Dr. Pradeep Sihare v. Income Tax Officer Ward 1(1), Mahima Complex, Vyapar Vihar,Bilaspur Chhattisgarh

MANPREETKAUR Digitally signed byMANPREET KAURDate: 2025.05.0210:43:45 +0530 2025:CGHC:19546-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPURWA No. 236 of 2025 Dr. Pradeep Sihare S/o Late Shri G.P. Sihare Aged About 72 Years R/oNirala Nagar, Bus Stand Bilaspur, Chhattisgarh. ... Appellant(s) versus 1 - Income Tax Officer Ward 1(1), Mahima Complex, Vyapar Vihar,Bilaspur Chhattisgarh. 2 - Additional Commissioner Of Income Tax Range - 1 MahimaComplex, Vyapar Vihar, Bilaspur Chhattisgarh. ... Respondent(s) For Appellant(s) :Mr. Neelabh Dubey, Advocate For Respondent(s) :Mr. Ajay Kumrani on behalf of Mr. Amit Chaudhari, Advocates Hon'ble Shri Ramesh Sinha, Chief JusticeHon'ble Shri Arvind Kumar Verma, JudgeJudgment on Board PerRamesh Sinha, Chief Justice 30.04.2025 1.Heard Mr. Neelabh Dubey, learned counsel for the appellant as well as Mr. Ajay Kumrani on behalf of Mr. Amit Chaudhari, learned counsel, appearing for the respondents. 2.This writ appeal is presented against an order dated 10.02.2025passed by the learned Single Judge in WPT No. 7129 of 2008(Dr. Pradeep Sihare vs. Income Tax Officer and another),whereby, the writ petition filed by the writ petitioner/appellantherein was dismissed by the learned Single Judge.passed by the learned Single Judge in WPT No. 7129 of 2008(Dr. Pradeep Sihare vs. Income Tax Officer and another),whereby, the writ petition filed by the writ petitioner/appellantherein was dismissed by the learned Single Judge. 3.Brief facts of the case are that the appellant is a medicalprofessional and he constructed a nursing home in accountingyear relevant for Assessment Year 2001-02 to 2003-04. He isregularly assessed and the returns for these assessment yearswere also submitted duly. The returns submitted by the appellantwere accepted by the Income Tax Department underSection143(1)(a) of the Act. In the balance sheet, the cost ofconstruction was incorporated on the asset side. On 28.07.2003,survey operation under S,133A was carried out by the Departmentat the professional premises of the appellant where a surrender ofRs.5,00,000/- was obtained from the appellant on account ofconstruction of the nursing home. Thereafter, during the course ofassessment proceedings for the year 2004-05, the assessingofficer referred the matter to the District Valuation Officer[hereinafter referred to as DVO] for determining the investment inconstruction of the nursing home. The DVO estimated the value ofthe property at Rs.32,59,004/- as against the total investmentshown by the appellant at Rs. 16,45,000/-. Solely on the basis ofthe DVO's report, the AO added the difference of Rs. 16,14,004/-as undisclosed investment while making assessment for the A.Y.professional and he constructed a nursing home in accountingyear relevant for Assessment Year 2001-02 to 2003-04. He isregularly assessed and the returns for these assessment yearswere also submitted duly. The returns submitted by the appellantwere accepted by the Income Tax Department underSection143(1)(a) of the Act. In the balance sheet, the cost ofconstruction was incorporated on the asset side. On 28.07.2003,survey operation under S,133A was carried out by the Departmentat the professional premises of the appellant where a surrender ofRs.5,00,000/- was obtained from the appellant on account ofconstruction of the nursing home. Thereafter, during the course ofassessment proceedings for the year 2004-05, the assessingofficer referred the matter to the District Valuation Officer[hereinafter referred to as DVO] for determining the investment inconstruction of the nursing home. The DVO estimated the value ofthe property at Rs.32,59,004/- as against the total investmentshown by the appellant at Rs. 16,45,000/-. Solely on the basis ofthe DVO's report, the AO added the difference of Rs. 16,14,004/-as undisclosed investment while making assessment for the A.Y. 2004-05. Against the above referred assessment order, theappellant preferred an appeal before the Commissioner IncomeTax [Appeals]. Vide order dated 30.04.2007, the addition made onaccount of construction by the AO was deleted by the CIT[Appeals]. This surrendered amount of Rs.5,00,000 was retractedby the appellant. With regard to this, the appellant submitted thathe was immensely pressurized and had no other alternative butconcede to all that was put to him by the survey team. Against theorder of the CIT [Appeals], the Department preferred an appealbefore the Income Tax Appellate Tribunal (hereinafter referred toas the ITAT], Jabalpur. The ITAT, Jabalpur confirmed the order ofthe CIT (Appeals). In the meantime, proceedings was initiatedagainst the appellant under Section148 of the Act for theAssessment Year 2001-02, 2002-03 and 2003-04. The appellantwas served with a notice dated 26.04.2007 under Section 148 ofthe Act on 01.05.2007. The notice dated 26.04.2007 thus,indicates that reassessment was initiated even prior to the orderof the CIT [Appeals] dated 30.04.2007. In response to the noticedated 26.04.2007, the appellant submitted its reply dated03.05.2007 wherein it requested the Income Tax Officer to treat itsreturn filed for the A.Y. 2001- 02, 2002-03 and 2003-04 as itsresponse to the notices and also requested the Income TaxOfficer to provide the copy of the reasons recorded and approvalobtained prior to issuance of notice. Instead of providing reasons to the appellant, the Income Tax Officer issued notices under S.143(2) and S.142(1)dated 06.08.2008 calling upon the appellant to furnish the repliesas sought in the notices. It is only through a letter dated29.08.2008, the appellant was provided a copy of the reasons forreopening for all these years. On receipt of the reasons, theappellant supplied a very detailed response /objection to theinitiation of proceedings under S.148 of the Act. This responsewas submitted in the office of the Income Tax Officer Ward-1(1),Bilaspur on 22.10.2008. Vide order dated 12.12.2008, the AOdisposed of the objections of the Appellant and proposed to hearthe case on 19.12.2008. After the above order was passed, theappellant preferred a petition being W.P. (T) No. 7129/2008 beforethis Court challenging initiation of reassessment proceedings,notice under S.148 of the Act and all consequential notices issuedthereafter. Thereafter on 19-12-2008, the appellant was grantedinterim by the learned Single Judge. Case was finally heard on10.02.2025 whereby the learned Single Judge dismissed the caseof the appellant. Hence, this writ appeal. 4.Learned counsel for the appellant submits that he learned Single Judge failed to see that there is gross violations of legalprovisions and the respondents have deviated from the procedurelaid down for reassessment and calling for District ValuationOfficer report. The reassessment notice as well as the DVO'sreport are bad in law and suffer from grave illegality. Thereassessment proceeding is without jurisdiction as it lacks reason 4.Learned counsel for the appellant submits that he learned Single Judge failed to see that there is gross violations of legalprovisions and the respondents have deviated from the procedurelaid down for reassessment and calling for District ValuationOfficer report. The reassessment notice as well as the DVO'sreport are bad in law and suffer from grave illegality. Thereassessment proceeding is without jurisdiction as it lacks reason to believe that there was any income that has escapedassessment. 'Reason to believe" is the requirement for initiatingfoundational reassessment proceedings under Section 147 of theAct. In the instant case, there was no new information to suggestthat the income of the Appellant has escaped assessment. Thejurisdictional facts which are necessary for initiating reassessmentproceedings are absent and in such case, reassessment noticesand any consequential notice issued pursuant to it, are bad in lawand void ab initio. There are catena of decisions of the Hon'bleSupreme Court and various High Courts which have held that inabsence of the jurisdictional facts which are essential to initiate aproceeding under S.147 of the Act, all proceedings andconsequential notices are illegal and bad in law. Further, thelearned Single Judge erred twice in conferring jurisdiction on theAO even in absence of jurisdictional facts. There was no reasonto believe even when the AO acted solely on the basis of theDVO's report without applying his own mind as the DVO's reportcould not have been called for as the AO does not have power todo so which has been clearly held by the Hon’ble Supreme Courtin the matter of Amiya Bala Paul v. CIT (2003) 262 ITR 407 (SC).Further, even if the AO had powers to call for DVO's report, in theinstant case, the DVO's report could not have been called for asthere was no proceeding pending before the AO when the DVO'sreport was called for. Also, the learned Single Judge in a blatantlyarbitrary manner, simply recorded that the cases relied upon by the appellant were either not relevant or distinguishable from thefacts of the appellant's case. The AO has not demonstratedindependent application of mind to verify whether the valuationdifference actually represents undisclosed investment, there is nocorroborative evidence showing that the differential amountexisted. 5.Learned counsel for the appellant further relied upon the judgment passed by the Hon’ble Supreme Court in the case of ACIT v.Dhariya Construction Company; [2010] 328 ITR 515 (SC), andin the case of Divine Infracon Private Limited v. DCIT (2025)342 CTR (Del) 46 and submits that the AO made reference to theDVO for ascertainment of cost of construction of the Hospitalbuilding on 30.09.2006. It is important to note that as on this datethe assessment proceedings for A.Y. 2001-02 to 2003- 04 wasconcluded. It may also be noted that the construction of theHospital completed prior to A.Y. 2004-05 and the Hospital wasinaugurated on 24.06.2001 and it had become operational. Thedepreciation claimed by the Appellant for A.Y. 2002-03 and200304 was allowed. The learned Single Judge erred inconferring jurisdiction to the AO in absence of reasons to believe.The AO failed to apply its mind and relied mechanically on theDVO's report which itself was illegal. The DVO's report could nothave been called for as the AO does not have the power to do sounder Section131(1)(d) of the Act. He also relied upon thejudgment passed by the Hon’ble Apex Court in the matter of Amiya Bala Paul vs. CIT (2003) 262 ITR 407(SC) and in thematter of Calcutta Discount Co. Ltd. v. Income-tax Officer,Companies District I, Calcutta and another AIR 1961 SC 372(V 48 C 60), relevant paras of which quoted hereinbelow:- Amiya Bala Paul vs. CIT (2003) 262 ITR 407(SC) and in thematter of Calcutta Discount Co. Ltd. v. Income-tax Officer,Companies District I, Calcutta and another AIR 1961 SC 372(V 48 C 60), relevant paras of which quoted hereinbelow:- “(27) Mr. Sastri next pointed out that at the stage whenthe Income-tax Officer issued the notices he was notacting judi- cially or quasi-judicially and so a writ ofcertiorari or prohibition cannot issue. It is well settledhowever that though the writ of prohibition or certiorariwill not issue against an executive authority, the HighCourts have power to issue in a fit case an orderprohibiting an executive authority from acting withoutjurisdiction. Where such action of an executiveauthority acting without jurisdiction subjects or is likelyto subject a person to lengthy proceedings andunnecessary harassment, the High Courts, it is wellsettled, will issue appropriate order or directions toprevent such consequences. (28) Mr. Sastri mentioned more than once the fact thatthe company would have sufficient opportunity to raisethis question, viz., whether the Income-tax Officer hadreason to believe that under assessment had resultedfrom non-disclosure of material facts, before theIncome-tax Officer himself in the assessmentproceedings and if unsuc- cessful there before theappellate officer or the appellate tribunal or in the HighCourt under S. 66(2) of the Indian Income-tax Act.. Theexistence of such alternative remedy is not howeveralways a sufficient reason for refusing a party quickrelief by a writ or order prohibiting an authority actingwith- out jurisdiction from continuing such action.” 6.On the other hand, learned counsel for respondents opposes thesubmissions made by the learned counsel for the appellant andsubmits that the learned Single Judge after considering all theaspects of the matter has rightly dismissed the writ petition filedby the writ petitioner / appellant herein, in which no interference iscalled for.submissions made by the learned counsel for the appellant andsubmits that the learned Single Judge after considering all theaspects of the matter has rightly dismissed the writ petition filedby the writ petitioner / appellant herein, in which no interference iscalled for. 7.Learned counsel for the respondents further submits that so far asthe matter of Calcutta Discount Co. (Supra) relied upon by theappellant is concerned, the facts of the present case are entirelydistinguishable and further, in pursuance of the order passed bythe learned Single Judge vide order dated 10.02.2025, theAssessing Authority has already passed its fresh order on08.04.2025 against which, the appellant herein has alternativeremedy to raise all his grievance in the CIT appeal under Section246A of the Income Tax Act before the competent authority, whichis reproduced below:-the matter of Calcutta Discount Co. (Supra) relied upon by theappellant is concerned, the facts of the present case are entirelydistinguishable and further, in pursuance of the order passed bythe learned Single Judge vide order dated 10.02.2025, theAssessing Authority has already passed its fresh order on08.04.2025 against which, the appellant herein has alternativeremedy to raise all his grievance in the CIT appeal under Section246A of the Income Tax Act before the competent authority, whichis reproduced below:- “246A. (1) Any assessee aggrieved by any of thefollowing orders (whether made before or after theappointed day) may appeal to the Commissioner(Appeals) against— (a) an order [passed by a Joint Commissionerunder clause (ii) of sub-section (3) of section-115VPor an order] against the assessee where theassessee denies his liability to be assessed underthis Act or an intimation under sub-section (1) orsub-section (1B) of section-143, where the “246A. (1) Any assessee aggrieved by any of thefollowing orders (whether made before or after theappointed day) may appeal to the Commissioner(Appeals) against— (a) an order [passed by a Joint Commissionerunder clause (ii) of sub-section (3) of section-115VPor an order] against the assessee where theassessee denies his liability to be assessed underthis Act or an intimation under sub-section (1) orsub-section (1B) of section-143, where the assessee objects to the making of adjustments, orany order of assessment under sub-section (3) ofsection-143 or section-144, to the income assessed,or to the amount of tax determined, or to the amountof loss computed, or to the status under which he isassessed; [( aa)an order of assessment under sub-section(3) of section-115WE or section-115WF, where theassessee, being an employer objects to the value offringe benefits assessed; (ab)an order of assessment or reassessment undersection-115WG;] (b) an order of assessment, reassessment orrecomputation under section-147 or section-150; [(ba)an order of assessment or reassessmentunder section-153A;] (c )an order made under section-154 or section-155 having the effect of enhancing the assessmentor reducing a refund or an order refusing to allowthe claim made by the assessee under either of thesaid sections; (d )an order made under section-163 treating theassessee as the agent of a non-resident; (e )an order made under sub-section (2) or sub-section (3) of section-170; (f )an order made under section-171; (g )an order made under clause (b) of sub-section(1) or under sub-section (2) or sub-section (3) orsub-section (5) of section-185 in respect of anassessment for the assessment year commencing on or before the 1st day of April, 1992; (h )an order cancelling the registration of a firmunder sub-section (1) or under sub-section (2) ofsection-186 in respect of any assessment for theassessment year commencing on or before the 1stday of April, 1992 or any earlier assessment year; [( ha)an order made under section-201;] [( hb)an order made under sub-section (6A) ofsection-206C;] (i )an order made under section-237; (j )an order imposing a penalty under— (A) section-221; or (B) section-271, section-271A , [ section-271AAA,]section-271F , [ section-271FB,] section-272AA orsection-272BB; (C) section-272, section-272B or section-273, asthey stood immediately before the 1st day of April,1989, in respect of an assessment for theassessment year commencing on the 1st day ofApril, 1988, or any earlier assessment years; [( ja) an order of imposing or enhancing penaltyunder sub-section (1A) of section-275;] (k )an order of assessment made by an AssessingOfficer under clause (c) of section-158BC, inrespect of search initiated under section-132 orbooks of account, other documents or any assetsrequisitioned under section-132A on or after the 1stday of January, 1997; (l )an order imposing a penalty under sub-section (2) of section-158BFA ; (m )an order imposing a penalty under section-271B or section-271BB; (n )an order made by a Deputy Commissionerimposing a penalty under section-271C [, section-271CA], section-271D or section-271E; (o )an order made by a Deputy Commissioner or aDeputy Director imposing a penalty under section-272A; (p )an order made by a Deputy Commissionerimposing a penalty under section-272AA; (q )an order imposing a penalty under ChapterXXI; (r )an order made by an Assessing Officer otherthan a Deputy Commissioner under the provisionsof this Act in the case of such person or class ofpersons, as the Board may, having regard to thenature of the cases, the complexities involved andother relevant considerations, direct. (l )an order imposing a penalty under sub-section (2) of section-158BFA ; (m )an order imposing a penalty under section-271B or section-271BB; (n )an order made by a Deputy Commissionerimposing a penalty under section-271C [, section-271CA], section-271D or section-271E; (o )an order made by a Deputy Commissioner or aDeputy Director imposing a penalty under section-272A; (p )an order made by a Deputy Commissionerimposing a penalty under section-272AA; (q )an order imposing a penalty under ChapterXXI; (r )an order made by an Assessing Officer otherthan a Deputy Commissioner under the provisionsof this Act in the case of such person or class ofpersons, as the Board may, having regard to thenature of the cases, the complexities involved andother relevant considerations, direct. Explanation.—For the purposes of this sub-section,where on or after the 1st day of October, 1998, thepost of Deputy Commissioner has beenredesignated as Joint Commissioner and the post ofDeputy Director has been redesignated as JointDirector, the references in this sub-section for"Deputy Commissioner" and "Deputy Director" shallbe substituted by "Joint Commissioner" and "JointDirector" respectively. [(1A) Every appeal filed by an assessee indefault against an order under section-201 on or after the 1st day of October, 1998 but before the 1stday of June, 2000 shall be deemed to have beenfiled under this section. [(1B) Every appeal filed by an assessee indefault against an order under sub-section (6A) ofsection-206C on or after the 1st day of April, 2007but before the 1st day of June, 2007 shall bedeemed to have been filed under this section.] (2) Notwithstanding anything contained in sub-section (1) of section-246, every appeal under thisAct which is pending immediately before theappointed day, before the Deputy Commissioner(Appeals) and any matter arising out of orconnected with such appeals and which is sopending shall stand transferred on that date to theCommissioner (Appeals) and the Commissioner(Appeals) may proceed with such appeal or matterfrom the stage at which it was on that day : Provided that the appellant may demand thatbefore proceeding further with the appeal or matter,the previous proceeding or any part thereof bereopened or that he be re-heard. Explanation.—For the purposes of thissection, "appointed day" means the day appointedby the Central Government by notification in theOfficial Gazette.]” 8.We have heard learned counsel for the parties and perused theimpugned order and other documents appended with writ appeal.impugned order and other documents appended with writ appeal. 9.From perusal of the impugned order, it transpires that the learnedSingle Judge has dismissed the writ petition i.e. WPT No.7129 ofSingle Judge has dismissed the writ petition i.e. WPT No.7129 of Provided that the appellant may demand thatbefore proceeding further with the appeal or matter,the previous proceeding or any part thereof bereopened or that he be re-heard. Explanation.—For the purposes of thissection, "appointed day" means the day appointedby the Central Government by notification in theOfficial Gazette.]” 8.We have heard learned counsel for the parties and perused theimpugned order and other documents appended with writ appeal.impugned order and other documents appended with writ appeal. 9.From perusal of the impugned order, it transpires that the learnedSingle Judge has dismissed the writ petition i.e. WPT No.7129 ofSingle Judge has dismissed the writ petition i.e. WPT No.7129 of 2008 vide order dated 10.02.2025, holding that admittedly, aSurvey was conducted under Section 133 of the Act on 8.7.2003.During the said Survey, a report has been sought from the DEOwith regard to construction of the Nursing Home as well asresidential unit made by the assessee. From the report of theDEO, it has been revealed that certain unexplained amount ofinvestment has been made. It was further revealed that theexpenditure incurred shown by the assessee was much below theassessed cost of the construction. So considering this cleardifference in the cost of construction, a reason to believe hasbeen recorded by the Assessing Officer in respect of the subjectAssessment Years and the case was reopened by exercising thepowers vested in him under Section 147 of the Act. Even thoughthe Assessee had raised objections for reopening, however, thesame was turned down by a speaking order dated 12.12.2008.Thus, it is explicit that the Assessing Officer has recorded thereasons in view of the report of the District Valuation Officer.Moreover, the Survey conducted reveals that the assessee hasnot truly disclosed his income chargeable to tax which hasescaped assessment for the relevant Financial Years. The learned Single Judge concluded that theAssessing Officer has recorded his own valid and propersatisfaction for existence of reason to believe that the income ofthe relevant assessment years has escaped assessment. Thus,the notice cannot be treated to have been passed without jurisdiction. Even otherwise, the writ petitioner would get fullopportunity to raise his defence in the appellate proceedings andaccordingly, dismissed the writ petition filed by the writ petitioneron merits. 10.Considering the submissions advanced by the learned counsel forthe parties and the fact that the Assessing Authority has alreadypassed its fresh order on 08.04.2025 against which, the appellantherein has alternative remedy to raise all his grievance in the CITappeal under Section 246A of the Income Tax Act and the findingrecorded by the learned Single Judge while dismissing the writpetition filed by the writ petitioner / appellant herein, we notice thatthe same has been rendered with cogent and justifiable reasons.In an intra-court appeal, no interference is usually warrantedunless palpable infirmities are noticed on a plain reading of theimpugned order. In the facts and circumstances of the instantcase, on a plain reading of order, we do not notice any suchpalpable infirmity or perversity, as such, we are not inclined tointerfere with the impugned order. 11.Accordingly, the writ appeal being devoid of merit is liable to beand is hereby dismissed with liberty to avail the alternativeremedy available under the law. No cost(s). Sd/- Sd/- (Arvind Kumar Verma)(Ramesh Sinha) Judge Chief Justice Manpreet