SUBHASH AGRAWAL V. UNION OF INDIA

WPT/30/2022

AI Insights

The case involves Subhash Agrawal, who challenged the reassessment proceedings initiated under Section 147 and the notice under Section 148 of the Income Tax Act, 1961. The petitioner argued that the proceedings were illegal and without jurisdiction, claiming that the sanction under Section 151 was granted mechanically and that the notice was based on 'borrowed satisfaction'. The respondents contended that all legal provisions were complied with and that the final assessment order had been passed, rendering the writ petition non-maintainable. The court dismissed the petition, citing the existence of an alternative remedy under Section 246A of the IT Act, 1961, and the precedent that writ petitions should not be entertained when assessment orders have already been passed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 737130 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 07-10-2023
• Assessment Year: misc
• Other Referred Cases: Maruti Clean Coal & Power Ltd. vs. ACIT, PCIT vs. Shodiman Investment Pvt. Ltd., PCIT vs. SNG Developers Ltd., PCIT vs. Meenakshi Overseas Ltd., PCIT vs. G & G Pharma India Ltd., CIT vs. Multiplex Trading & Industrial Co. Ltd., CIT vs. Insecticides (India) Ltd., CIT vs. Fair Invest Ltd., CIT vs. Kamdhenu Steel & Alloy Ltd., Sarthak Securities Co. (P.) Ltd. vs. ITO, Akshar Builders and Developers vs. ACIT, Income Tax Officer-1 and Others vs. Smt. Kamala Ojha
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AJAY KUMRANI
• Assessee Lawyers: S RAO; MK SINHA
• Keywords: Borrowed satisfaction; Final Assessment Order; Jurisdiction; Mechanical sanction; Re-assessment
• Section: 147; 148; 131; 133(6); 151

Judgement Text

"-1- NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Writ Petition (T) No. 30 of 2022  Subhash Agrawal, Age 55 years, S/o Shri Ramniwas Agrawal, M/s Subhash Agrawal & Associates, M.G. Road, Banaras Chowk, P.S. Ambikapur, PIN 497001, Chhattisgarh ---- Petitioner Versus 1. Union of India, Through Secretary Central Board of Direct Taxes, North Block, New Delhi 2. Principal Commissioner of Income Tax, Raipur-1 Aaykar Bhawan, Civil Lines, Raipur 3. Joint Commissioner of Income Tax, Range-1, Income-Tax Office, Mahima Complex, Vyapar Vihar, P.S. Tarbahar, Bilaspur (C.G.) PIN 495001 4. Income-Tax Officer, Ward-1, Kharsia Marg, Near Ambika Petrol Pump Ambikapur, 497335 (C.G.) ---- Respondents For Petitioner : Mr. S. Rajeshwara Rao, Advocate and Mr. M.K. Sinha, Advocate For Respondents No. 2 to 4 : Mr. Ajay Kumrani, Advocate Hon'ble Shri Justice Rakesh Mohan Pandey Order on Board 07.10.2023 With the consent of learned counsel for the parties, the matter is heard finally. 1) In the present petition, the petitioner has challenged the re- assessment proceedings initiated under Section 147 of the Income Tax Act, 1961 (for short 'IT Act, 1961) and the impugned notice issued under Section 148 of the IT Act, 1961 on the ground that the proceedings are illegal and without jurisdiction -2- as sanction has been granted under Section 151 of the IT Act, 1961 in a mechanical manner. It is also prayed that respondent No. 4 may be directed to not pass the final order till the disposal of the petition. 2) The facts of the present case are that the petitioner is a regular income tax assessee and assessed to tax with the Income Tax Officer, Ambikapur under Permanent Account Number ADYPA3448H. The return of income for the assessment year 2015-16 was filed on 12.02.2016 declaring total income at Rs.4,96,800/-. The revised return was filed on 19.03.2016. The petitioner derived income of Rs.37,76,073/- assessable under the head long-term capital gain on the sale of shares of Virtual Global Education Ltd. and claimed exemption under Section 10(38) of the IT Act, 1961. Respondent No. 4 issued notice under Section 148 of the IT Act, 1961, whereas the petitioner sought a copy of the reasons recorded along with approval obtained under Section 151 of the IT Act, 1961. The petitioner filed an objection to the reason recorded under Section 148(2) of the IT Act, 1961. Thereafter, respondent No. 4 decided the objection on 09.12.2021 and on 30.03.2021 a notice under Section 148 of the IT Act, 1961 was issued. 3) Learned counsel for the petitioner would submit that the case of the petitioner was reopened as per information of DDIT (Inv.), Delhi and the same is contrary to provisions of Section 147 of the IT Act, 1961. He would further submit that no inquiry was conducted by the Assessing Officer under Section 131 or 133(6) -3- of the IT Act, 1961. He would also submit that a copy of the sanction under Section 151 of the IT Act, 1961 was not provided, therefore, the entire proceeding is vitiated. He would further contend that on the basis of 'borrowed satisfaction' the notice under Section 148 of the IT Act, 1961 has been issued. He would also contend that the provisions of Section 147 of the IT Act, 1961 have not been complied with. In support thereof, he has placed reliance on the judgments rendered in the matter of Maruti Clean Coal & Power Ltd. vs. ACIT, [2018 (1) TMI 675 – Chhattisgarh High Court; PCIT vs. Shodiman Investment Pvt. Ltd. (2020) 422 ITR 337 (Bom); PCIT vs. SNG Developers Ltd. (2018) 404 ITR (Delhi) (HC); PCIT vs. Meenakshi Overseas Ltd. - 395 ITR 677 (Del); PCIT vs. G & G Pharma India Ltd. [2017] 384 ITR 147 (Delhi) (HC); CIT vs. Multiplex Trading & Industrial Co. Ltd. (2016) 378 ITR 351 (Delhi) (HC); CIT vs. Insecticides (India) Ltd. (2013) 357 ITR 300 (Delhi) (HC); CIT vs. Fair Invest Ltd. (2013) 357 ITR 146 (Delhi) (HC); CIT vs. Kamdhenu Steel & Alloy Ltd. (2014) 361 ITR 220 (Delhi) (HC); Sarthak Securities Co. (P.) Ltd. vs. ITO (2010) 329 ITR 110 (Delhi) (HC) and Akshar Builders and Developers vs. ACIT (2019) 411 ITR 602 (Bom) (HC). 4) On the other hand, learned counsel for respondents No. 2 to 4 would submit that after receiving the notice under Section 148 of the IT Act, 1961, the petitioner filed an objection against the reason recorded on 08.10.2021 through DAK and filed the same -4- online on 12.10.2021. Later on, the case was taken by NeFAC for further assessment proceedings. He would further submit that the Assessing Officer of NeFAC has also given the reply to the assessee on 03.12.2021 and 09.12.2021 in response to the assessee's objection dated 12.10.2021 and notice under Section 148 of the IT Act, 1961 was issued fulfilling all the mandatory conditions. He would also submit that the Pr. Commissioner of Income Tax-1, Raipur after going through the proposal and recommendation accorded approval under Section 151 of the IT Act, 1961. He would further contend that all the standard procedures as prescribed by the CBDT vide Instruction dated 10.01.2018 were followed for recording reasons for reopening the assessment. He would also contend that on 24.03.2022 final assessment order was passed and therefore, the petition is not maintainable and there is a remedy under Section 246A of the IT Act, 1961. In support of his argument, he has placed reliance on the judgment passed by the Hon'ble Division Bench of this Court in the matter of Income Tax Officer-1 and Others vs. Smt. Kamala Ojha, Dated 25-06-2019, where the Hon'ble Division Bench categorically held that the writ Court ought not to have entertained the writ petition more so when assessment orders have already been passed during the pendency of the writ petition. 5) I have heard learned counsel appearing for the parties and perused the documents. 6) Learned counsel for the petitioner has vehemently argued and -5- pointed out irregularity and illegality in the issuance of notice under Section 148 of the IT Act, 1961 and placed reliance on various judgments. Learned counsel for respondents No. 2 to 4 has stated that the provisions of the law have been complied with. It is specifically stated by learned counsel for respondents No. 2 to 4 that the final assessment order has been passed on 24.03.2022 during the pendency of the present petition and there is an efficacious alternative remedy to prefer an appeal. 7) The Hon'ble Division Bench of this Court in the matter of Smt. Kamala Ojha (supra) in para-33 held as under:- “33. To sum up the matter, when there existed reason to belief which is formed on the basis of material available having nexus with the subject, writ Court ought not to have entertained the writ petition more so when assessment orders have already been passed during pendency of the writ petition, therefore, we set aside the order passed by the writ Court and relegate the writ petitioner to prefer an appeal against the reassessment order which may be filed within a period of 30 days from today. The writ petitioner would be at liberty to raise all grounds both factual and legal in the said appeal. The appellate authority shall entertain the appeal for decision on merits without raising objection as to limitation.” 8) Taking into consideration the fact that the final assessment order has already been passed on 24.03.2022, therefore, in the light of the judgment passed by the Hon'ble Division Bench of this Court in the case of Smt. Kamala Ojha (supra), the writ petition cannot be entertained. 9) Consequently, the petition is dismissed. However, the petitioner is permitted to prefer an appeal against the reassessment order which may be filed within a period of 30 days from the date of -6- receipt of a copy of this order. The writ petitioner would be at liberty to raise all grounds, both factual and legal in the said appeal and the appellate authority shall entertain the appeal for a decision on merits without objection as to limitation. 10) In the result, the petition is dismissed with the aforesaid liberty as stated above. Sd/- (Rakesh Mohan Pandey) Judge Vatti "