Century Tradeserve Limited v. Oral Judgment

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 10596 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA andHONOURABLE MS. JUSTICE NISHA M. THAKORE ==========================================================CENTURY TRADESERVE LIMITED VersusINCOME-TAX DEPARTMENT ==========================================================Appearance:MR CHINTAN DAVE FOR HLP ASSOCIATES LLP(9263) for the Petitioner(s) No. 1MR MR BHATT FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 18/01/2022 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE) 1.By this writ application, the writ applicant being a Public Limited Company through its Director / Authorized Representativehas invoked an extraordinary writ jurisdiction of this Court underArticle 226 of the Constitution of India and has prayed for thefollowing reliefs: “(A) Your Lordships may be pleased to issue a writ ofmandamus and / or an appropriate writ, order ordirection, quashing and setting aside the notice dated31.03.2021 issued under Section 148 of the IncomeTax Act, 1961 along with notice dated 18.06.2021issued under Section 143(2) read with Section 147 ofthe Income Tax Act, 1961 for Assessment Year2013-14;mandamus and / or an appropriate writ, order ordirection, quashing and setting aside the notice dated31.03.2021 issued under Section 148 of the IncomeTax Act, 1961 along with notice dated 18.06.2021issued under Section 143(2) read with Section 147 ofthe Income Tax Act, 1961 for Assessment Year2013-14; (B) Pending admission, hearing and final disposal of thispetition, Your Lordships may kindly be pleased tostay the further proceedings pursuant to the issuanceof the notice dated 31.03.2021 issued under Section148 of the Income Tax Act, 1961 along with noticedated 18.06.2021 issued under Section 143(2) readwith Section 147 of the Income Tax Act, 1961 forAssessment Year 2013-14;petition, Your Lordships may kindly be pleased tostay the further proceedings pursuant to the issuanceof the notice dated 31.03.2021 issued under Section148 of the Income Tax Act, 1961 along with noticedated 18.06.2021 issued under Section 143(2) readwith Section 147 of the Income Tax Act, 1961 forAssessment Year 2013-14; (C) Your Lordships may be pleased to grant such otherand further relief and / or order in the interest ofjustice in favour of the petitioner.” and further relief and / or order in the interest ofjustice in favour of the petitioner.” 2.Brief facts, which emerges from the record of the writapplication are summarized as under: 2.1The writ applicant is a Public Limited Company registeredunder the provisions of the Companies Act, 1956 and is engagedin the business of trading and service. The writ applicant- asseseehas filed its return of income for A.Y. 2013-14 declaring its grossincome total income as ‘NIL’ on 28.09.2013. On 18.09.2014, theintimation was received from the Revenue Department under Section 143(1) of the Income Tax Act, 1961 ( for short, ‘the act’),however, no scrutiny assessment was done for the relevant period.2.2On 05.02.2021, the original Company Century Polyfil Ltd.was renamed as Century Tradeserve Ltd. and necessaryincorporation was reported to the Registrar of the Companies. 2.3Suddenly, on 31.03.2021, the impugned notice came to beissued seeking initiation of reassessment proceedings for A.Y.2013-14. On 27.04.2021, the writ applicant Company hadsubmitted its revised return of income for the relevant A.Y.responding to the aforesaid notice under Section 148 of the Actand had further prayed for supply of reasons for reopening. Section 143(1) of the Income Tax Act, 1961 ( for short, ‘the act’),however, no scrutiny assessment was done for the relevant period.2.2On 05.02.2021, the original Company Century Polyfil Ltd.was renamed as Century Tradeserve Ltd. and necessaryincorporation was reported to the Registrar of the Companies. 2.3Suddenly, on 31.03.2021, the impugned notice came to beissued seeking initiation of reassessment proceedings for A.Y.2013-14. On 27.04.2021, the writ applicant Company hadsubmitted its revised return of income for the relevant A.Y.responding to the aforesaid notice under Section 148 of the Actand had further prayed for supply of reasons for reopening. 2.4It is the case of the writ applicant that the respondentdepartment instead of supply of reasons proceeded further byissuing notice dated 18.06.2021, under Section 142(1) of the Act,thereby calling upon the writ applicant Company to submitsupporting documents, if any, which was expected to be submittedon or before 21.07.2021. 2.5The writ applicant has placed on record the letter dated10.06.2021, which claims about reasons for reopening assessmentof the year under consideration, being supplied, however, it is thespecific case of the writ applicant Company that no suchattachment of reasons was actually served upon the writ applicantCompany. Thus, in absence of reasons for reopening being notbeen supplied or served, the writ applicant has approached thisCourt by way of this writ application challenging the impugnednotice, more particularly, on the ground that the same seeksreopening beyond the period of four years. 3.During pendency of this petition, the writ applicant hadsubmitted draft amendment seeking incorporation of the relevantdetails in the memo of the petition as regards the communicationdated 10.06.2021 and had thereby contended that though thecommunication states that the attachment has been enclosedwhich according to the respondent Authority are the reasons thatwere recorded for reopening for the relevant A.Y., however, it wascategorically contended that no attachment has ever been servedupon the writ applicant. 4.Considering the aforesaid stand of the writ applicant, thisCourt vide order dated 03.08.2021 had passed the following order: “Draft amendment as prayed for is granted. Freshamended Memo of petition be furnished within two days.After the amended petition is furnished, Notice be issued tothe respondent returnable on 17.08.2021. Direct service ispermitted.” 5.On 17.08.2021, when this petition was taken up for hearing,Mr. M.R. Bhatt, the learned senior counsel appearing for therespondent department had placed on record the copy of screenshot of the portal of the Department and has submitted that theattachment contained the reasons for reopening of the A.Y. underconsideration. 6.Subsequently, an affidavit-in-reply has been filed by I.T.O.,Ward-1(1)(3), Ahmedabad, wherein the respondent authority hascategorically denied the fact of non supply of reasons and hasplaced on record cogent material including the extract of portalreflecting attachment file as well as the reasons. 7.The writ applicant has submitted affidavit-in-rejoinder dealing with the aforesaid affidavit of the Department and has reiteratedthat the reasons were never supplied to the writ applicant beforenotice dated 18.06.2021 issued under Section 143(2) read withSection 147 of the Act, which was served upon the writ applicant. Itis further contended that the respondent Authority under the garbof technical error are now coming up with a case to serve thereasons recorded at a very belated stage of the reassessmentproceeding, which is otherwise impermissible in the eye of law. Inthe peculiar facts and circumstances, the writ applicant has prayedfor direction to quash and set aside the impugned notice andconsequential actions. 7.The writ applicant has submitted affidavit-in-rejoinder dealing with the aforesaid affidavit of the Department and has reiteratedthat the reasons were never supplied to the writ applicant beforenotice dated 18.06.2021 issued under Section 143(2) read withSection 147 of the Act, which was served upon the writ applicant. Itis further contended that the respondent Authority under the garbof technical error are now coming up with a case to serve thereasons recorded at a very belated stage of the reassessmentproceeding, which is otherwise impermissible in the eye of law. Inthe peculiar facts and circumstances, the writ applicant has prayedfor direction to quash and set aside the impugned notice andconsequential actions. 8.Mr. Bhatt, the learned senior counsel assisted by Mr. MunjalBhatt, learned advocate appearing for the respondent Authorityhas raised preliminary objection that the present writ application ispremature at this stage, more particularly, when the writ applicanthas sought relief to quash and set aside the notice under Section147 read with Section 148 of the Act. So far the contention raisedby the writ applicant with regard to the violation of the principles ofnatural justice inasmuch as non-supply of the copy of the reasonsrecorded with regard to the satisfaction arrived at by therespondent Authority of issuance of the notice under Section 147read with Section 148 of the Act is concerned, it is submitted thatthe attachment containing the reasons recorded by the AssessingOfficer was duly uploaded on the portal along with communicationdated 10.06.2021, which can be verified from the case historydownloaded from the Income Tax Business Application (ITBA)portal. The extract of the same is annexed and placed on recordthe reasons recorded by the Assessing Officer for reopening therelevant assessment year under consideration, which is producedat page 41 of the aforesaid reply. It is therefore submitted that the mandate cast upon the assessing officer by the supreme Court inthe case of GKN Driveshaft’s stands discharged and has prayed tonot to entertain this petition, at this stage. 9.In light of the peculiar facts and circumstances of the case,only limited question of law, which arises for our consideration iswhether the writ applicant, an assessee is justified in invokingextraordinary writ jurisdiction at the notice stage when the noticeshave been issued under Sections 143(2) and 148 of the act,subsequently being furnished with the reasons recorded forreopening the assessment under consideration. 10.We have heard learned counsels representing the respectiveparties and have also perused the record and the material placedfor consideration of this Court. The limited issue, which we arerequired to decide is with regard to service of the reasons recordedby the Assessing Officer for reopening of the relevant assessmentyear. At this stage, it would be relevant to consider the contents ofthe notice dated 18.06.2021 issued under Section 143(2) read withSection 147 of the Income Tax Act. The same reads thus: “GOVERNMENT OF INDIAMINISTRY OF FINANCEINCOME TAX DEPARTMENTOFFICE OF THE INCOME TAX OFFICERWARD 1(1)(3), AHMEDABAD. To CENTURY TRADESERVE LIMITED405, ASIATIC TRADE CENTRE,NR. JAIN TEMPLE, NAVRANGPURA,AHMEDABAD 380009, Gujarat India PAN:Assessment DIN & Notice No. Dated: Notice under section 143(2).read with section 147 at the income tax Act,1951(Act Dear Taxpayer Thank you for filing your return of income for Assessment Year 2013-14 inresponse to notice under section 145 of the Act, vide Ackno.345340441270421 on 27/04/2021 2. While acknowledging the care and diligence you have taken inpreparing the return, there are certain issues as mentioned below whichneed further clarification:- Issues as per reasons recorded for reopening “GOVERNMENT OF INDIAMINISTRY OF FINANCEINCOME TAX DEPARTMENTOFFICE OF THE INCOME TAX OFFICERWARD 1(1)(3), AHMEDABAD. To CENTURY TRADESERVE LIMITED405, ASIATIC TRADE CENTRE,NR. JAIN TEMPLE, NAVRANGPURA,AHMEDABAD 380009, Gujarat India PAN:Assessment DIN & Notice No. Dated: Notice under section 143(2).read with section 147 at the income tax Act,1951(Act Dear Taxpayer Thank you for filing your return of income for Assessment Year 2013-14 inresponse to notice under section 145 of the Act, vide Ackno.345340441270421 on 27/04/2021 2. While acknowledging the care and diligence you have taken inpreparing the return, there are certain issues as mentioned below whichneed further clarification:- Issues as per reasons recorded for reopening 3. In view of the above, you may submit your response with supportingdocuments (if any) on the above mentioned issues to undersignedelectronically in ‘E-proceedings' facility through your account in e-Filingwebsite (www.incometandiefing.govt.in) at your convenience on or before21/07/2021 4. In course of assessment proceedings, if required specificquestionnaire(s) or requisition(s) for information/document may be issuedsubsequently. 5. A brief note on E- Proceeding is enclosed for your kind reference. Incase you require any assistance in filing your response you may contacttoll free Call Centre number 1800 103 4215 Enclosure: As above Yours faithfully BABULA GOPAL UNNITHAN WARD 1(1)(3)AMEDABAD” 11.Upon bare reading of the contents of the aforesaid noticedated 18.06.2021, it transpires that there is reference to the issueas per the reasons recorded for reopening and at the end of para 5referred to above mentions about enclosed note. Even otherwiseas per the affidavit-in-reply filed by the respondent Authority, thehistory downloaded from the Income Tax Business Application portal refers to the communication dated 10.06.2021 which alsomentions about the attachment annexed with the saidcommunication dated 10.06.2021. Bare reading of the relevantextract of web page of the portal indicates about the attachmentannexed with the communication dated 10.06.2021, moreparticularly, under the column view other action, there is referenceto view attach document file. The said document is suggestive ofthe fact that in fact the document in the nature of attachment wasvery much available on the Income Tax Business Applicationportal. However, without going into the aforesaid controversy ofservice of reasons recorded by the Assessing Officer seekingreopening of the assessment under Section 147 of the Act, tobalance equity we find it appropriate to relegate the writ applicantto submit it’s objections along with necessary documents, if any,which the writ applicant may propose to rely, in response to thereasons being produced before this Court as reflected from page41 onwards. 12.For the reasons stated hereinabove, the writ applicant ispermitted to approach the respondent Authority to submit theobjections against the reasons for reopening of the relevant A.Y.under consideration with necessary documents, if any, within aperiod of two weeks from the date of receipt of the copy of thisorder. The writ applicant is at liberty to take all legal contentions asmay be permissible in law. On receipt of such objections alongwith documents, if any, the respondent Authority is hereby directedto look into the matter and take decision in accordance with law.We clarify that even otherwise we have not gone into merits of thelegality and validity of the impugned notice. 13.The petition stands disposed of in the aforesaid terms. (J. B. PARDIWALA, J) Y.N. VYAS (NISHA M. THAKORE,J)