SMART VISHWAS SOCIETY V. ASSISTANT COMMISSIONER OF INCOME TAX AND 2 OTHERS

WTAX/1076/2023

AI Insights

The case involves Smart Vishwas Society, a charitable society, challenging the reassessment proceedings initiated by the Assistant Commissioner of Income Tax for the Assessment Year 2016-17. The society had initially filed a nil income return, which was accepted after the first assessment. However, subsequent investigations raised questions about the genuineness of substantial donations claimed by the society. This led to the issuance of a notice under Section 148A(b) and an order under Section 148A(d) of the Income Tax Act, 1961, prompting the society to file a writ petition. The court dismissed the petition, supporting the reassessment based on new information that income had escaped assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 671750 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 26-09-2023
• Assessment Year: misc
• Other Referred Cases: Deepak Kumar Yadav Vs. Principal Commissioner of Income Tax and another, Anshul Jain Vs. Principal Commissioner, Income Tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GAURAV MAHAJAN; MANU GHILDYAL
• Assessee Lawyers: RAGHUBIR AGRAWAL
• Keywords: Change of opinion; Charitable society; Income escape; Notice under section 148; Reassessment
• Section: 147; 148; 143(3); 142(1); 143(2); 148A(b); 148A(d); 151A; 131(1A)

Judgement Text

"Neutral Citation No. - 2023:AHC:188648-DB Chief Justice's Court Case :- WRIT TAX No. - 1076 of 2023 Petitioner :- Smart Vishwas Society Respondent :- Assistant Commissioner Of Income Tax And 2 Others Counsel for Petitioner :- Raghubir Saran Agrawal Counsel for Respondent :- Gaurav Mahajan,Manu Ghildyal Hon'ble Pritinker Diwaker,Chief Justice Hon'ble Ashutosh Srivastava,J. Heard Ms. Kavita Jha, learned counsel for the petitioner through video conferencing and Sri Manu Ghildyal, learned counsel for the Income Tax Department. The challenge laid in this writ petition is to the impugned notice dated 30.03.2023 issued under Section 148A(b) of the Income Tax Act by the Respondent No.1 for the Assessment Year 2016-17 as also the order dated 26.04.2023 passed under Section 148A(d) of the Act and consequent initiation of the reassessment proceedings under Section 148 of the Act for the Assessment Year 2016-17. It is the case of the petitioner that it is a charitable society duly registered with the Office of the Registrar of Society, Meerut. The petitioner filed a return of income for Assessment Year 2016-17 on 22.09.2016 declaring total income as Nil. A notice under Section 143(2) of the Income Tax Act was issued by the Respondent No.1 on 21.08.2017. Thereafter the notice under Section 142(1) of the Act was issued by the Respondent No.2 on 26.12.2017 requiring the petitioner to provide various information in respect of the Assessment Year 2016-17. The petitioner in response to the said notice submitted a reply annexing various documents. The Respondent No.2 being satisfied with the reply/documents filed, passed the order under Section 143(3) of the Act on 02.02.2018 without any adverse comment or inference and accepted the returned income as declared by the petitioner. In spite of the order dated 02.02.2018, a notice dated 19.02.2021 under Section 131(1A) of the Act was issued by the Deputy/Assistant Director of Income Tax (Investigation) Unit 2, Meerut requiring the petitioner to file various documents as also the details of donations paid by the petitioner. The petitioner submitted a detailed reply on 03.03.2021, 15.02.2023, 17.02.2023 and 10.03.2023 providing all the details as provided in response to the notice under Section 142(1) of the Act. The Respondent No.1 thereafter relying on an ex-parte report of the Deputy Director Income Tax (Investigation) Unit-2, Meerut, issued the impugned notice dated 30.03.2023 under Section 148A(b) of the Act for the Assessment Year 2016-17. The petitioner is stated to have filed detailed reply to the notice under Section 148A(b) of the Act on 10.04.2023. The reply has not found favour with the Respondent No.1 and the impugned order has been passed on 26.04.2023 under Section 148A(d) of the Act. Learned counsel for the petitioner has argued that the impugned order passed by the Respondent No.1 is per se illegal and is liable to be set aside by this Court inasmuch as reassessment proceedings initiated merely on the basis of change of opinion is impermissible in law; there cannot be any information and/or suggestion in respect of escapement of income in the case of the petitioner which is the sine- qua-non for initiating action under Section 148 of the Act; the reassessment proceeding resorted to merely conduct verification is not permissible in law; the non sharing of the information/material purportedly relied upon in the impugned notice is in contravention of the provisions of Section 148A of the Act; the impugned order under Section 148A(d) has been passed mechanically without application of mind and is in gross violation and contravention of the procedure prescribed under Section 151A of the Act. It is thus prayed that the impugned orders are liable to be set aside. Reliance has been placed on interim order passed by a Coordinate Bench of this Court in Writ (Tax) No.719 of 2023. Sri Manu Ghildyal, learned counsel for the Income Tax Department, in opposition to the writ petition, submits that the objections filed by the petitioner have been duly considered and the Assessing Officer has found that it is a fit case to issue notice under Section 148. He submits that the original assessment proceedings pursuant to which assessment order had been passed under Section 143(3) only called for donations received by the assessee. While the present information leading to issuance of notice under Section 148A(b) is based on input by the Deputy Director Income Tax (Investigation) Unit-2, Meerut, to enquire as to the genuineness of the persons/entitled to whom donations have been given by the assessee. Since no enquiry was made by the Assessing Officer at the time of original assessment with regard to the donations given by the assessee. There was no occasion for the assessee to reply to the same at that point of time. Even if the information is said to have been furnished by the assessee at the time of the original proceedings, the Assessing Officer had no occasion to consider the same in the light of the information which came subsequently to the knowledge of the Department in terms of the explanation to Section 147 of the Act. The ground for \"change of opinion\" canvassed on behalf of the assessee does not arise as no opinion could have been formed with reference to donations given by assessee. It is further contended that the consideration at the stage of passing order under Section 148A(d) is limited to ascertainment of information with the Assessing Officer that income of assessee has escaped assessment to tax. Final determination on the question whether income of assessee has actually escaped assessment is then to be made after notice under Section 148, by passing an order of assessment or reassessment under Section 147 subject to the provisions of Section 148 to 153 of the Act. It is also argued that the petitioner is at liberty to raise all factual issues/objections at the appropriate stage of the proceedings and no prejudice is being caused to the petitioner. It is contended that this Court would not be justified in embarking upon the correctness or otherwise of the information available with the Assessing Officer while taking decision under Section 148A(d) of the Act. Reliance has been placed upon a decision of a Coordinate Bench of this Court in Writ (Tax) No.561 of 2023 (Deepak Kumar Yadav Vs. Principal Commissioner of Income Tax and another) decided on 05.05.2023. It is accordingly prayed that the writ petition no substance and warrants rejection at the threshold. We have heard learned counsel for the parties and have given over anxious consideration to the rival submissions. We have also perused the records. We find substance in the submissions of Sri Manu Ghildyal, learned counsel for the Income Tax Department. The Respondent No.1 has proceeded to pass an order on 26.04.2023 under Section 148A(d) of the Income Tax Act, 1961 rejecting the objections of the petitioner to the show cause notice dated 30.03.2023 under Section 148A(b) of the Income Tax Act on the ground that information suggests that income chargeable to tax for the Assessment Year 2016-17 has escaped assessment within the meaning of Section 147 of the Income Tax Act. As per report of Deputy Director Income Tax (Investigation) Unit-2, Meerut, during the course of the proceedings the assessee has not produced any supporting documentary evidences in respect of the donation given to the tune of Rs.3,44,55,000/- for the Financial Year 2015-16 relevant to Assessment Year 2016-17. The Income Tax Act, 1961 does not contemplate any detailed adjudication on the merits of information available with the Assessing Officer at the stage of passing order under section 148A(d) of the Act of 1961. In our considered view there is a specific purpose for not introducing any further enquiry or adjudication in the statute, on the correctness or otherwise of the information, at this stage. The reason for it is obvious. Under the scheme of the Act a detailed procedure has been provided under Section 148 for issuance of notice whereafter the assessing authority has to determine, in the manner specified, whether income has escaped assessment and the defence of assessee, on all permissible grounds, remains open to be pressed at such stage. The ultimate determination made by the Assessing Authority under Section 147 for reassessment is otherwise subject to appeal under Section 246-A of the Act. Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the Assessing Authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment. Thus, in our opinion, the impugned order under Section 148A(d) of the Act and notice under Section 148 would not warrant any interference under Article 226 of the constitution of India as challenge to such order would be available to an assessee while challenging the order passed in reassessment proceedings consequent to the notice issued under Section 148 of the Act. The Apex Court in the case of Anshul Jain Vs. Principal Commissioner, Income Tax, reported in (2002) 143 taxman.com 38 observed as under:- \"What is challenged before the High Court was the re-opening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the re- assessment proceedings. Under the circumstances, the High Court has rightly dismissed the writ petition. No interference of this Court is called for. The present Special Leave Petition stands dismissed.\" In view of the above, we find no merit in the challenge laid to the order dated 30.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 as well as to the notice dated 30.03.2023 under Section 148 of the Act. The writ petition, as framed, fails and is dismissed. No order as to costs. Order Date :- 26.9.2023 pks (Ashutosh Srivastava, J) (Pritinker Diwaker, CJ) Digitally signed by :- PAWAN KUMAR SINGH High Court of Judicature at Allahabad "