VINOD LALWANI V. UNION ON INDIA

WPT/216/2022

AI Insights

The case involves Vinod Lalwani, the petitioner, challenging notices issued under Section 148 and Section 148A(d) of the Income Tax Act, 1961, by various income tax authorities. The primary contention was the non-supply of necessary documents and information that formed the basis of the notices. The petitioner argued that despite requests for specific documents related to alleged bogus transactions, the department failed to provide them, thus denying an effective opportunity to respond. The court referenced decisions from the Delhi High Court and the Supreme Court, emphasizing the need for the department to supply relevant materials to the petitioner to ensure a fair opportunity to contest the allegations.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 685224 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 17-11-2022
• Assessment Year: misc
• Other Referred Cases: Mahashian Di Hatti Pvt. Limited v. Deputy Commissioner of Income Tax, Divya Capital One Private Limited v. ACIT & Ors., Union of India & others v. Ashish Agrawal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: TUSHAR DIWAN; AJAY KUMRANI
• Assessee Lawyers: SIDDHARTH DUBEY; HARSHWARDHAN PARGANIHA
• Keywords: Income Tax; Non-supply of documents; Notice Challenge; Reassessment proceedings
• Section: 148; 148A(b); 148A(d)

Judgement Text

"1 AFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 216 of 2022 Vinod Lalwani S/o Shri Baliram Lalwani Aged About 47 Years R/o Old, Santkanwarram Ward, Sindhi Colony, Tilda Camp, Raipur 492001, Chhattisgarh. India. ---- Petitioner Versus 1. Union On India Through Secretary Ministry Of Finance, Department Of Revenue, North Block, New Delhi- 110001, India. 2. Income Tax Officer Ward 1(2) Raipur Office Of The Income Tax Officer Ward 1(2), Raipur, Central Revenue Building Civil Lines, Raipur, Chhattisgarh- 492001, India 3. Principal Commissioner Of Income-Tax, Raipur-1 Office Of The Principal Commissioner Of Income-Tax, Raipur-1, Central Revenue Building Civil Lines, Raipur, Chhattisgarh 492001, India. 4. Additional Commissioner Of Income Tax, Raipur, Range-1, Central Revenue Building Civil Lines, Raipur, Chhattisgarh- 492001, India. 5. Principal Director Of Income Tax (Investigation), Raipur, Office Of The Principal Director Of Income Tax (Investigation), Raipur, Central Revenue Building, Civil Lines, Raipur, Chhattisgarh- 492001, India ---- Respondent For Petitioner : Mr. Siddharth Dubey, Advocate and Mr. Harshwardhan Parganiha, Adv. For Respondent No.1 : Mr. Tushar Dhar Diwan, Advocate For Respondents No.2 to 5 : Mr. Ajay Kumrani, Advocate on behalf of Mr. Amit Choudhari, Advocate Hon'ble Shri Justice P. Sam Koshy Order on Board 17/11/2022 1. The challenge in the present writ petition is to the notice dated 19.07.2022 issued under Section 148 of the Income Tax Act, 1961 as also to the notice issued under Section 148A(d) dated 15.07.2022 (Annexure P/3 collectively). 2 2. The primary challenge to the said notice was the non-supply of the necessary information and the material documents on the basis of which the notices under Section 148 and the notice under Section 148A(d) has been issued. The specific contention raised by the counsel for the petitioner was that after the notice under Section 148A(b) was received by the petitioner on 26.05.2022, the petitioner gave a reply to the same on 06.06.2022 and thereafter an additional reply was further submitted on 08.06.2022. According to the petitioner, in the additional reply that he had submitted on the 8th of June, he had raised a specific claim for providing of the necessary information and material documents which forms the basis for issuance of the notice was issued. 3. Learned counsel for the petitioner submitted that the information that he had sought for was those informations which is referred to in the notice as well, on the basis of which the notice under Section 148A(b) has been issued. The nature of documents and informations sought for are: * TRANSACTION DETAILS ALONG WITH BANK STATEMENTS/DETAILS OF THE ALLEGED TRANSACTIONS. * ENTITY WITH WHICH ALLEGED BOGUS PURCHASES HAS TAKEN PLACE. * BILL BOOK/CHEQUE BOOK/DOCUMENT WHERE MR. DEEPAK NANJIYANI HAS ACCEPTED THAT HE HAS FURNISHED BOGUS BILL(S) TO ASSESSEE/PETITIONER. * DOCUMENTARY EVIDENCE(S) AND STATEMENT(S) ON OATH WHICH LED TO FROMING BELIEF THAT ASSESSEE/PETITIONER HAS MADE ALLEGED PURCHASE OF BOGUS BILL9S). * DETAILS OF INQUIRY CONDUCTED BY THE INCOME TAX DEPARTMENT AND COMMERCIAL TAX DEPARTMENT ON WHICH AO PLACES RELIANCE. 4. According to the petitioner, in the denial of these documents, the very order would be in violation of the provisions of law. It also would be per se bad, as the petitioner has not got an opportunity of 3 properly explaining himself or even appreciating the contention that has been drawn against him by the department for prosecuting. Learned counsel for the petitioner referred to the recent decision of the Delhi High Court in WPC No. 12505/2022 (Mahashian Di Hatti Pvt. Limited v. Deputy Commissioner of Income Tax) decided on 01.09.2022 on almost similar set of facts. 5. Per contra, learned counsel for the respondents opposing the petition submits that the petitioner was served with the notice Annexure P/1 under Section 148(b) on 26.05.2022 and the petitioner has without any objection submitted his reply on 06.06.2022, however in the said reply he had not raised these grounds nor had he made any claim for providing of these informations and documents. It was also the contention of the department that the plain reading of the notice under Section 148(b) of the Income Tax Act, 1961 issued to the petitioner on 26.05.2022 would show that the notice contained all the relevant informations in respect of the notice that was issued to the petitioner and as such it is not a case where he was not aware of the contents and the grounds on which the department intended to prosecute him. 6. It would be relevant at this juncture to take note of the decision of the Delhi High Court wherein the Division Bench of the Delhi High Court in the case of “Mahashian Di Hatti Pvt. Limited v. Deputy Commissioner of Income Tax” (supra) has in paragraphs No. 6 to 8 has held as under: “6. This Court has consistently observed that to give effect to the objective of the scheme of Section 148A of the Act, the Assessing Officer must provide specific material and information to the Assessee in the notice issued under Section 148A(b) of the Act so that the 4 Assessee can provide a meaningful response at the stage of inquiry under Section 148A proceedings. The following observation of this Court in its decision in Divya Capital One Private Limited v. ACIT & Ors., 2022 SCC OnLine Del 1461 is apposite: \"11. This Court further finds that the information/material stated in the impugned show cause notice dated 17th March, 2022 issued under Section 148A(b) of the Act have not been shared with the Petitioner, despite specific request made by the Petitioner vide letter dated 24th March, 2022, thereby denying the Petitioner an effective opportunity to file a response/reply. The non-sharing of the information is violative of the rationale behind the judgment of this Court in Sabh Infrastructure Ltd. vs. Asst. CIT, MANU/DE/2989/2017 : 398 ITR 198 (Del).\" 7. Consequently, as the show cause notice issued under Section 148A(b) of the Act as well as the subsequent notice dated 18th May, 2022 are bereft of any details, this Court is of the view that the Revenue by asking the Petitioner-Assessee to respond to the aforesaid vague show cause notice was virtually asking the Petitioner to search for 'a needle in a haystack'. 8. However, as learned counsel for the Respondent- Revenue now states that the Respondent shall supply all the relevant material documents and information in its possession, the impugned order passed under Section 149A(d) of the Act as well as the notice issued under Section 148 of the Act dated 22nd July, 2022 are set aside with a direction to the Respondent- Revenue to issue a supplementary notice in pursuance to the initial notice issued under Section 148A(b) of the Act, within three weeks enclosing all the relevant/incriminating information/ material/ documents. The Petitioner shall file its response to the said supplementary notice within three weeks. The Assessing Officer is directed to pass a fresh order under Section 148A(d) in accordance with law within six weeks thereafter.” 7. Undisputedly, the details of the information documents referred to in the preceding paragraphs sought for by the petitioner in his request letter dated 08.06.2022 has not been made available to the petitioner by the department. The plain reading of the notice Annexure P/1 dated 26.05.2022 issued under Section 148A(d) of the Income Tax Act, 1961 would reveal that though there is a reference of these informations by the department but the department as such has not made these documents and material informations available to the petitioner. In the absence of such 5 materials and necessary informations to the petitioner by the department it cannot be expected that the petitioner would be in a position to justify his acts and conduct, nor would he be able to provide for the reasonable explanation to these informations which have been collected and relied by the department, but have not been made available to the petitioner. 8. What is also necessary to be appreciated is the fact that the judgment of the Delhi High Court referred to in the preceding paragraph is based upon another recent decision of the Delhi High Court reported in 2022 SCC OnLine Del 1461 (Divya Capital One Private Limited v. ACIT & Ors.). Both these orders were further taking into reliance the judgment of the Hon'ble Supreme Court in the case of “Union of India & others v. Ashish Agrawal” 2022 SCC OnLine SC 543, wherein the Hon'ble Supreme Court dealing with a similar issue in paragraphs No. 23 & 27 has held as under: “23. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non-application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been 6 issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under: (i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be 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; (iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees; (iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 27. 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 7 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.” 9. Keeping in view the aforesaid authoritative decision of the Hon'ble Supreme Court as also that which has been followed by the two decisions of the Delhi High Court, this court is of the firm view that the factual matrix of the present case squarely fits in to the facts of those cases that has been decided by the Delhi High Court the instant writ petition also deserves to be and is accordingly allowed. 10. As a consequence, the notice dated 15.07.2022 under Section 148A(d) as also notice dated 19.07.2022 under Section 148 of the Income Tax Act, 1961 issued in this regard by the department are set-aside/quashed. The matter stands remitted back to the department concerned with a further direction that in the light of the decision of the Hon'ble Supreme Court in the case of “Union of India & others v. Ashish Agrawal” (supra), the necessary informations and material documents are made available to the petitioner, those which are referred to in the notice under Section 148A(b) dated 26.05.2022 and thereafter a fresh order be passed after due consideration of the contentions to be submitted by the petitioner. 11. With the aforesaid observations, the present writ petition stands allowed and disposed of. Sd/- (P. Sam Koshy) Judge Ved "