Gopal Tukaram Bitode Vs ITO (Bombay High Court)
Summary: Bombay High Court declined to entertain writ petitions challenging assessment orders passed under Section 147 read with Section 144B of the Income Tax Act, 1961. The petitioners contended that since reassessment arose from information connected with search and seizure proceedings against M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited, proceedings ought to have been initiated under Section 153C rather than Section 148. The Revenue maintained that no seized books, documents or assets pertaining to the petitioners had been received and that reassessment was initiated on information uploaded on the Insight Portal and flagged as high-risk CRIU/VRU information.
The Court found this stand sufficient for declining extraordinary jurisdiction under Article 226. It also noted that the petitioners had responded to the show-cause notices and permitted the assessments to be completed without raising the Section 153C jurisdictional objection at that stage. The Court clarified that it was not holding that jurisdictional objections could never be raised subsequently, but in the facts of these cases an efficacious statutory appellate remedy was available. While recognising that a writ can be entertained where an impugned exercise is without jurisdiction, the Court held that the petitioners should contest the assessment orders on merits through the statutory remedy. The writ petitions were accordingly dismissed without examination of the assessment orders on merits.
Cases Discussed
- Magadh Sugar & Energy Limited Vs. The State of Bihar and others [2021 (6) BLJ 356] — Relied upon by the petitioners for the proposition that extraordinary jurisdiction under Article 226 can be invoked when the action complained of is without jurisdiction.
- Kanwar Singh Saini Vs. High Court of Delhi [2011(10) SCALE 725] — Relied upon by the petitioners in support of their jurisdictional challenge.
- Assistant Commissioner of Income-Tax Vs. Hotel Blue Moon [(2010) 188 Taxman 113(SC)] — Relied upon by the petitioners while challenging the jurisdiction assumed in reassessment proceedings.
- Commissioner of Income Tax Vs. Laxman Das Khandelwal [(2019) 266 Taxman 171(SC)] — Relied upon by the petitioners in support of their challenge to the reassessment proceedings.
- Indus Towers Ltd. Vs. Deputy Commissioner of Income Tax, Circle-ii(1) [(2017) 82 Taxman 430 (Delhi)] — Relied upon by the petitioners.
- Pr. Commissioner of Income-tax Vs. Shri Jai Shiv Shankar Traders (P) Ltd. [(2015) 64 Taxman 220 (Delhi)] — Relied upon by the petitioners.
- Murli Industries Limited Vs. Assistant Commissioner of Income Tax and others, Writ Petition No.2948 of 2021 (Nagpur Bench), decided on 23.12.2021 — Relied upon by the petitioners in support of the contention that the reassessment was without jurisdiction.
- Heval Navinbhai Patel C/o Ketan H Shah Vs. Income Tax Officer Ward 3(2)(2), R/Special Civil Application No.17557 of 2018, decided on 01.02.2021 — Relied upon by the petitioners.
- State of Maharashtra and others vs. Greatship (India) Limited, Civil Appeal No.4956 of 2022, decided on 20.09.2022 — Relied upon by the Revenue in support of its preliminary objection based on availability of an efficacious statutory remedy.
- Ramnivas Satyanarayan Dodiya Vs. The National Faceless Assessment Centre and Others, Writ Petition No.4714 of 2022, order dated 02.05.2022 — Distinguished because that proceeding challenged the notice issued under Section 148, whereas the present writ petitions challenged completed assessment orders.
- FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
In these writ petitions filed under Article 226 of the Constitution of India challenge has been raised to the orders of assessment passed by the National E-Assessment Centre, New Delhi under Section 147 read with Section 144B of the Income Tax Act, 1961 (for short, the Act of 1961). A preliminary objection has been raised by the respondents to the maintainability of the writ petitions on the ground that the petitioners have a statutory remedy by way of an appeal under Section 246 (1) of the Act of 1961 and for that reason the writ petitions do not deserve to be entertained.
2. Before considering the preliminary objection as raised, we may refer to certain relevant aspects. According to the petitioners Writ Petition No.4141 of 2022 can be considered as the lead petition since the pleadings of the parties therein are complete. With regard to the Assessment Year 2015-16 a notice under Section 148 of the Act of 1961 dated 29.03.2021 was issued to the petitioner by the Income Tax Officer in which it was stated that he had reasons to believe that the income chargeable to tax for the Assessment Year 2015-16 had escaped assessment within the meaning of Section 147 of the Act of 1961. It was therefore proposed to assess/re- assess the income/loss for the said Assessment Year. The petitioner was thus called upon to deliver a return in the prescribed form for the said assessment year. Accordingly the petitioner submitted his return on 22.01.2022. On 27.01.2022 a notice was issued to the petitioner under Section 143(2) read with Section 147 of the Act of 1961. As per annexures to the said notice the reasons for re-opening the case under Section 147 of the Act of 1961 were indicated. It was stated that the Assessment Officer collected/received information uploaded on Insight Portal and flagged as high risk CRIU/VRU information. The details mentioned were that search and seizure action was carried out in the case of M/s. Renuka Mata Multi- State Urban Co-operative Credit Society Limited. During the search it was noticed that huge money was deposited in the bank accounts maintained in the Society and during the course of assessment, the Society could not explain the source for the same. For verifying the information after making necessary enquiries, it was found that the petitioner had deposited an amount of Rs.8,41,93,228/- in his account held with M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited during the Financial Year 2014-15. It was thus stated that there was a reason to believe that the aforesaid total deposit during the Financial Year 2014-15 that was chargeable to tax had escaped assessment for the Assessment Year 2015-16 within the meaning of Section 147 of the Act of 1961. It was stated that since period of more than four years from the end of Assessment Year 2015- 16 had not elapsed, necessary sanction was obtained from the Additional Commissioner of Income Tax as per Section 151 of the Act of 1961 for issuing notice under Section 148 of the Act of 1961.
3. In response to the show cause notice issued under Section 142(1) of the Act of 1961, the petitioner submitted his reply on 28.02.2022. He stated that on account of his illiteracy and lack of knowledge, he had not maintained any books of accounts and had also not filed his return of income for the said assessment year. The return was not filed for want of old record. On 21.03.2022 a show cause notice was issued to the petitioner as to why variation as proposed should not be made. It stated that the source of cash deposited being Rs.8,41,93,228/- had remained unexplained and therefore treating it as unexplained money under Section 69A of the Act of 1961 it was proposed to be added to the total income of the petitioner. It was also proposed to initiate penalty proceedings under Section 271(1)(c) of the Act of 1961. In response to the said show cause notice the petitioner on 24.03.2022 stated that he had accepted total deposits for the Assessment Year 2014-15 in the bank accounts held with the Society. It was further stated that there was no supporting evidence in support of the statements made in the show cause notice.
4. On 25.03.2022 an assessment order under Section 147 read with Section 144B of the Act of 1961 came to be passed. In the said order it was stated that the source of cash deposited which was Rs.8,41,93,228/- had remained unexplained. The stand of the petitioner that the transactions made through his bank account were without his knowledge was not accepted. The reply of the petitioner was found to be not acceptable. Accordingly the total income of the petitioner came to be assessed at Rs.8,45,05,360/- and it was directed to issue a demand notice as well as a penalty notice under Section 271 (1)(c) of the Act of 1961. Consequentially a notice for penalty was issued on the same day. The order of assessment as passed is under challenge in these writ petitions.
5. Shri Ram Heda, learned counsel for the petitioners submitted the respondents had no authority to re-open the assessment under Section 148 of the Act of 1961 for the reasons for which it was sought to be re-opened. According to him, since the re-opening of the assessment was pursuant to the search and seizure carried out in the case of M/s. Renuka Mata Multi- State Urban Co-operative Credit Society Limited the respondents ought to have proceeded under Section 153C of the Act of 1961. Despite the fact that the re-opening ought to have been done by invoking the provisions of Section 153C of the Act of 1961, recourse had been taken to the provisions of Section 148 of the Act of 1961. Inviting attention to the relevant statutory provisions, it was submitted that under Section 153C (1)(b) when any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, related to a person other than the person referred to in Section 153A, there was a jurisdiction to re- open the proceedings accordingly. It was an admitted position that only on the basis of the search and seizure operations at M/s. Renuka Mata Multi- State Urban Co-operative Credit Society Limited that the Assessing Officer had reason to believe that the alleged income had escaped assessment. Instead of invoking jurisdiction under Section 153C, the notice under Section 148 came to be issued. The search in question was conducted on 26.05.2017 and therefore the re-opening of the assessment could have been done only under Section 153C of the Act of 1961. This aspect being jurisdictional in nature, the High Court could entertain the writ petitions under Article 226 of the Constitution of India and strike down the orders of assessment. No purpose would be served by driving the petitioners to invoke the statutory remedy as provided under the Act of 1961. Inviting attention to the judgment of the Hon’ble Supreme Court in Magadh Sugar & Energy Limited Vs. The State of Bihar and others [2021 (6) BLJ 356] it was submitted that when an action is complained to be without jurisdiction, the extra ordinary jurisdiction could be invoked under Article 226 of the Constitution of India. Reliance was also placed on the decisions in Kanwar Singh Saini Vs. High Court of Delhi [2011(10) SCALE 725], Assistant Commissioner of Income-Tax Vs. Hotel Blue Moon [(2010) 188 Taxman 113(SC)], Commissioner of Income Tax Vs. Laxman Das Khandelwal [(2019) 266 Taxman 171(SC), Indus Towers Ltd. Vs. Deputy Commissioner of Income Tax, Circle-ii(1) [(2017) 82 Taxman 430 (Delhi) and Pr. Commissioner of Income-tax Vs. Shri Jai Shiv Shankar Traders (P) Ltd. [(2015) 64 Taxman 220 (Delhi), Writ Petition No.2948 of 2021 (Nagpur Bench) (Murli Industries Limited Vs. Assistant Commissioner of Income Tax and others) with connected writ petition decided on 23.12.2021 and the judgment of the Gurjarat High Court in R/Special Civil Application No.17557 of 2018 [Heval Navinbhai Patel C/o Ketan H Shah Vs. Income Tax Officer Ward 3(2)(2)] with connected civil application decided on 01.02.2021. Since there was no dispute on any factual aspects and as the jurisdiction had been wrongly assumed under Section 148 of the Act of 1961, the writ petitions were liable to be entertained on merits. The learned counsel also referred to the Notification dated 17.09.2020 issued by the Central Board of Direct Taxes to all the Principal Chief Commissioners of Income Tax as regards the procedure to be followed in the matter of search and seizure. The re-opening was contrary to the aforesaid procedure. It was thus prayed that the impugned orders of assessment be set aside as without jurisdiction.
6. Shri Anand Parchure, learned counsel for the respondents opposed the writ petitions by urging that an efficacious statutory remedy was available to the petitioners for being invoked. The remedy of appeal under Section 246 (1) of the Act of 1961 being available, there was no reason whatsoever to permit the petitioners to by-pass the same. Inviting attention to the reply filed on behalf of the respondents it was submitted that the re- opening of the assessment under Section 148 of the Act of 1961 was justified. The Income Tax Officer had not received any books of account or documents or assets, seized or requisitioned during the search. The information in the case of the petitioners was shared by the Assistant Commissioner of Income Tax on the basis of enquiries conducted during the assessment proceedings in the case of M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited. The information uploaded on Insight Portal and flagged as high risk information. Reasons were also recorded for re-opening the case under Section 147 of the Act of 1961. Notice under Section 148 of the Act of 1961 was issued after approval of the competent authority. Hence the Assessing Officer was justified in proceeding on the basis that there were reasons to believe that the income chargeable to tax had escaped assessment for the Assessment Year 2015-16. The provisions of Section 153C of the Act of 1961 were not at all attracted and hence there was no reason to entertain the writ petitions on the grounds as urged by the petitioners. In support of his submissions the learned counsel placed reliance on the decision of the Hon’ble Supreme Court in Civil Appeal No.4956 of 2022 (State of Maharashtra and others vs. Greatship (India) Limited) decided on 20.09.2022. In absence of any jurisdictional aspect being attracted, the writ petitions were not liable to be entertained.
7. Having heard the learned counsel for the parties and having perused the material on record, we are of the considered view that the writ petitions as filed under Article 226 of the Constitution of India do not deserve to be entertained in the absence of any jurisdictional aspect being involved and the petitioners can be permitted to avail the statutory remedy as available under the Act of 1961.
Alongwith the notice issued under Section 148 of the Act of 1961 the reasons for re-opening the case under Section 147 of the Act of 1961 have been indicated. It has been stated that the information had been uploaded on Insight Portal and flagged as high risk CRIU/VRU information. As per the details, it was stated that search and seizure action was carried out in the case of M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited on 26.05.2017. It was found that huge money was deposited in the account maintained in the Society and during the course of assessment, the Society could not explain the source for the same. Thereafter during the course of assessment proceedings by the Deputy Commissioner of Income Tax certain data was collected. On verification, the Assessment Officer provided information of the persons in whose accounts held with M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited large credits were seen. The petitioner is one of the depositors having account with the said Society. It is on the basis of this information received and enquiries made that there was reason to believe that there had been escapement of income. After obtaining necessary sanction under Section 151 of the Act of 1961, the said notice under Section 148 of the Act of 1961 came to be issued.
8. According to the petitioners, there was no jurisdiction to re-open the assessment under Section 148 of the Act of 1961. Since the re-opening was pursuant to the search and seizure operations carried out at M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited and as the search was carried out prior to 01.04.2021, the jurisdiction under Section 153C ought to have been invoked. On the other hand, according to the respondents it is in view of the information shared by the Assistant Commissioner of Income Tax as well as the information uploaded on Insight Portal and flagged as high risk CRIU/VRU information that the re-opening was under Section 147 of the Act of 1961. In paragraph 5.11 of the reply it has been stated by the respondents as under:
“5.11 Reply as to Grounds i, ii, iii, & iv– The petitioner has taken ground in these paras that reopening of his case under Section 148 of the Income Tax Act, 1961 based on the information received from a search and seizure action under Section 132 is contrary to the law laid down under the provisions of Section 153 C of the Income Tax Act, 1961. In this context, it is submitted that respondent no.1 has not received any books of account or documents or assets, seized or requisitioned during the search in case of petitioner. However, information in the case of petitioner was shared by ACIT, Central Circle 4(4), Mumbai on the basis of enquiries conducted during the assessment proceedings in case of M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited in whose case search and seizure action under Section 132 was carried out. The petitioner Shri Gopal Tukaram Bitode having PAN AMFPB6343L was having account with Shri Renuka Mata Multi-State Urban Co-operative Credit Society Limited. On the basis of information uploaded on Insight Portal and flagged as High Risk CRIU/VRU information and after enquiries and verification, Respondent no.1 has recorded reasons for reopening the case under Section 147. Thereafter, notice under Section 148 was issued after approval of competent authority. Thus, proceedings initiated against the petitioner under Section 148 of the Income Tax Act, 1961 are correct as the Assessing Officer was having reason to believe that income chargeable to tax has escaped assessment for AY 2015-16. In the light of above facts, provisions of Section 153 C are not applicable in the case.”
We find that the aforesaid stand is sufficient to refuse to entertain the writ petitions filed under Article 226 of the Constitution of India. The respondent have specifically asserted that they have proceeded to re-open the assessment in the light of the information uploaded on Insight Portal. The same is quoted to be a reason to believe that the income chargeable to tax had escaped assessment. It has also been asserted that the Income Tax Officer has not received any books of account or documents or assets seized or requisitioned during the search at M/s. Renuka Mata Multi-State Urban Co-operative Credit Society Limited in the case of the petitioner. We therefore find that it would necessary for the petitioners to contest and challenge the assessment orders on merits so as to substantiate the stand that the re-opening of the proceedings under Section 147 of the Act of 1961 was not at all justified and thus without jurisdiction.
9. Another relevant aspect to be considered is that in reply to the show cause notice the petitioners did not seek to challenge the re-opening on the ground that it was without jurisdiction since the assessment was not sought to be re-opened in the light of Section 153C of the Act of 1961. Having responded to the show cause notice and having contested the same, the petitioners have permitted the orders of assessment to be passed. It would have been a different matter had the petitioners challenged the notice issued under Section 148 of the Act of 1961 seeking to re-open the proceedings at that stage itself. The petitioners permitted the authorities to proceed under Section 147 by responding to the notice. It is only after passing of the assessment orders that is now sought to be urged that the re-opening was without jurisdiction and it ought to have been only under Section 153C of the Act of 1961. We may not be understood to have stated that in no case could such challenge be raised to the jurisdiction to re-opening of the proceedings. However in the facts of the present cases when in the reply to the show cause notice such stand as regards lack of jurisdiction was not raised and the same is being now raised after passing of the assessment orders, we are not inclined to invoke extra ordinary jurisdiction in favour of the petitioners especially since an efficacious statutory remedy is available.
10. There can be no dispute with the proposition that if the impugned exercise is without jurisdiction, extra ordinary jurisdiction under Article 226 of the Constitution of India could be invoked. Similarly, acquiescence of a party would also not be relevant in that regard. However in the facts of the present cases when it is asserted by the respondents that the re-opening of the proceedings is based on the information uploaded on Insight Portal, the same is found sufficient for not invoking the extra ordinary jurisdiction. The petitioners have sought to rely upon the order dated 02.05.2022 passed in Writ Petition No.4714 of 2022 (Ramnivas Satyanarayan Dodiya Vs. The National Faceless Assessment Centre and Others) at the Aurangabad Bench. It is however seen that the challenge therein was to the notice issued under Section 148 of the Act of 1961 and not the orders of assessment as in the present cases.
11. For all these reasons we are not inclined to entertain the writ petitions as filed. By clarifying that it would be open for the petitioners to invoke the statutory remedy as provided under the Income Tax Act, 1961 and by stating that this Court has not examined the impugned orders of assessment on merits, the writ petitions are not entertained. The same are accordingly dismissed. The observations made in this order are only for considering the preliminary objection as raised and those observations do not reflect consideration of the challenge on merits. The parties shall bear their own costs.
