Kamdhenu Enterprises Ltd v. Income Tax Officer Ward 14-2,Delhi & Ors

Signature Not Verified $~31 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 8589/2022 & CM APPL. 25865/2022 (for interim relief) KAMDHENU ENTERPRISES LTD...... PetitionerThrough:Mr. Ved Jain, Ms. Richa Mishra,Mr. Nishchay Kantoor, Advocates. versus INCOME TAX OFFICER WARD 14-2,DELHI & ORS...... RespondentsThrough:Mr.AbhishekMaratha,SeniorStanding Counsel for Revenue. %Date of Decision: 27[th]October, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1.Present writ petition has been filed challenging the notice dated 15[th]May, 2020, issued under Section 148 of the Income Tax Act, 1961 (the‘Act’), for the Assessment Year 2013-14, the reasons recorded for re-opening and the approval granted by the Respondent No.2; the assessmentorder and demand notice dated 30[th]March, 2022 and proceedings initiated W.P.(C) 8589/2022 Page 1 of 6 Signature Not Verified pursuant thereto; the show cause notices dated 20[th]September, 2021 and 13[th]January, 2022 and the notice dated 25[th]March, 2022, show cause noticedated 30[th]March, 2022, issued by the Respondent No. 3 for imposition ofpenalty under Section 271(1)(c) of the Act, notice dated 07[th]June, 2021issued under Section 148 of the Act for the Assessment Year 2013-14 andnotices dated 18[th]May, 2022 and 23[rd]May, 2022. 2.Learned counsel for the Petitioner states that in the present case, tworeassessment notices have been issued to the Petitioner under Section 148 ofthe Act for the same assessement year. He states that the first notice is dated15[th]May, 2020, which has been issued by the Assessing Officer, Ward14(2), Delhi, whereas the second notice has been issued on 07[th]June, 2021,by the Assessing Officer, Ward 14(1). He contends that Assessing Officer,Ward 14(2) is not theJurisdictional Assessing Officer (‘JAO’) ofthePetitioner. In the alternative, learned counsel for the Petitioner submits thattwo reassessment notices could not have been issued simultaneously. 3.Learned Counsel for the Petitioner further states that the assessmentorder dated 30[th]March, 2022, has been passed without disposing of theobjections raised by the Petitioner vide letter dated 22[nd]July, 2021. Hesubmits that non-disposal of objections before passing the assessment orderis in disregard of the law laid down by the Supreme Court in the case of M/SGKN Driveshafts (India) Ltd vs. Income Tax Officers & Ors. (2003) 1SCC 72. 4.Learned counsel for the Petitioner also states that despite severalrequests made by the Petitioner to share the copy of statement of Sh. KewalKrishna Arora, which formed one of the main grounds for making theaddition, the said statement was not shared till the conclusion of personal W.P.(C) 8589/2022Page 2 of 6 Signature Not Verified hearing on 25[th]March, 2022. He states that copy of the statement of ShriKewal Krishna Arora, relied upon by the Assessing Officer, was shared withthe Petitioner vide notice dated 25[th]March, 2022, digitally signed on14:25:55 PM requiring the Petitioner to make compliance on or before 25[th]March, 2022 by 9:42 AM i.e. compliance date and time was set even prior tothe date of issuance of notice. 5.Learned counsel for the Respondent-Revenue, on instructions statesthat notice dated 15[th]May, 2020 under Section 148 of the Act was issued bythe Assessing Officer Ward 14(2), Delhi, as on the said date, the saidAssessing Officer had jurisdiction over the Petitioner. He points out thatsince August, 2020, current Ward 14(1), Delhi, and Ward 14(2) had beenmerged. He also emphasizes that both the reassessment notices had beenissued on the same information. He also states that there has been noviolation of the principles of natural justice as the petitioner was given anoral hearing by way of a video conference on 25[th]March, 2022. 5.Learned counsel for the Respondent-Revenue, on instructions statesthat notice dated 15[th]May, 2020 under Section 148 of the Act was issued bythe Assessing Officer Ward 14(2), Delhi, as on the said date, the saidAssessing Officer had jurisdiction over the Petitioner. He points out thatsince August, 2020, current Ward 14(1), Delhi, and Ward 14(2) had beenmerged. He also emphasizes that both the reassessment notices had beenissued on the same information. He also states that there has been noviolation of the principles of natural justice as the petitioner was given anoral hearing by way of a video conference on 25[th]March, 2022. 6.In rejoinder, learned counsel for the Petitioner states that he does notwish to press the first issue of jurisdiction of the Assessing Officer Ward14(2) to issue notice under Section 148 of the Act. 7.Having heard learned counsel for the parties, this Court is of the viewthat it is settled law that during the subsistence of a reassessmentproceedings, another reassessment notice cannot be issued for the sameassessment year. The Division Bench of this Court in CIT v. Sanjay KumarGarg, [2015] (9) TMI 390 – Delhi High Court has held as under:- [ “9. The contention of the Assessee which has been accepted by theITAT is that when the re-assessment proceedings pursuant to thenotices issued on 21[st]September 2005 were still pending and had not W.P.(C) 8589/2022 Signature Not Verified been completed by 31[st]December 2006 as was required by law, it waslegally impermissible that fresh notices under Section 148 of the Actcould be issued to the Assessee. The ITAT has after examining a largenumber of decisions of the High Court and the Supreme Court cometo the conclusion that the issuing of fresh notices under Section 148 ofthe Act for AYs 2001-02 to 2004-05 was impermissible in law. Theassessments for the said AYs were annulled as being barred bylimitation. 10.The legal position appears to be fairly well settled. In S.B. Jain,Income Tax Officer, Nagpur v. Mahendra [1972] 83 ITR 104 (SC) anotice was issued a notice has been issued to the Assessee on 5[th]January 1962 under Section 34(1)(a) of the Income Tax Act, 1922seeking to reopen the assessment for AY 1946-47. While the saidproceedings were pending, the Income Tax Act, 1961 came into forcewith effect from 1[st]April 1962. The challenge by the Assessee to thevalidity of the notice issued under the 1922 Act succeeded with theBombay High Court quashing the said notice by the order dated 6[th]March 1963. Thereafter the Income Tax Officer issued a fresh noticeon 26[th]March 1963 under Section 148 of the Act in respect of the veryassessment which had sought to be reopened by the earlier noticeunder Section 34(1)(a) of the 1922 Act. The Supreme Court held thatthe proceedings initiated under Section 34 (1)(a) of the 1922 Act werepending at the time when the 1961 Act came into force and, therefore,the Income Tax Officer was not competent to issue a fresh noticeunder Section 148 of the Income Tax Act, 1961.Income Tax Officer, Nagpur v. Mahendra [1972] 83 ITR 104 (SC) anotice was issued a notice has been issued to the Assessee on 5[th]January 1962 under Section 34(1)(a) of the Income Tax Act, 1922seeking to reopen the assessment for AY 1946-47. While the saidproceedings were pending, the Income Tax Act, 1961 came into forcewith effect from 1[st]April 1962. The challenge by the Assessee to thevalidity of the notice issued under the 1922 Act succeeded with theBombay High Court quashing the said notice by the order dated 6[th]March 1963. Thereafter the Income Tax Officer issued a fresh noticeon 26[th]March 1963 under Section 148 of the Act in respect of the veryassessment which had sought to be reopened by the earlier noticeunder Section 34(1)(a) of the 1922 Act. The Supreme Court held thatthe proceedings initiated under Section 34 (1)(a) of the 1922 Act werepending at the time when the 1961 Act came into force and, therefore,the Income Tax Officer was not competent to issue a fresh noticeunder Section 148 of the Income Tax Act, 1961. 11. In Nilofer Hameed v. Income Tax Officer [1999] 235 ITR 161(Ker) after referring to a number of judgments of the High Courts, itwas held by the Kerala High Court that "if an assessment is pendingeither by way of original assessment or by way of reassessmentproceedings, the Assessing Officer cannot issue a notice underSection 148 but if no proceedings are pending either by way oforiginal assessment or by way of reassessment, he can issue a noticeunder Section 148 within the time mentioned." W.P.(C) 8589/2022 Signature Not Verified 11.This Court is further in agreement with the submission of the learnedcounsel for the Petitioner that non-disposal of petitioner’s objections dated22[nd]July, 2021, was contrary to the law laid down by the Supreme Court inthe case of M/S GKN Driveshafts (India) Ltd. (supra). 12.This Court, is also in agreement with the contention of the learnedcounsel for the Petitioner that there has been a violation of principles ofnatural justice inasmuch as the Petitioner was not given a reasonableopportunity to respond to the statement of Sh. Kewal Krishna Arora sharedby the AO with the petitioner on 25[th]March, 2022. 13.For the aforesaid reasons, the impugned second notice dated 07[th]June,2021 issued under Section 148 of the Act during the pendency ofreassessment proceedings as well as the consequential notices dated 18[th]May, 2022 and 23[rd]May, 2022 are quashed. 14.Further, the assessment order dated 30[th]March, 2022, as well as thedemand and penalty notices dated 30[th]March, 2022 issued in pursuance tofirst reassessment notice dated 15[th]May, 2020, are quashed and the matter isremanded back for fresh decision by the Assessing Officer with a directionto first decide the objections filed by the Petitioner in accordance with thejudgment of the Supreme Court in M/S GKN Driveshafts (India) Ltd.(supra) within eight weeks and thereafter carry out the assessment inaccordance with law. 15.The Assessing Officer while disposing of the objections shall takeinto account the reply/response filed by the Petitioner dated 22[nd]July, 2021.If the 29[th]March, 2022. If the Assessing Officer wishes to issue any noticeor seek any further information, he shall be at liberty to do so. W.P.(C) 8589/2022 Signature Not Verified 16.With the aforesaid direction, the present writ petition alongwith thepending application stands disposed of. The rights and contentions of all theparties are left open. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J OCTOBER 27, 2022/msh W.P.(C) 8589/2022 Page 6 of 6