C/Sca/20294/2019 Cav Judgment Dated: 05/07/2021 v. C/Sca/20294/2019 Cav Jud

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 20294 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE BELA M. TRIVEDISd/-andHONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHISd/-==========================================================1Whether Reporters of Local Papers may be allowedNoto see the judgment ?2To be referred to the Reporter or not ?Yes3Whether their Lordships wish to see the fair copyNoof the judgment ?4Whether this case involves a substantial questionNoof law as to the interpretation of the Constitutionof India or any order made thereunder ?==========================================================RAJU BHUPENDRA DESAI VersusTHE INCOME TAX OFFICER WARD 1(3)(4) ==========================================================Appearance:MR. DARSHAN R PATEL(8486) for the Petitioner(s) No. 1MR. M.R. BHATT, SENIOR ADVOCATE WITH MRS. MAUNA M BHATT(174)for the Respondent(s) No. 1========================================================== CORAM: HONOURABLE MS. JUSTICE BELA M. TRIVEDIandHONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI Date : 05/07/2021 CAV JUDGMENT (PER : HONOURABLE MS. JUSTICE BELA M. TRIVEDI) filed under Article 226 of the Constitution ofIndia has challenged the impugned notice dated31.03.2019 (Annexure ‘A’) issued under section153C of the Income Tax Act, 1961 (hereinafterreferred to as ‘the said Act’), the preliminaryorder dated 10.10.2019 passed by the respondentrejecting the objections of the petitioner(Annexure ‘D’), and the order dated 30.10.2019passed again rejecting the objections raised bythe petitioner (Annexure ‘F’). 2.The short facts giving rise to the presentpetition are that the petitioner had received anotice dated 31.03.2019 issued under section153C of the said Act calling upon the petitionerto prepare true and correct return of his totalincome for the A.Y. 2012-13 in the prescribedform and manner under the Act. The petitionertherefore filed a return of income on 17.09.2019in response of the said notice. The petitionerthereafter received the notice dated 23.09.2019issued under section 142(1) of the said Actcalling upon the petitioner to furnish theaccounts and documents specified in the Annexurein connection with the scrutiny assessmentproceedings under section 143(3) read withsection 153C of the Act for the A.Y. 2012-13.Along with the said notice dated 23.09.2019, thepetitioner also received a certified copy of thereasons recorded in the proceedings undersection 153C of the said Act for the assessment C/SCA/20294/2019 CAV JUDGMENT DATED: 05/07/2021 year 2012-13 in the case of the petitioner. Thepetitioner filed objections (Annexure ‘C’)against the said satisfaction note, whichobjections came to be disposed of by therespondent vide the order dated 10.10.2019(Annexure ‘D’). The petitioner filed furtherobjections (Annexure ‘E’) on 17.10.2019, whichalso came to be rejected by the respondent videthe order dated 30.10.2019 (Annexure ‘F’). C/SCA/20294/2019 CAV JUDGMENT DATED: 05/07/2021 year 2012-13 in the case of the petitioner. Thepetitioner filed objections (Annexure ‘C’)against the said satisfaction note, whichobjections came to be disposed of by therespondent vide the order dated 10.10.2019(Annexure ‘D’). The petitioner filed furtherobjections (Annexure ‘E’) on 17.10.2019, whichalso came to be rejected by the respondent videthe order dated 30.10.2019 (Annexure ‘F’). 3.The learned Senior Advocate Mr. M.R. Bhattfor the respondent at the outset challenging thevery maintainability of the petition, has reliedupon the decision of Supreme Court in the caseof Commissioner of Income-Tax Gujarat, versusVijaybhai N. Chandrani reported in (2013) 357ITR 713(Supreme Court), and submitted that theCourt should not interfere at the stage ofissuance of notice under section 153C of thesaid Act, and more particularly when theobjections raised by the petitioner have beenduly considered by the Assessing Officer.According to him, after the disposal of theobjections, the Assessing Officer is required topass an order of assessment, and if that ordergoes against the assessee, he could exhaust theremedy under the Act. Such petition at thisjuncture is also not maintainable in view of thesettled legal position that when the alternativeremedy is available to the aggrieved party, itmust first exhaust the same before approaching C/SCA/20294/2019 CAV JUDGMENT DATED: 05/07/2021 the Writ Court. However, the learned advocateMr. D.R. Patel for the petitioner would submitthat existence of alternative remedy itselfwould not be a bar against entertaining the writpetition under Article 226 of the Constitutionof India, if the impugned order is withoutjurisdiction or is passed in violation of theprinciples of natural justice. 4.In the opinion of the Court, there cannot beany disagreement with the proposition of lawcanvassed by Mr. D.R. Patel for the petitioner,however, in the instant case, the objectionsraised by the petitioner against thesatisfaction note were considered by therespondent vide the impugned order dated10.10.2019 and the further objections raised bythe petitioner also came to be considered andrejected by the respondent vide the order dated30.10.2019. Under the circumstances, it couldnot be said that the impugned notice and theimpugned orders were in violation of theprinciples of natural justice. The question ofjurisdiction was also not raised by thepetitioner in the objections raised twice beforethe respondent. Mr. Patel had also failed tomake out any case as to how the impugned orderswere without jurisdiction. Therefore, the propercourse would have been that the AssessingOfficer should have been permitted to frame theassessment, and if the order of assessment was passed against the petitioner, he could takerecourse to the remedy available under the Act.In this regard, learned Senior Advocate Mr.Bhatt has rightly relied upon the observationsmade by the Supreme Court in the case ofCommissioner of Income-Tax Gujarat, versusVijaybhai N. Chandrani (supra), in which it hasbeen observed as under : - “16. In the present case, the assessee hasinvoked the Writ jurisdiction of the HighCourt at the first instance without firstexhausting the alternate remedies providedunder the Act. In our considered opinion, atthe said stage of proceedings, the HighCourt ought not have entertained the WritPetition and instead should have directedthe assessee to file reply to the saidnotices and upon receipt of a decision fromthe Assessing Authority, if for any reasonit is aggrieved by the said decision, toquestion the same before the forum providedunder the Act. “16. In the present case, the assessee hasinvoked the Writ jurisdiction of the HighCourt at the first instance without firstexhausting the alternate remedies providedunder the Act. In our considered opinion, atthe said stage of proceedings, the HighCourt ought not have entertained the WritPetition and instead should have directedthe assessee to file reply to the saidnotices and upon receipt of a decision fromthe Assessing Authority, if for any reasonit is aggrieved by the said decision, toquestion the same before the forum providedunder the Act. 17. In view of the above, without expressingany opinion on the correctness or otherwiseof the construction that is placed by theHigh Court on Section 153C, we set aside theimpugned judgment and order. Further, wegrant time to the assessee, if it sodesires, to file reply/objections, if any,as contemplated in the said notices within15 days' time from today. If suchreply/objections is/are filed within timegranted by this Court, the AssessingAuthority shall first consider the saidreply/objections and thereafter direct theassessee to file the return for theassessment years in question. We make itclear that while framing the assessmentorder, the Assessing Authority will not beinfluenced by any observations made by theHigh Court while disposing of the WritPetition. If, for any reason, the assessmentorder goes against the assessee, he/it shall avail and exhaust the remedies available tohim/it under the Act, 1961.” 5.Recently, the Coordinate Bench of this Courtin similar situation in case ofJitendraMansukhlal Adesara versus Assistant Commissionerof Income Tax reported in (2021) 126 Taxmann.com150 (Gujarat), had an occasion to consider theabove ratio laid down by the Supreme Court, andit had observed as under : - “23.Thus, the Supreme Court took the viewthat the assessee should have filed hisreply/objections to the satisfaction noteand if any assessment order is passed, itwould be open for the assessee to avail andexhaust the remedy available to him underthe Act, 1961. The only distinguishingfeature in the case before the Supreme Courtcompared to the case on hand is that in thecase on hand, the reply/objections werefiled by the writ-applicant and those wereduly considered and rejected, whereas, inthe case of Vijaybhai N. Chandrani (supra)even without filing any reply/objections,the assessee came straight to the High Courtwith a writ-application. However, what isimportant to note is that the Supreme Courtmade itself very clear that the assesseeshould file his reply/objections andthereafter, file the return for theassessment year in question. As regard theassessment order, the Supreme Court saidthat it would be open for the writ-applicantto avail and exhaust the remedy available tohim under the Act.” 6.In view of the above, this Court is also ofthe opinion that after the objections of theAssessee against the notice under section 153Care decided, the Assessing Officer has to frame the assessment and if the assessment order goesagainst the assessee, he could avail or exhaustthe remedy as may be available to him under theAct. Therefore, the petition at this juncturedoes not deserve any further consideration,however, since the learned advocate Mr. Patelhas made his submissions on the merits of thepetition also, let us examine whether there isany substance in the same. 6.In view of the above, this Court is also ofthe opinion that after the objections of theAssessee against the notice under section 153Care decided, the Assessing Officer has to frame the assessment and if the assessment order goesagainst the assessee, he could avail or exhaustthe remedy as may be available to him under theAct. Therefore, the petition at this juncturedoes not deserve any further consideration,however, since the learned advocate Mr. Patelhas made his submissions on the merits of thepetition also, let us examine whether there isany substance in the same. 7.It was sought to be submitted by Mr. D.R.Patel that the entire proceedings had vitiatedas the officer who had issued the notice undersection 153C was different from the officer whohad recorded the satisfaction. In this regard,it may be noted that the learned advocate Mr.Patel has raised this issue orally for the firsttime during the course of arguments. It wasnever raised before the respondent at any pointof time. It was also not raised in thememorandum of the present petition, andtherefore, the respondent had no occasion todeal with the same. The issue which was neitherraised before the authority nor in thememorandum of the petition, could not bepermitted to be raised for the first time duringthe course of arguments. 8.Mr. Patel further submitted that the Assessing Officer had recorded the satisfactionon the borrowed information. The said submission C/SCA/20294/2019 CAV JUDGMENT DATED: 05/07/2021 of Mr. Patel has no force. In the instant case,the search was carried out under section 132 ofthe said Act on 06.02.2017 at various locationsof one MS Patel Group of Ahmedabad i.e. ShriMahendra Shantilal Patel, Shri Dhruv D. Patel,Shri Vishal D. Pandya, Shri Bharat P. Popat,M/s. Benefit Tradelink, M/s. Ellegance RealtyPrivate Limited, by the DCIT Cen, Circle-1(3),Ahmedabad who vide the letter dated 19.03.2019had forwarded the information to the office ofthe respondent along with documents for furtherverification, as the information pertained tothe petitioner. Accordingly the respondent hadinitiated the proceedings under section 142(1)read with section 153C of the said Act byrecording the satisfaction that the documentsfound and seized from the premises of theaccommodation entry provider group of Ahmedabad,pertained to the petitioner – assessee and had abearing on the determination of the total incomeof the petitioner for the A.Y. 2012-13. Asstated earlier, the petitioner filed theobjections against the said satisfactionrecorded by the respondent and the saidobjections have been duly considered by therespondent. Under the circumstances, it couldnot be said that the respondent had recorded thesatisfaction on the basis of the borrowedinformation. C/SCA/20294/2019 CAV JUDGMENT DATED: 05/07/2021 C/SCA/20294/2019 CAV JUDGMENT DATED: 05/07/2021 advocate Mr. D.R. Patel submitted that theimpugned notice under section 153C was issued onthe basis of incorrect facts, inasmuch as thesatisfaction note recorded by the respondent on23.09.2019 mentioned that the petitioner hadentered into several transactions with S.V.P.Corporation whose proprietor was Shri VishalPandya, whereas the petitioner had not enteredinto any such transactions with the saidproprietary concern or with its proprietor. Hefurther submitted that the said transactionswere allegedly carried out in December, 2016,and therefore, they could be taken intoconsideration for the relevant assessment year2017-18, however, the notice issued undersection 153C against the petitioner for therelevant assessment year 2017-18 was alreadydropped earlier vide order dated 08.09.2019.There is also no substance in the saidsubmission of Mr. Patel. As stated in the saidassessment order dated 08.09.2019 passed for theA.Y. 2017-18, “the proceedings initiated undersection 153C of the Income-Tax Act by way ofissue of notice under section 153C of theIncome-Tax Act dated 31.03.2019 for A.Y. 2017-18is hereby dropped due to technical and ledgerreasons as the same was issued in the financialyear 2018-19, the year in which regularassessment proceedings for the assessment year2017-18 can only be initiated and no reopenassessment proceedings either under section 147 or 153C of the said Act for the assessment year2017-18 could be initiated”. Again, it may benoted that no such contention was ever raised bythe petitioner in the objections twice raisedbefore the Assessing Officer. 10.The learned advocate Mr. Patel furthersubmitted that the respondent had initiated theaction against the petitioner on the basis of amistaken identity as the petitioner had neverentered into any such transactions as mentionedin the reasons for recording satisfaction by therespondent, which otherwise pertained to someother Dr. Raju Desai. Again, it may be notedthat this contention was not taken up before therespondent authority and has been taken for thefirst time in the present petition, by way ofthe affidavit-in-rejoinder. Apart from thefact, that such a contention taken up for thefirst time in the affidavit-in-rejoinder, cannotbe considered, the Court is of the opinion thatif the petitioner was not the same Raju Desai,he would not have missed to raise such acontention in the objections filed before therespondent authority. 11.There is also no merit in the submission ofMr. Patel that the respondent was carrying outfishing and roving inquiry completely onincorrect facts and based on the borrowed beliefof DCIT Central Circle-1(3), Ahmedabad. It may 11.There is also no merit in the submission ofMr. Patel that the respondent was carrying outfishing and roving inquiry completely onincorrect facts and based on the borrowed beliefof DCIT Central Circle-1(3), Ahmedabad. It may be noted that merely because in the reasonsrecorded to reopen the case under section 153C,the respondent has recorded in the first openingparagraph that he had received the informationfrom DCIT Cen, Cir-1(3), Ahmedabad, it could notbe said that the respondent had borrowed thebelief from the other officer or that he hadinitiated the action without any application ofmind. In the reasons recorded in support of thenotice under section 142(1) read with section153C, the respondent has narrated all thematerial received by him connecting thepetitioner forprima faciecoming to theconclusion that the sheets seized during thesearch proceedings at the various locations ofMS Patel Group of Ahmedabad, revealed that ShriRaju Bhupendra Desai i.e. the petitioner hadentered into monetary transactions with SVPCorporation, the proprietary concern of ShriVishal D. Pandya. The respondent after havinggone through the information and material, hadrecorded the satisfaction that the documentsfound and seized from the premises of theaccommodation entry provider Group of Ahmedabadpertained to the petitioner – assessee and hadbearing on the determination of the total incomeof the petitioner – assessee for the assessmentyear 2012-13, and therefore, the case wasrequired to be assessed under section 153C readwith 153A of the Income-Tax Act for the A.Y.2012-13. 12.The objections against the said reasonsrecorded by the respondent for re-opening of thecase of the petitioner, were duly considered bythe respondent vide the detailed order dated10.10.2019 (Annexure D), after calling upon thepetitioner to furnish the details and documentsvide the notice dated 23.09.2019 issued undersection 142(1) of the said Act. The petitioneragain filed objections against the said orderpassed on 10.10.2019 (Annexure D), which alsocame to be disposed of by the respondent videthe order dated 30.10.2019 (Annexure F). 13.It may be noted that at the time of issuingthe notice under section 153C of the Act, theAssessing Officer has to satisfy himself whetherthe books of accounts or documents or assetsseized or requisitioned by the other AssessingOfficer in the proceedings under section 153Aand handed over to him, had a bearing on thedetermination of the total income of the personto whom the notice under section 153C is issued.Such satisfaction would be in the realm ofsubjective satisfaction of the concernedAssessingOfficer.Thesufficiencyorcorrectness of the documents or material handedover by the other Assessing Officer to him alsocould not be gone into by the Courts at thisstage. In the case of Raymond Woolen Mills Ltd.Versus ITO reported in (1999) 236 ITR 34 (SC),it has been held that in determining whether the commencement of reassessment proceeding isvalid, the Court has only to see whether thereis prima facie some material on the basis ofwhich the department has opened the case, andthat the sufficiency or correctness of thematerial could not be considered at this stage.It is true that the supreme Court has made thesaid observations while considering the validityof the reasons recorded by the Assessing Officerfor reopening of the assessment of the assesseeunder Section 147, whereas the present casearises out of the proceedings initiated and thesatisfaction recorded by the Assessing Officerfor initiating the proceedings under section153C of the said Act, nonetheless such relianceof the decision of Supreme Court by therespondent could not be said to be out of placewhen the matter was concerning about thereopening of the assessment of the petitioner –assessee.