of the assessee on or after 1 April, 2021, the Assessing officer shall be deemed to have information which [2025:RJ-JP:7695-DB] (5 of 8) [CW-7702/2023] suggests that income chargeable to tax has escaped assessment. However, it is to clarify that the due procedure as prescribed u/s 148A needs to be followed in such cases also before issuing a notice u/s 148 of the Act. (refer proviso to section 148A). vi. The AO shall, if required, undertake enquiries on any \"information\" received/available with him which suggests that the income chargeable to tax has escaped assessment in a previous year only with the prior approval of \"specified authority\". vii. If the result of enquiry/information available suggests that the income chargeable to tax has escaped assessment, the AO shall provide an opportunity of being heard to the assessee by issuing a show cause notice u/s 148A(b) of the Act. The said notice shall provide between 7 to 30 days' time to the assessee for submitting the reply. A template of show cause notice is enclosed at Annexure-A1 viii. If an assessee requests for a personal hearing, the same may be dealt with following the principle of natural Justice by giving a reasonable period for compliance of notice specifying the date of hearing. ix. As per 3rd proviso to section 149, for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded. x. Further as per 4th proviso to Section 149, where immediately after exclusion of the period referred to in the immediately preceding proviso (i.e. 3rd proviso), the period of limitation available to the Assessing Officer for passing an order under clause (d) of Section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. xi . The AO has to consider the reply of assessee furnished, if any, in response to the show cause notice referred to in clause(b) of Section 148A before passing the order u/s 148A(d). xii . The AO shall mandatorily pass a speaking order u/s 148A(d) in all cases with the 'prior approval of the specified authority' (Annexure-A2) for such order u/s. 148A(d), expect in the cases covered in Para 2.1 [2025:RJ-JP:7695-DB] (6 of 8) [CW-7702/2023] (iii) above of these guidelines, irrespective of whether issuance of notice u/s 148 is being recommended or not. A template of such order u/s. 148A(d) is enclosed at Annexure-A3. xiii. Once an order under clause(d) of Section 148A has been passed, no further approval is required for issuance of notice u/s 148 by the AO, with effect from 1.4.2022.* (* except for cases in which procedure under Section 148A is being applied for implementation of the Hon’ble Supreme Court’s judgment in the case of UOI Vs. Ashish Agarwal (2022 SCC Online SC 543) dated 4.5.2022 for which specific instruction dated 11.5.2022 has been issued”). Annexure-A1 is reproduced hereinbelow:- GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE -------------- (Designation of AO along with Office address) To, PAN: A.Y: Dated: DIN* & NoticeNo. Notice under clause (b) of Section 148A of the Income-tax Act, 1961 Sir/Madam/M/s 1. Whereas I have information which suggests that income chargeable to tax for the Assessment Year __________ has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. The details of the information/enquiry conducted on which reliance is being placed, along with supporting documents, are enclosed with this notice. 2. You are required to show-cause as to why, in view of the details contained in enclosures mentioned in point number 1 above, a notice under Section 148 of the Income Tax Act, 1961 should not be issued. 3. You may submit your reply to this notice, along with supporting documents (if any) on the above mentioned issues on or before _______ electronically at www.incometax.gov.in. [2025:RJ-JP:7695-DB] (7 of 8) [CW-7702/2023] Guidelines for Enclosures • The AO should 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, may be shared if reliance is being placed by the AO on it. • Judicial order (i.e., case laws) on which reliance is being placed, if any. Refer Explanation 1 and Explanation 2 of Section 148 for what constitutes “information”. Analysis and Conclusion: 5. Section 148A of the Act stipulates that before initiating the proceedings under Section 148 of the Act, with prior approval of the specified authority the A.O. if so required, may conduct an enquiry with regard to the information suggesting escaped assessment. The assessee is to be provided an opportunity of hearing by issuing notice specifying the date of not less than seven days but not exceeding thirty days, which may be extended on application. The information relied upon for reassessment and outcome of enquiry if conducted any, is to be supplied. In case of information having been received from investigating wing or other agency, brief summary of information along with relevant portion of report and details of documents relied upon is to be supplied. The decision that if it is a fit case for issuance of notice under Section 148 is to be taken with prior approval of the specified authority, on the basis of material available on record and after considering the reply filed by the assessee. The order is to be passed within one month from ending of the month when reply [2025:RJ-JP:7695-DB] (8 of 8) [CW-7702/2023] was filed and in case no reply was filed within one month from end of month when time to file reply expires. 6. The proviso to Section 148A of the Act provides exception to the applicability of Section 148A of the Act.” 7. From perusal of the impugned order, it is forthcoming that the objections raised by the petitioner-Company have not been dealt with. The request for supplying the material was not considered. 8. The impugned order is set aside and the matter is remitted back to respondent No.1 to pass the order afresh after dealing with the objections raised by the petitioner. The writ petition is allowed. 9. In order to avoid further delay, let petitioner through his representative appear in the office of the respondent No.1 on 05.03.2025 at 11:00 A.M. (ASHUTOSH KUMAR),J (AVNEESH JHINGAN),J RIYA /AARZOO ARORA /35 Whether Reportable: Yes "