Case Law Details
Rishva Infrastructures Vs ITO (Gujarat High Court)
The Gujarat High Court allowed a writ petition challenging an order passed under Section 148A(d) of the Income-tax Act, 1961 and the consequential notice issued under Section 148 for AY 2018-19, holding that the proceedings were vitiated by breach of the principles of natural justice.
The petitioner, a partnership firm engaged in construction activities, had filed its return of income for AY 2018-19 declaring total income of ₹58,66,260. The Assessing Officer issued a notice under Section 148A(b) on 21.03.2022 requiring the petitioner to respond by 28.03.2022. The petitioner submitted that it sought an adjournment through the Income-tax portal on 26.03.2022 and received a confirmation email acknowledging successful submission of the request.
According to the petitioner, the Assessing Officer neither considered nor responded to the adjournment request and proceeded to pass an order under Section 148A(d) on 30.03.2022, holding that income of ₹1,42,55,127 had escaped assessment. A notice under Section 148 was also issued on the same date. The petitioner contended that only a very short period had been granted to respond, with effectively four working days available, although the statutory time for issuing the notice extended up to 31.03.2029. It further argued that the information sought related to transactions about four years old, requiring verification of records, and that the opportunity granted under Section 148A(b) was merely formal rather than effective.
The petitioner also submitted that Section 148A(b) contemplates an opportunity of being heard and permits extension of time. Since its request for adjournment was ignored, the impugned order and notice were alleged to be illegal and contrary to the principles of natural justice.
During the hearing, the Revenue did not dispute the factual position that the petitioner’s adjournment request had not been considered.
The High Court observed that it was undisputed that the petitioner had sought additional time through an email on 26.03.2022, that the communication had been delivered and acknowledged by the respondent, and that the request formed part of the record. The Court held that the respondent had passed the order and notice without considering the request for adjournment, thereby acting contrary to the provisions of the Act and in clear breach of the principles of natural justice.
Without examining the merits of the reassessment, the High Court quashed the order dated 30.03.2022 passed under Section 148A(d) and the notice issued under Section 148. The matter was remanded to the Assessing Officer to pass a fresh de novo order in accordance with law after providing the petitioner an opportunity to file a reply and be heard. The Court directed that the exercise be completed within 12 weeks from receipt of its order.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr. S.N. Divatia for the petitioner and learned Senior Standing Counsel Mr. Maunil Yajnik for the respondent.
2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr. Maunil Yajnik, waives service of notice of rule for and on behalf of the respondent.
3. Since a short issue is involved, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing, for final disposal.
4. By way of the present petition under Articles 226 and 227 of the Constitution of India, the petitioner seeks direction to quash and set aside the order dated 30.03.2022 passed under Section 148A(d) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ for short) for the Assessment Year (A.Y.) 2018-19 by the respondent as well as direction to quash and set aside notice under Section 148 of the Act, dated 30.03.2022.
5. The brief facts leading to filing of the present writ petition are as under:
5.1 The petitioner is a partnership firm, inter alia, engaged in the business of construction activities. The petitioner filed its Return of Income for the A.Y. 2018-19 on 04.10.2018 declaring total income of Rs. 58,66,260/-.
5.2 The respondent issued notice under Section 148A(b) of the Act, on 21.03.2022, calling upon the petitioner to show cause as to why, in view of the reasons mentioned, a notice under Section 148 of the Act should not be issued. The petitioner was asked to furnish response on or before 28.03.2022 i.e. after 07 days from the date of issuance of show-cause notice under Section 148A(b) of the Act.
5.3 It is the case of the petitioner that an adjournment was sought by the petitioner on 26.03.2022 on the IT Portal and a confirmation mail regarding successful submission of adjournment request was also received from communication@cpc.incometax.gov.in.
5.4 It is the case of the petitioner that without considering the adjournment request made by the petitioner, the respondent issued impugned order under Section 148A(d) of the Act on 30.03.2022 holding that the income to the tune of Rs.1,42,55,127/- had escaped assessment for the year under consideration. It was further mentioned in the order passed under Section 148A(d) of the Act that the petitioner neither furnished any reply or sought any further time for furnishing the reply before 28.03.2022. Subsequent to the order dated 30.03.2022 under Section 148A(d) of the Act, the respondent also issued notice under Section 148 of the Act on 30.03.2022, which are impugned in the writ petition.
6. Learned advocate Mr. S.N. Divatia for the petitioner has submitted that the impugned order under Section 148A(d) of the Act dated 30.03.2022 and notice under Section 148 of the Act dated 30.03.2022 are patently illegal, bad-in-law and without jurisdiction because the condition precedent for order under Section 148A(d) of the Act and notice under Section 148 of the Act are not satisfied.
6.1 It is further submitted that the respondent had issued a single notice under Section 148A(b) of the Act at 12:21 PM on 21.03.2022 and called upon the petitioner to respond it on or before 28.03.2022. It is further submitted that the petitioner was allowed a very short period to respond to notice despite the fact that time i.e. upto 31.03.2029 was available with the respondent for issuing notice under Section 148 of the Act. It was further submitted that there were only 4 working days being 22 to 25.03.2022 whereas 26th & 27th March were Saturday-Sunday. It was submitted that the information asked pertain to the period about 4 years required verification of old records which was not possible to do in such short period. It was submitted that the perusal of the provisions of section148A of the Act provides for extension of time which though asked for and the same was not responded. It was lastly submitted that the provision of Section 148A(b) of the Act requires at least 7 days’ notice before passing any order under Section 148A(d) of the Act. There should be clear seven days’ notice but in the case of the petitioner, the time allowed was only 4 working days. Thus, according to the petitioner, there was gross violation of principles of natural justice on part of the respondent so that the impugned order under Section 148A(d) of the Act was liable to be quashed being illegal, unlawful and without jurisdiction.
6.2 It is further submitted that the provisions of Section 148A(b) of the Act in clear terms provides for an opportunity of being heard to the assessee in this regard. It is submitted that in the circumstances narrated above, the so called opportunity allowed by the respondent was mere formality.
In wake of such submissions, learned advocate Mr. Divatia has prayed to grant the prayer, as prayed for, in the present writ petition.
7. Per contra, learned Senior Standing Counsel Mr. Maunil Yagnik was not in a position to dispute the factual aspect that the request of adjournment was not considered by the respondent. In view of the same, Mr. Yajnik, learned Senior Standing Counsel, submitted that appropriate orders may be passed.
9. Having heard heard learned advocates for the respective parties and perused the material on record, the limited question for consideration is with regard to procedure for principles of natural justice. It is not in dispute that the petitioner had sought for time on 26.03.2022 by preferring a mail, which was categorically delivered to the respondent. The respondent has acknowledged the same. This e-mail is forming part of the paper-book and is attached at page-20 of the writ petition. The respondent passing the impugned order and notice ignoring the request made by the petitioner has acted dehors the provisions of the Act.
9. Therefore, it cannot be disputed that the impugned order as well as the impugned notice is passed in clear breach of principles of natural justice and are, therefore, dehors settled principles of law.
10. In view of the above facts and without entering into merits of the matter, the impugned order under Section 148A(d) of the Act passed on 30.03.2022 as well as the notice under Section 148 of the Act passed on 30.03.2022 are hereby quashed and set aside and the matter is remanded to the respondent Assessing Officer to pass a fresh denovo order, in accordance with law, after giving an opportunity to the petitioner to file a reply as well as giving an opportunity of being heard. Such exercise shall be completed within 12 weeks from the date of receipt of copy of this order.
The petitioner stands disposed of accordingly. Rule is made absolute with no order as to costs.
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