Tara Mani Agarwal and Sharda Devi Agarwal and Sharda Agarwal V. The Assistant Commissioner of Income Tax, Investigation Circle, Bikaner

CW/775/1998

AI Insights

The case involves multiple writ petitions filed by Tara Mani Agarwal and Sharda Devi Agarwal against the Assistant Commissioner of Income Tax, Bikaner, challenging the validity of notices issued under Section 148 of the Income Tax Act, 1961. The petitioners argued that the ACIT, Bikaner lacked jurisdiction to issue these notices and that there was no reasonable belief that their income had escaped assessment. The respondents countered that a search and seizure operation conducted in 1995 at the petitioners' residence provided sufficient grounds for the notices. The court examined the jurisdictional authority of the ACIT, Bikaner, and the reasons recorded for the belief that income had escaped assessment, ultimately dismissing the petitions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 810590 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 11-10-2023
• Assessment Year: misc
• Other Referred Cases: GKN Driveshafts (India) Ltd. vs. Income Tax Officer & Ors., Assistant Commissioner of Income Tax Vs. Banswara Syntex Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K K BISSA; G S CHOUHAN
• Assessee Lawyers: TARUN DUDIA
• Keywords: Assessment Year 1985-86; Income Tax; Jurisdiction; Notice; Search and seizure
• Section: 147; 148; 132; 127; 120

Judgement Text

"[2023:RJ-JD:33116-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Civil Writ Petition No. 773/1998 Tara Mani Agarwal wife of Shri Dharam Pal Agarwal, resident of near M. S. Hostel, Gajner Road, Bikaner. ----Petitioner Versus The Assistant Commissioner of Income Tax, Investigation Circle, Bikaner. ----Respondent Connected With D.B. Civil Writ Petition No. 774/1998 Sharda Devi Agarwal wife of Shri Lal Chand Agarwal, resident of near M. S. Hostel, Gajner Road, Bikaner. ----Petitioner Versus The Assistant Commissioner of Income Tax, Investigation Circle, Bikaner. ----Respondent D.B. Civil Writ Petition No. 775/1998 Sharda Agarwal wife of Shre Prem Chand Agarwal, resident of near M. S. Hostel, Gajner Road, Bikaner. ----Petitioner Versus The Assistant Commissioner of Income Tax, Investigation Circle, Bikaner. ----Respondent For Petitioner(s) : Mr. Tarun Dudia For Respondent(s) : Mr. K. K. Bissa with Mr. G. S. Chouhan HON'BLE MR. JUSTICE VIJAY BISHNOI HON'BLE MR. JUSTICE YOGENDRA KUMAR PUROHIT [2023:RJ-JD:33116-DB] (2 of 9) [CW-775/1998] Judgment 11/10/2023 By the Court (Per Hon’ble Vijay Bishnoi, J) : 1. These writ petitions have been filed by the petitioners essentially challenging the notice dated 27.03.1996 (Annexure-1) issued to the petitioners, whereby the notice under Section 148 of the Income Tax Act, 1961 (hereinafter to be referred as ‘the Act of 1961’). The petitioners have further challenged the communication dated 20.02.1998 written by the Assistant Commissioner of Income Tax, Investigation Circle, Bikaner (hereinafter to be referred as ‘ACIT, Bikaner’), whereby the objections filed by the petitioners regarding jurisdiction of ACIT, Bikaner have been rejected. 2. The brief facts of the case are that the petitioners are the regular assessee under the Act of 1961 and they had filed their return of income for assessment year 1985-86 within time declaring their income. The assessments for the year 1985-86 pertaining to the petitioners were completed, however, a search was conducted under Section 132 of the Act of 1961 by the Income Tax Department at the residential house situated at Bansal Bhawan, Gajner Road, Bikaner on 14.11.1995 and after that, the ACIT, Bikaner issued notice dated 27.03.1996 to the petitioners under Section 148 of the Act of 1961 reopening the assessment for the assessment year 1985-86 within the meaning of Section 147 of the Act of 1961. 3. In response to the said notice, the authorized representative of the petitioners wrote a letter dated 04/08.04.1996 and requested for dropping of the proceedings being illegal on the [2023:RJ-JD:33116-DB] (3 of 9) [CW-775/1998] ground that the notice was without jurisdiction. The authorized representative of the petitioners wrote another letter reiterating that the ACIT, Bikaner has no jurisdiction to issue notice under Section 148 of the Act of 1961. 4. It appears that the objection raised by the authorized representative of the petitioners regarding the jurisdiction of the ACIT, Bikaner was rejected by the said Officer vide communication dated 20.02.1998 (Annexure-8). 5. Being aggrieved with the same, the petitioners have preferred these writ petitions mainly on the following two grounds; (i) that the ACIT, Bikaner has no jurisdiction to issue notice under Section 148 of the Act of 1961 (ii) that the ACIT, Bikaner has no reason to believe that the income of the petitioners has been escaped from assessment for the assessment year 1985-86. 6. Learned counsel for the petitioners argued that vide notification dated 21.05.1996 issued under Section 127 of the Act of 1961, the Commissioner of Income Tax, Jodhpur transferred the cases specified in schedule from the Officer mentioned in column 5 to the Officer mentioned in column 6. It is submitted that the petitioners’ names find mention at serial Nos.39, 40 and 41 respectively of the schedule and their cases have been transferred from Income Tax Officer, Ward-1 to ACIT, Bikaner. The said notification came into force with effect from 21.05.1996, whereas the notice under Section 148 of the Act of 1961 has been issued to the petitioners prior to that i.e. on 27.03.1996 and in such circumstances, it is clear that the ACIT, Bikaner has no jurisdiction [2023:RJ-JD:33116-DB] (4 of 9) [CW-775/1998] to issue impugned notices under Section 148 of the Act of 1961 at the relevant time. 7. It is specifically contended that as a matter of fact, no search and seizure were conducted against the petitioners and no assessment proceedings in relation to search and seizure were initiated against the petitioners and therefore, there was no assessable case of search and seizure in relation to the petitioners. 8. It is also submitted that in the above facts and circumstances of the case, there is no question of exercising any jurisdiction by the ACIT, Bikaner even in terms of the notification dated 09.07.1993 issued by the Commissioner, Income Tax Department, Jodhpur, whereby jurisdiction was given to the ACIT, Bikaner only in cases of search and seizure. 9. Learned counsel for the petitioners has further submitted that the ACIT, Bikaner has no reason to believe that the income of the petitioners for the assessment year 1985-86 has been escaped from assessment and in such circumstances, the impugned notice issued to the petitioners is liable to be quashed and set aside. 10. It is further contended that the ACIT, Bikaner has illegally dismissed the objections raised by the petitioners vide communication dated 20.02.1998 purportedly relying on the notification dated 09.07.1993, though the said notification has no application because no search or seizure was conducted in the case of the petitioners. Learned counsel for the petitioner has, therefore, prayed that the impugned notice dated 27.03.1996 (Annexure-1) and the communication dated 20.02.1998 [2023:RJ-JD:33116-DB] (5 of 9) [CW-775/1998] (Annexure-8) are without jurisdiction and the same are liable to be quashed and set aside. 11. No other ground is raised on behalf of the petitioners. 12. Per contra, learned counsel appearing for the respondents has vehemently opposed the writ petitions and argued that the ACIT, Bikaner was very well in its jurisdiction in issuing notices under Section 148 of the Act of 1961 to the petitioners. It is submitted that it is wrong to say that the petitioners were not subjected to any search and seizure. It is argued that search had taken place in November, 1995 at the common residence of the family members of the petitioners. The owners of the said residence are the petitioners themselves and all of them were not only present during the course of search and seizure, but also accepted that the gold jewellery partly belongs to them. 13. It is further submitted that certain documents relating to the petitioners were also found and seized during the course of search and in such circumstances, it is clear that the petitioners were subjected to search and seizure and as such, the ACIT, Bikaner has jurisdiction of issuing notice under Section 148 of the Act of 1961 to the petitioners as per the notification dated 09.07.1993. It is further contended that the ACIT, Bikaner has definite reasons to believe that the income of the petitioners for the assessment year 1985-86 has been escaped from assessment. It is submitted that those reasons have duly been recorded by the ACIT, Bikaner before issuance of the notices. 14. Learned counsel for the respondents has, therefore, submitted that in the above facts and circumstances of the case, [2023:RJ-JD:33116-DB] (6 of 9) [CW-775/1998] there is no force in the writ petitions and the same are liable to be dismissed. 15. Learned counsel for the respondents has placed reliance on the decision of the Hon’ble Supreme Court dated 25.11.2002 rendered in the case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer & Ors. reported in 2002 Supp(4) SCR 359 and on the decision of the Hon’ble Division Bench of this Court dated 22.09.2004 rendered in the case of Assistant Commissioner of Income Tax Vs. Banswara Syntex Ltd. reported in (2004) 191 CTR Raj 330. 16. Heard learned counsel for the parties and perused the material available on record. 17. First of all, we decide the question regarding the jurisdiction of ACIT, Bikaner in respect of issuance of notice to the petitioners under Section 148 of the Act of 1961. 18. The Commissioner of Income Tax, Jodhpur vide Notification No.10 of 1993-94 dated 09.07.1993, while exercising powers under Section 120 of the Act of 1961, has authorized the Assessing Officer mentioned in Column No.1 of the table to perform functions of Assessing Officer in respect of such areas and/or persons or classes of persons and/or income or classes of income and/or cases or classes of cases mentioned in column No.2 of the table. The relevant portion of the notification dated 09.07.1993 is quoted as under :- Column No. 1 Column No. 2 ACIT, Investigation Circle, Bikaner All search & seizure cases hitherto assessable by Assessing Officers Ward-1, Ward-2 and Ward-3 Bikaner and Ward-1 and Ward-2 Churu [2023:RJ-JD:33116-DB] (7 of 9) [CW-775/1998] 18. The respondents are claiming that the ACIT, Bikaner assumes jurisdiction in the cases of the petitioners pursuant to the notification dated 09.07.1993 because the petitioners were the part of search conducted by the ACIT, Bikaner in their house in the year 1995. 19. It is to be noticed that though in writ petition as well as in reply, the petitioners have claimed that they were not part of the search conducted in the year 1995 at the residence situated at Amarsinghpura, Bikaner, but has not denied that they were residing in that house along with their family in the year 1995 when the search was conducted in the above referred residence. They have also not specifically contradicted the statement of the revenue that the residence in which search was conducted in the year 1995 was owned by them and they were very much present in the said house when the search was conducted. The petitioners have also not disputed that the seized items which are seized in the search were not claimed by them. 20. Taking into consideration the above circumstances of the case, we have no hesitation in holding that the ACIT, Bikaner was having jurisdiction, as per the notification dated 09.07.1993 to issue impugned notices to the petitioners. In view of the above, we also do not find any illegality in the action of the assessing officer, Bikaner in rejecting the objections raised by the petitioners regarding the jurisdiction of the ACIT, Bikaner vide order dated 20.02.1998. 21. So far as the contention of the petitioners that the ACIT, Bikaner has no reason to believe that income for the assessment year 1985-86 has escaped assessment, it is to be noticed that [2023:RJ-JD:33116-DB] (8 of 9) [CW-775/1998] pursuant to the direction given by this Court on 24.01.2017, learned counsel for the respondent has placed on record the copy of the reasons recorded by the ACIT, Bikaner in the proceedings under Section 148 of the Act of 1961 and a copy of the same was also provided to the petitioners’ counsel, however, no response in respect of the same has ever been filed on behalf of the petitioners. 22. The Hon’ble Supreme Court in GKN Driveshafts (India) Ltd.’s case (supra) has held as under :- “We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the abovesaid five assessment years.” 22. The Division Bench of this Court in the case of Assistant Commissioner of Income Tax’s Case (supra) has held as under :- “15. It seems to us that when a notice under Section 148 of the IT Act is issued to a noticee, he is to adopt the following path paved and recognised by the legislature and the judicial decisions : (1) File return in response to the notice. (2) He can ask the assessing authority to furnish reasons for issuance of the notice, which the [2023:RJ-JD:33116-DB] (9 of 9) [CW-775/1998] assessing authority is bound to communicate to him within a, reasonable time. (3) On receiving the reasons he may file objections thereto, which the assessing authority is bound to decide by a speaking order before proceeding with reassessment of income chargeable to tax with regard to the relevant assessment year. (4) After the passing of the order of reassessment under Section 147 of the IT Act by the assessing authority, the assessee, if not satisfied with the order, can file an appeal before the appellate authority under Section 246 thereof.” 23. In view of the above, we do not find any merit in these writ petitions and the same are, therefore, dismissed. However, the petitioners are at liberty to file their return in response to the impugned notices and they are free to file their objections before the Assessing Authority and if the said authority pass the assessment order adverse to the petitioners, they are free to file appeal against it as provided under the law. (YOGENDRA KUMAR PUROHIT),J (VIJAY BISHNOI),J AjaySingh/- "