Auroglobal Comtrade Private Limited Vs Chairman, CBDT & Others (Orissa High Court)
HC declined to accept challenge to the Reopening notices under Section 148-A(1)(b) of the Act as well as the consequential order under Section 148-A(1)(d) of the Act by holding that the Petitioners/Assessees in those cases would have a full opportunity of urging all the grounds of challenge at the stage of challenging the consequential order in the reassessment proceedings consequent upon the notice under Section 148 of Act.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
This matter is taken up by virtual/physical mode.
2. The Petitioner, alleging non-consideration of its application, dated 18th May, 2022 submitted before the Deputy Commissioner of Income-tax, Circle-1(1), Bhubaneswar, in response to the notice dated 15.03.2022 issued under Section 148A of the Income-tax Act, 1961 (for brevity herein after referred to as “IT Act”) pertaining to Assessment Year 2018-19 [Previous Year 2017-18], has filed this writ petition craving for following relief:
“*** quash the notice under Section 148 of the IT Act, 1961 dated 26.03.2022 under Annexure-4***.”
3. Shorn off detailed narration of facts, suffice it to describe that based on information which suggests that income chargeable to tax for the Assessment Year 2018-19 has escaped assessment within the meaning of Section 147 of the IT Act, notice dated 15.03.2022 under Section 148A was issued calling upon the petitioner-assessee, bearing PAN AAJCA0870E, to furnish response on or before 22.03.2022. Enclosed to said notice was the following material particulars facilitating filing of show-cause by the petitioner:
“As per information gathered, you have inflated your expenses by showing bogus purchase from M/s. Mideast Integrated Steel Pvt. Ltd. and suppressed income amounting to Rs.31,64,58,088/-, which needed to be added back to your income during the Financial Year 2017-18.”
3.1. There was no response from the assesse nor was any step taken for extension of time on or before 22.03.2022 as stipulated in the aforesaid notice dated 15.03.2022. Vide Order dated 26.03.2022 passed under Section 148A(d) of the Income Tax Act a detailed discussion has been made based on available material which is to the following effect:
“The case was flagged for the Assessment Year 2018-19 by DIT (Systems) in Insight Portal in accordance with the risk management strategy formulated by the Board with certain underlying information.
‘From the information it is noted that, you have inflated your expenses by showing bogus purchase from M/s. Mideast Integrated Steel Pvt. Ltd. and suppressed income amounting to Rs.31,64,58,088/- during the Financial Year 2017-18, which needed to be added back to your total income for the Assessment Year 2018-19.’
Accordingly, a show cause notice was sent to the assessee under clause (b) of Section 148A of the Income-tax Act, 1961 for assessee’s response with supporting documents (if any) on the above mentioned issues electronically in ‘e-proceeding’ facility through his account in e-filing portal on or before 22.03.2022. Prior approval of the PCIT-1, Bhubaneswar was obtained before issuance of show cause notice on date 12.03.2022.
The assessee has not complied with the show cause notice on or before due date which means assessee has nothing to say in this regard.
In view of the above, I have reasons to believe that income chargeable to tax has escaped assessment to the extent of Rs.31,64,58,088/- within the meaning of Section 147 of the Income-tax Act, 1961 and this is a fit case to issue a notice under Section 148 of the Income-tax Act, 1961.”
3.2. The Assessing Officer-Deputy Commissioner of Income-tax, Circle-1(1), Bhubaneswar, after passing such an Order on 26.03.2022, initiated proceeding under Section 148 of the IT Act by issue of notice dated 26.03.2022 (Annexure-4) specifying the reason therefor, which is impugned in the writ petition.
3.3. Annexure-5 enclosed to the writ petition by the petitioner would go to show that Original Return in Form ITR-6 filed [by: Self] on 26.09.2018 under Section 139(1) was processed and intimation of refund was issued on 14.04.2019. However, in response to the notice dated 26.03.2022, the petitioner-assessee has filed its revised return in Form ITR-6 [filed by: Representative] for the Assessment Year 2018-19 on 23.04.2022 under Section 148 which was successfully e-verified on 25.04.2022.
3.4. After having participated in the proceeding, the petitioner-company has filed an application/reply on 18.05.2022 pursuant to notice dated 15.03.2022 issued under Section 148A(b) of IT Act requesting the Deputy Commissioner of Income-tax to refrain from proceeding with reassessment.
3.5. Mr. Jagamohan Pattanaik, learned Advocate for the petitioner-company submitted that the assessee could not furnish its reply to notice dated 15.03.2022 issued under Section 148A as inadequate time of seven days only was given. Furthermore, there was absence of reason with material particulars for proposed reassessment under Section 148 of the IT Act.
4. Mr. Tushar Kanti Satapathy, learned Senior Standing Counsel for Income-tax Department submitted that had the petitioner being sanguine about its rights and prejudice, it could have sought for further time on or before 22.03.2022 in response to notice dated 15.03.2022 under Section 148A enclosed as Annexure-2 to the writ petition. It is too late in the day to raise contention that the time granted to furnish response to notice dated 15.03.2022 under Section 148A was inadequate, more so when Order dated 26.03.2022 had already been passed under Section 148A(d) based on material available on record and in absence of any step being taken by the assessee on or before 22.03.2022. Still there is scope for the petitioner-assessee to place its own material to rebut the evidence collected by the Assessing Officer during the course of assessment under Section 148.
4.1. If the grounds are relevant and have a nexus with the formation of opinion regarding escaped assessment, the Assessing Authority would be clothed with jurisdiction to take action under Section 148 of the IT Act. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court, for the sufficiency of the grounds which induced the Assessing Authority to act is not a justiciable issue. What can be challenged is the existence of the belief but not the sufficiency or reasons for the belief. It is submitted that non-response of the assessee to the notice dated 15.03.2022 under Section 148A speaks volumes about the conduct of the petitioner-company. Amplifying such submission, it is said that the details of material based on which the action under Section 148 has been initiated was made known to the petitioner, which it itself has enclosed to the writ petition at Annexure-4. Said Annexure contains “Case Related Information Detail” which inter alia shows as follows:
