Bijendra Singh Vs Principal Chief Commissioner of Income Tax (Rajasthan High Court)
Background: The petitioner challenged a pre-reassessment notice dated 16.03.2022 issued under Section 148A(b), the order dated 27.03.2022 under Section 148A(d), and the notice dated 27.03.2022 under Section 148 of the Income Tax Act, 1961. The proceedings concerned Assessment Year 2015-16. The notice under Section 148A(b) called upon the petitioner to respond by 23.03.2022.
Notice period under Section 148A(b): The petitioner contended that the notice was contrary to Section 148A(b), which requires a notice of not less than seven days. The petitioner submitted that the first and last dates had to be excluded and therefore the statutory minimum was not available. The Department fairly accepted that the notice did not comply with the requirement as to the time granted and sought remand for a fresh opportunity.
Limitation under Section 149: The petitioner also challenged the proceedings as barred by limitation. The petitioner contended that the amount involved was below Rs.50,00,000/- and that, for Assessment Year 2015-16, the notice had been issued after three years. The Court examined the bank statement placed on record. It showed three cash deposits of Rs.2,65,000/-, Rs.50,000/- and Rs.39,00,000/-, aggregating to Rs.42,15,000/-. The notice also referred to Rs.41,65,000/-, but the order under Section 148A(d) merely reiterated both figures without further material substantiating the amount having been deposited by the petitioner. The respondents did not dispute the statement of account or establish another bank account.
Service and timing of proceedings: The notice dated 16.03.2022 was not served on the petitioner. The envelope produced by the respondents was returned undelivered and was received in the Department on 28.03.2022. The postal receipt showed that the notice was sent on 17.03.2022. Despite this, the order under Section 148A(d) had already been passed on 27.03.2022.
Court’s findings: The Court considered Section 148A(b), which requires an opportunity of being heard through a notice specifying not less than seven days. It relied on the Supreme Court decision in Pioneer Motors (Private) Ltd. vs. The Municipal Council, Nagrecoil, AIR 1967 SC 684, on computation of a period expressed as “not less than” a specified number of days. The Court held that both terminal days have to be excluded. On the facts before it, the period between the date of sending the notice and the last date fixed for response fell short of seven days, even assuming receipt by the petitioner. The notice therefore could not be sustained for violation of the mandatory requirement of Section 148A(b).
The Court separately examined Section 149(1)(a) and Section 149(1)(b). Section 149(1)(a) provides the three-year limitation, while clause (b) permits a notice up to ten years where the escaped assessment amount is Rs.50,00,000/- or more. Since the bank statement established deposits of only Rs.42,15,000/- and the notice was issued on 16.03.2022 for Assessment Year 2015-16, the Court held that the notice was ex-facie barred by limitation and consequently without jurisdiction.
The Court also found a mechanical exercise of statutory power. The notice had been returned to the Department on 28.03.2022, whereas the Section 148A(d) order had been passed on 27.03.2022, before the Department had received the returned notice. The Court held that proceeding without caring whether the notice had been served could not be appreciated.
Decision: The writ petition was allowed. The notice dated 16.03.2022 under Section 148A(b), the order dated 27.03.2022 under Section 148A(d), and the notice dated 27.03.2022 under Section 148 were quashed and set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. This writ petition has been filed by the petitioner, aggrieved of pre-reassessment notice dated 16.03.2022 (Annex.1) issued under Section 148A (b) of the Income Tax Act, 1961 (‘the Act’), the order dated 27.03.2022 (Annex.4) passed under Section 148A (d) of the Act and the notice dated 27.03.2022 (Annex.5) issued under Section 148 of the Act.
2. It is inter-alia indicated that the petitioner was issued notice (Annex.1) dated 16.03.2022 under Section 148A (b) of the Act calling upon him to file his response by 23.03.2022, which notice is contrary to the requirement of provisions of Section 148A (b) of the Act, which requires a notice of not less than seven days.
3. Further submissions have been made that the notice issued is barred by limitation, as provided under Section 149(1)(a) of the Act, inasmuch as the amount involved is less than Rs.50,00,000/- and for the Assessment Year 2015-16, these notices have been issued after lapse of three years and as such the notice being without jurisdiction, deserves to be quashed and set aside.
4. Submissions have also been made that from the material produced by the respondents, it is apparent that the notice, which was issued to the petitioner, was not served on the petitioner and was received back by the Department on 28.03.2022, however, the order under Section 148A(d) of the Act was passed on 27.03.2022 itself, which clearly indicates the manner in which the respondents have proceeded and, therefore, the entire proceedings initiated by the respondents, deserve to be quashed and set aside.
5. Learned counsel appearing for the Department made submissions that as the petitioner didn’t file any response to the notice, the respondents were constrained to pass the order impugned. Further submissions have been made that insofar as the challenge laid to the jurisdiction in terms of Section 149(1)(a) of the Act is concerned, the said aspect could only be determined by the authority concerned and merely on account of the indications made by the petitioner, the said plea cannot be accepted.
6. However, it was fairly submitted that the notice as issued, does not comply with the requirement of Section 148A(b) of the Act, insofar as time granted for responding is concerned. It was prayed that the matter may be remanded back to the authority to provide opportunity to the petitioner as per law and thereafter pass a fresh order.
7. We have considered the submissions made by counsel for the parties and have perused the material available on record.
8. The notice under Section 148A(b) of the Act was issued to the petitioner pertaining to Assessment Year 2015-16, with the allegations that the petitioner has deposited in cash amount of Rs.42,15,000/- in his saving bank account with Bank of Baroda and again it has been indicated that he has deposited cash aggregate Rs.41,65,000/- in the bank account maintained with Bank of Baroda. The notice also invoked the provisions of Section 149(1)(b) along with explanation, which provides extended period of limitation up to ten years, in case where the amount involved is more than Rs.50,00,000/-.
9. The notice is dated 16.03.2022 and the petitioner has been called upon to file his response on or before 23.03.2022. It appears that the notice was never served on the petitioner, as in reply to the petition, the respondents have produced the envelope, by which the notice was sent to the petitioner and was returned back ‘undelivered’ to the respondent Department, wherein the same has been received in the office on 28.03.2022. The postal receipt pertaining to sending of the notice indicates the date of 17.03.2022.
10. Section 148A(b) of the Act requires providing opportunity of being heard to the assessee by serving upon him/her notice to show cause within such time, as may be specified in the notice being ‘not less than seven days’ but not exceeding thirty days from the date, on which such notice is issued.
11. The aspect of calculating the days in a case where the provision requires a notice of ‘not less than particular days’, has been dealt with by the Hon’ble Supreme Court in the Pioneer Motors (Private) Ltd. vs. The Municipal Council, Nagrecoil : AIR 1967 SC 684, wherein it has, inter-alia, been laid down as under:
“The words “not being less than one month” do imply that clear one month’s notice was necessary to be given, that is, both the first day and the last day of the month had to be excluded. To put it in the language used by Maxwell on Interpretation of Statutes, 10th Edition, p. 351 :-
“..when…….. ‘not less than’ so many days are to intervene, both the terminal days are excluded from the computation.”
12. It has been laid down by the Hon’ble Supreme Court that both the terminal days have to be excluded for the purpose of complying with the requirement of words ‘not less than …. days ”. Admittedly, in the present case, the notice dated 16.03.2022 was issued/posted on 17.03.2022 and the date fixed for response was 23.03.2022. Excluding two days i.e. the date of sending of the notice as well the last date indicated, even if the notice was received by the petitioner, the same falls short of seven days’ period, as envisaged by provisions of Section 148A(b) of the Act; and as such, for violation of mandatory provisions of Section 148A(b) of the Act, the notice issued to the petitioner cannot be sustained.
13. So far as the plea pertaining to Section 149(1)(a) of the Act pertaining to limitation is concerned, as noticed hereinbefore, the notice pertained to bank account of the petitioner in Bank of Baroda. The petitioner has placed on record Annex.2, which is statement of account of the petitioner for the period 01.04.2014 to 31.03.2015, which pertain to the Assessment Year 2015-16. The said statement of account contains three cash entries of deposit i.e. Rs.2,65,000/-, Rs.50,000/- and Rs.39,00,000/- on three different dates, the total of which, comes to Rs.42,15,000/-. The notice indicates the said amount of Rs.42,15,000/-, however, another indication has been made of deposit of sum of Rs.41,65,000/- in the said notice. In the order passed under Section 148A(d) of the Act, the Assessing Authority has merely reiterated the said amount of Rs.42,15,000/- and 41,65,000/-, nothing has been indicated to further substantiate the said amount having been deposited by the petitioner. In response to the writ petition also, the statement of account (Annex.2) has not been disputed by the respondents and/or the case has been made out seeking to indicate that the petitioner has any other bank account other than what has been produced by the petitioner as Annex.2. The Annex.2, as noticed hereinbefore, indicates the amount of Rs.42,15,000/- only, which is clearly less than Rs.50,00,000/-.
14. Section 149(1)(a) of the Act provides that no notice under Section 148 of the Act shall be issued for the relevant assessment year, if three years have elapsed from end of the relevant assessment year. The exception to the said provision has been provided under Clause (b), wherein a notice can be issued up to ten years, where the escaped assessment amount is Rs.50,00,000/- or more.
15. As in the present case, the amount is less than Rs.50,00,000/- and for the Assessment Year 2015-16, the notice has been issued on 16.03.2022 i.e. beyond three years, the same is ex-facie barred by limitation and consequently is without jurisdiction.
16. The mechanical exercise of powers by the respondents is also reflected from the fact that though the notice sent to the petitioner was returned back and received in the office on 28.03.2022, the authority without caring for the fact as to whether the notice sent to the petitioner has been served, or not, has passed the order under Section 148A(d) of the Act on 27.03.2022, which mechanical exercise of power under the Act, cannot be appreciated under any circumstance.
17. In view of above discussion, the writ petition filed by the petitioner is allowed. The notice dated 16.03.2022 (Annex.1) issued under Section 148A(b) of the Act, the order dated 27.03.2022 (Annex.4) passed under Section 148A(d) of the Act and the notice dated 27.03.2022 (Annex.5) issued under Section 148 of the Act are quashed and set aside.
Order pronounced in the open court on 04/01/2024
