SHREE HARI AGRO INDUSTRIES LTD V. DEPUTY COMMISSIONER OF INCOME TAX

CW/14894/2021

AI Insights

The case involves Shree Hari Agro Industries Ltd, which challenged the initiation of proceedings under Section 148 of the Income Tax Act, 1961, claiming that the proceedings were initiated without following the proper procedure as amended by the Finance Act, 2021. The petitioner argued that the notice was not validly issued as it was digitally signed after the effective date of the amendment requiring preliminary proceedings under Section 148A. The respondents countered that the proceedings were correctly initiated under the amended provisions. The court referenced the Supreme Court's decision in Union of India & Others Vs. Ashish Agarwal, which provided guidance on how such cases should be handled post-amendment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 770880 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 01-09-2022
• Assessment Year: misc
• Other Referred Cases: Union of India & Others Vs. Ashish Agarwal (Civil Appeal No. 3005/2022 and batch of appeals decided on 04.05.2022)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: SIDDHARTH BAPNA; ANIL MEHTA
• Assessee Lawyers: GUNJAN PATHAK; ISHITA RAWAT
• Keywords: Authority of Law; Contempt proceedings; Digital Signature; Income Tax; Jurisdiction; Section 148; Section 148A
• Section: 148; 148A(d); 148A

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D. B. Civil Writ Petition No. 14894/2021 Shree Hari Agro Industries Ltd, Khasra No. 123/664,124,125, and 132/2 Benara Road, Village Mansar Kheri, Tehsil Bassi 303001 Jaipur Rajasthan, through its Authorised Signatory Shri Mukesh Kumar Gupta, S/o Lt. Shri Ramniwas Gupta, aged about 52 years, R/o 73/215, Mansarovar, Jaipur 302020 ----Petitioner Versus 1. Deputy Commissioner of Income Tax, Central Circle, Alwar NCR Building, Moti Doongri, Alwar. 2. Union of India, through Finance Secretary, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, North Block, New Delhi 110002 ----Respondents For Petitioner : Mr. Gunjan Pathak Advocate with Ms. Ishita Rawat Advocate. For Respondents : Mr. Siddharth Bapna Advocate on behalf of Mr. Anil Mehta Senior Standing Counsel. HON'BLE THE ACTING CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE VINOD KUMAR BHARWANI Order 01/09/2022 Heard. Challenge in this petition is to the initiation of proceedings under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) on the ground that after amendment with effect from 01.02.2021, proceedings under Section 148 of the Act could not be initiated without first drawing proceedings under Section 148A of the Act. (2 of 5) [CW-14894/2021] According to learned counsel for the petitioner, the notice bears date 31.03.2021 but it was digitally signed on 02.04.2021. Therefore, the proceedings are without jurisdiction and authority of law and the Hon’ble Supreme Court has decided the issue in the case of Union of India & Others Vs. Ashish Agarwal (Civil Appeal No. 3005/2022 and batch of appeals decided on 04.05.2022) and directions have been issued. He would further submit that while this matter remained pending, interim order was operative having been passed on 20.12.2021, but in the garb of aforesaid decision rendered by the Hon’ble Supreme Court, the respondents proceeded to give notice drawing the proceedings under Section 148A of the Act and have proceeded to pass an order under Section 148A(d) of the Act. However, the proceedings after passing of order under Section 148A(d) of the Act have been kept in abeyance because a notice for initiation of contempt proceedings was given by the petitioner. He would further submit that when the interim order was operating in favour of the petitioner, the respondents could not have even initiated any proceedings in view of directions issued by the Hon’ble Supreme Court in the case of Union of India & Others Vs. Ashish Agarwal (supra) without seeking leave of this Court. Therefore, only on that ground, all the proceedings drawn subsequently are illegal. Learned counsel for the respondents would submit that even if the case of the petitioner is accepted that the notice was digitally signed on 02.04.2021, that situation is also governed by the judgment of the Hon’ble Supreme Court in the case of Union of India & Others Vs. Ashish Agarwal (supra), and, therefore, (3 of 5) [CW-14894/2021] the Department proceeded to issue notice under Section 148A of the Act and passing the order under Section 148A(d) of the Act, though further proceedings have been kept in abeyance because a contempt notice was given in the matter. Having heard learned counsel for the parties, we find that on 20.12.2021, this Court had protected the petitioner taking into consideration that the notice under Section 148 of the Act was digitally signed only on 02.04.2021. The Hon’ble Supreme Court by its authoritative pronouncement in the case of Union of India & Others Vs. Ashish Agarwal (supra) passed following directions and order: “10. In view of the above and for the reasons stated 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:- (i) 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 show-cause 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 assessees can reply to the show-cause notices within two weeks thereafter; (ii) 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 one-time measure vis-à-vis 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. (4 of 5) [CW-14894/2021] 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; (iii) 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); (iv) All defences which may be available to the assessees 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.” The Hon’ble Supreme Court further declared that the order shall be applicable PAN INDIA and all the judgments and orders passed by different High Courts on the issue shall be governed by the order and held as below: “11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge. 12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned (5 of 5) [CW-14894/2021] hereinabove, shall stand modified/substituted to the aforesaid extent only. All these appeals are accordingly partly allowed to the aforesaid extent. In the facts of the case, there shall be no order as to costs.” In view of the aforesaid directions and order passed by the Hon’ble Supreme Court, the interim order, which was passed by this Court on 20.12.2021 came to an automatic end. We find that the department has proceeded to pass the order under Section 148A(d) of the Act against the petitioner. In these changed circumstances, particularly taking into consideration the scope and ambit of the pending petition, we are inclined to close this writ petition also, however, giving liberty to the petitioner to challenge order passed under Section 148A(d) of the Act on such grounds as may be available to the petitioner under the law. Writ petition is, accordingly, disposed off, with aforesaid liberty. (VINOD KUMAR BHARWANI),J (MANINDRA MOHAN SHRIVASTAVA),ACTING CJ MANOJ NARWANI /18 "