Mr. Subhash Agrawal v. Assistant Commissioner Of Income Tax Circle-2(1), Bilaspur, Aaykar Bhawan,Vyapar Vihar, Bilaspur (C.g.) Vyapar Vihar, Bilaspur (C.g

NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Judgment Reserved on 05.02.2020 Judgment Delivered on 14 .02.2020 Writ Appeal No. 399 of 2019 {Arising out of order dated 05.04.2019 passed by the learned Single Judge in WritPetition (T) No. 70 of 2018} 1. Hariom Rice Mill Private Limited NH-200, having its office at Masturi Road, Postand Village Darrighat, Bilaspur-495001, (C.G.) through its director Mr. SubhashAgrawal, aged about 48 year's, s/o Radheshyam Agrawal, r/o B-104, SheelaPark (C.G.)and Village Darrighat, Bilaspur-495001, (C.G.) through its director Mr. SubhashAgrawal, aged about 48 year's, s/o Radheshyam Agrawal, r/o B-104, SheelaPark (C.G.) 2. Mr. Subhash Agrawal, S/o Radheshyam Agrawal, aged about 48 years, r/o B-104, Sheela Park, Raj Kishore Nagar, Bilaspur (C.G.)104, Sheela Park, Raj Kishore Nagar, Bilaspur (C.G.) ---- Appellants Versus 1. Assistant Commissioner of Income Tax Circle-2(1), Bilaspur, Aaykar Bhawan,Vyapar Vihar, Bilaspur (C.G.) Vyapar Vihar, Bilaspur (C.G.) 2. Principal Commissioner of Income Tax, Bilaspur, Aaykar Bhawan, Vyapar Vihar,Bilaspur (C.G.) Bilaspur (C.G.) 3. Income Tax Officer-2(1), Bilaspur, Office of Income Tax Officer-2(1), Bilaspur,Aaykar Bhawan, Vyapar Vihar, Bilaspur (C.G.)Aaykar Bhawan, Vyapar Vihar, Bilaspur (C.G.) 4. Income Tax Officer (Tech. & TPS-2) Bilaspur, Aaykar Bhawan, Vyapar Vihar,Bilaspur (C.G.) Bilaspur (C.G.) 5. Union of India through its Secretary, Department of Revenue, Ministry ofFinance, North Block, New Delhi - 110001. Finance, North Block, New Delhi - 110001. ---- Respondent Writ Appeal No. 337 of 2019 {Arising out of order dated 05.04.2019 passed by the learned Single Judge in WritPetition (T) No. 69 of 2018} 1. Hariom Rice Mill Private Limited NH-200, having its office at Masturi Road, PostAnd Village Darrighat, Bilaspur-495001, (C.G.). through its director Mr. SubhashAgrawal, aged about 48 year's s/o Radheshyam Agrawal, r/o B-104, R.K.Nagar, Sheela Park (C.G.) And Village Darrighat, Bilaspur-495001, (C.G.). through its director Mr. SubhashAgrawal, aged about 48 year's s/o Radheshyam Agrawal, r/o B-104, R.K.Nagar, Sheela Park (C.G.) 2. Mr. Subhash Agrawal, s/o Radheshyam Agrawal, aged about 48 years, r/o B-104, Sheela Park, Raj Kishore Nagar, Bilaspur (C.G.)104, Sheela Park, Raj Kishore Nagar, Bilaspur (C.G.) Versus 1. Assistant Commissioner of Income Tax Circle- 2(1) Bilaspur, Aaykar Bhawan,Vyapar Vihar, Bilaspur, Chhattisgarh. Vyapar Vihar, Bilaspur, Chhattisgarh. 2. Principal Commissioner of Income Tax, Bilaspur Aaykar Bhawan, Vyapar Vihar,Bilaspur, Chhattisgarh. Bilaspur, Chhattisgarh. 3. Income Tax Officer-2(1) Bilaspur, Office of Income Tax Officer-2(1), Bilaspur,Aaykar Bhawan, Vyapar Vihar, Bilaspur, Chhattisgarh.Aaykar Bhawan, Vyapar Vihar, Bilaspur, Chhattisgarh. 4. Income Tax Officer(Tech. & TPS-2) Bilaspur, Aaykar Bhawan, Vyapar Vihar,Bilaspur, Chhattisgarh. Bilaspur, Chhattisgarh. 5. The Union of India Through its Secretary Department of Revenue, Ministry ofFinance, North Block, New Delhi-110001.Finance, North Block, New Delhi-110001. ---- Respondents Writ Appeal No. 479 of 2019 {Arising out of order dated 05.04.2019 passed by the learned Single Judge in WritPetition (T) No. 235 of 2018} 1. M/s Aaditya Construction a partnership firm registered under the IndianPartnership Act, 1932 having it office at 56, Indira Commercial Complex,Transport Nagar Korba, (C.G.) through its partner Mr. Amit Kumar Dalmia, agedabout 41 years, s/o Mr. Sumer Mal Dalmia, r/o B-7, Housing Board Colony,Balco Nagar, Korba (C.G.) Partnership Act, 1932 having it office at 56, Indira Commercial Complex,Transport Nagar Korba, (C.G.) through its partner Mr. Amit Kumar Dalmia, agedabout 41 years, s/o Mr. Sumer Mal Dalmia, r/o B-7, Housing Board Colony,Balco Nagar, Korba (C.G.) ---- Respondents Writ Appeal No. 479 of 2019 {Arising out of order dated 05.04.2019 passed by the learned Single Judge in WritPetition (T) No. 235 of 2018} 1. M/s Aaditya Construction a partnership firm registered under the IndianPartnership Act, 1932 having it office at 56, Indira Commercial Complex,Transport Nagar Korba, (C.G.) through its partner Mr. Amit Kumar Dalmia, agedabout 41 years, s/o Mr. Sumer Mal Dalmia, r/o B-7, Housing Board Colony,Balco Nagar, Korba (C.G.) Partnership Act, 1932 having it office at 56, Indira Commercial Complex,Transport Nagar Korba, (C.G.) through its partner Mr. Amit Kumar Dalmia, agedabout 41 years, s/o Mr. Sumer Mal Dalmia, r/o B-7, Housing Board Colony,Balco Nagar, Korba (C.G.) 2. Mr. Amit Kumar Dalmia, s/o Mr. Sumer Mal Dalmia, aged about 40 years, r/o B-7, Housing Board Colony, Balco Nagar, Korba (C.G.)7, Housing Board Colony, Balco Nagar, Korba (C.G.) ---- Appellants Versus 1. Principal Commissioner of Income Tax, Bilaspur, office of PrincipalCommissioner of Income Tax, Bilaspur, Aaykar Bhawan, Vyapar Vihar, Bilaspur(C.G.) Commissioner of Income Tax, Bilaspur, Aaykar Bhawan, Vyapar Vihar, Bilaspur(C.G.) 2. Income Tax Officer Ward-1, Korba, Office of Income Tax Officer Ward-1, Korba,Mahandi Bhawan, Niharika Road, Korba (C.G.)Mahandi Bhawan, Niharika Road, Korba (C.G.) 3. Joint Commissioner of Income Tax, Range-2, Bilaspur, office of JointCommissioner of Income Tax, Range-2, Bilaspur, Aaykar Bhawan, VyaparVihar, Bilaspur (C.G.) Commissioner of Income Tax, Range-2, Bilaspur, Aaykar Bhawan, VyaparVihar, Bilaspur (C.G.) 4. Union of India through its Secretary Department of Revenue, Ministry ofFinance, North Block, New Delhi - 110001. Finance, North Block, New Delhi - 110001. For Appellants:Shri Siddharth Dubey, Advocate. For Respondent:Shri Amit Chaudhari, Ms. Naushina Afrin Ali and Shri Topilal Bareth, Advocates. For Respondent:Shri Amit Chaudhari, Ms. Naushina Afrin Ali and Shri Topilal Bareth, Advocates. Hon'ble Shri P. R. Ramachandra Menon, Chief JusticeHon'ble Shri Justice Parth Prateem Sahu, JudgeCAV Judgment Per P. R. Ramachandra Menon, Chief Justice 1.Dismissal of the writ petition filed by the Appellant/Assessee challenging theapproval granted in terms of the Section 151 (1) of the Income Tax Act, 1961(for short, 'Act of 1961') to reopen the assessment and to quash the noticeissued under Section 148 of the Act of 1961 in this regard, after holding that thestatutory requirement has been complied with and accordingly relegating thewrit Petitioner to avail the statutory remedy by way of appeal; more so since theassessment proceedings had also been finalized in the meanwhile, made theAssessee/writ Petitioners to feel aggrieved and hence the appeal. approval granted in terms of the Section 151 (1) of the Income Tax Act, 1961(for short, 'Act of 1961') to reopen the assessment and to quash the noticeissued under Section 148 of the Act of 1961 in this regard, after holding that thestatutory requirement has been complied with and accordingly relegating thewrit Petitioner to avail the statutory remedy by way of appeal; more so since theassessment proceedings had also been finalized in the meanwhile, made theAssessee/writ Petitioners to feel aggrieved and hence the appeal. 2.Heard Shri Siddharth Dubey, the learned counsel for the Appellants as well asMs. Naushina Afrin Ali, the learned standing counsel for theRespondent/Department at length. Ms. Naushina Afrin Ali, the learned standing counsel for theRespondent/Department at length. 2.Heard Shri Siddharth Dubey, the learned counsel for the Appellants as well asMs. Naushina Afrin Ali, the learned standing counsel for theRespondent/Department at length. Ms. Naushina Afrin Ali, the learned standing counsel for theRespondent/Department at length. 3.When the matter is taken up for consideration, maintainability of the appeal wasraised as the first point to be considered, especially in the light of the relevantstatutory provisions and as to the satisfaction of the procedural formalities. Thelearned counsel for both the sides addressed the Court accordingly. To considerthe matter effectively, it will be necessary to have some idea as to the factualsequence as well. raised as the first point to be considered, especially in the light of the relevantstatutory provisions and as to the satisfaction of the procedural formalities. Thelearned counsel for both the sides addressed the Court accordingly. To considerthe matter effectively, it will be necessary to have some idea as to the factualsequence as well. 4.Writ Appeal No. 399 of 2019 arising from the Writ Petition (T) No. 70 of 2018 isstated as the lead case and the parties and proceedings are referred to asgiven in the said writ appeal/writ petition. stated as the lead case and the parties and proceedings are referred to asgiven in the said writ appeal/writ petition. 5.The Appellant-Company is an Assessee on the rolls of Respondent/Departmentand scrutiny assessment for the assessment year 2012-13 was completedunder Section 143(3) of the Act of 1961 on 08.01.2014. Four years later, anotice of reassessment under Section 148 of the Act of 1961 was issued to theAppellant/Assessee on 07.02.2018. On receipt of the said notice, theAppellant/Assessee requested for furnishing the reasons recorded underSection 148(2) of the Act of 1961, by submitting an application dated22.02.2018 addressed to the competent authority; which came to be suppliedon 22.02.2018. An application was submitted on 07.03.2018, to furnishapproval/sanction accorded in terms of Section 151(1) of the Act of 1961 whichled to issuance of notice under Section 148(2) of the Act of 1961. On receipt ofthe reasons recorded for issuing notice under Section 148(2) of the Act of 1961,it was sought to be objected by filing statement of objections on 22.03.2018. Itis the case of the Appellant/Assessee that the said objections were consideredin a quite mechanical manner and turned down on the very same day, as perorder dated 23.03.2018, with intent to proceed with further steps, which hencewas sought to be challenged by filing writ petition before this Court. Similarnature of challenge is involved in the connected cases as well. 6.Shri Siddharth Dubey, the learned counsel for the Appellants submits that thereassessment proceedings have been initiated absolutely without any 'reasonto believe' as to the escape of any income from assessment. As per therelevant provisions of law and the binding judgments rendered by the ApexCourt and various High Courts on the point, the condition precedent shouldexist and be satisfied for reopening the assessment, which is stated as lackingin the instant case. It is also stated there is no nexus or basis for theproceedings and no tangible material is there to hold that there was 'reason tobelieve' for initiating the reassessment proceedings. reassessment proceedings have been initiated absolutely without any 'reasonto believe' as to the escape of any income from assessment. As per therelevant provisions of law and the binding judgments rendered by the ApexCourt and various High Courts on the point, the condition precedent shouldexist and be satisfied for reopening the assessment, which is stated as lackingin the instant case. It is also stated there is no nexus or basis for theproceedings and no tangible material is there to hold that there was 'reason tobelieve' for initiating the reassessment proceedings. 7.It is also the case of the Appellant/Assessee that all the relevant materials hadbeen furnished by the Assessee and that there was no instance of any relevantfact, either whole or in part in respect of the scrutiny assessment finalized on08.01.2014; under which circumstances no reassessment proceedings couldhave been initiated or pursued merely on the basis of conjunctures or surmises.The learned counsel submits that each case has to be considered on the basisof its merit with regard to the satisfaction of the statutory requirements which inthe instant case is conspicuously absent and hence the various rulingsrendered by the Apex Court, as referred to by the learned Single Judge whiledeclining interference, are not applicable. been furnished by the Assessee and that there was no instance of any relevantfact, either whole or in part in respect of the scrutiny assessment finalized on08.01.2014; under which circumstances no reassessment proceedings couldhave been initiated or pursued merely on the basis of conjunctures or surmises.The learned counsel submits that each case has to be considered on the basisof its merit with regard to the satisfaction of the statutory requirements which inthe instant case is conspicuously absent and hence the various rulingsrendered by the Apex Court, as referred to by the learned Single Judge whiledeclining interference, are not applicable. 8.It cannot be held that no writ petition/appeal is maintainable, merely for thereason that the assessment had already been finalized. Support is sought to bedrawn by the Appellants from the rulings rendered by the Apex Court inCalcutta Discount Co. Ltd. vs. Income Tax Officer, Companies District ICalcutta & Another reported in AIR 1961 SC 372 and Khoday DistilleriesLimited (now known as Khoday India Limited) & Another vs. SriMahadeshwara Sahakara Sakkare Karkhande Limited, Kollegal reported in(2019) 4 SCC 376 which reiterates the law declared in Kunhayammed &Others vs. State of Kerala & Another reported in (2000) 6 SCC 359. Thelearned counsel also sought to draw distinction from the position consideredand decided by the co-ordinate Bench in Writ Appeal No. 293 of 2017. reason that the assessment had already been finalized. Support is sought to bedrawn by the Appellants from the rulings rendered by the Apex Court inCalcutta Discount Co. Ltd. vs. Income Tax Officer, Companies District ICalcutta & Another reported in AIR 1961 SC 372 and Khoday DistilleriesLimited (now known as Khoday India Limited) & Another vs. SriMahadeshwara Sahakara Sakkare Karkhande Limited, Kollegal reported in(2019) 4 SCC 376 which reiterates the law declared in Kunhayammed &Others vs. State of Kerala & Another reported in (2000) 6 SCC 359. Thelearned counsel also sought to draw distinction from the position consideredand decided by the co-ordinate Bench in Writ Appeal No. 293 of 2017. 9.Ms. Naushina Afrin Ali, the learned standing counsel appearing for theRespondent/Department submits that the scrutiny assessment was finalized interms of Section 143 of the Act of 1961, based on the return submitted by theAppellant/Assessee. Later, in the course of survey under Section 133A of theAct of 1961, various incriminating materials were brought to light and statementof the Assessee was taken. The materials collected revealed that sharetransfers were done in respect of various shell companies and there was aRespondent/Department submits that the scrutiny assessment was finalized interms of Section 143 of the Act of 1961, based on the return submitted by theAppellant/Assessee. Later, in the course of survey under Section 133A of theAct of 1961, various incriminating materials were brought to light and statementof the Assessee was taken. The materials collected revealed that sharetransfers were done in respect of various shell companies and there was a conscious attempt of defrauding the revenue because of the escaped incomefrom assessment. It was accordingly, that necessary proceedings were initiatedand approval of the competent authority, in terms of Section 151(1) of the Act of1961, was obtained. After getting approval as above, statutory notice wasissued under Section 148(2) of the Act of 1961 to the Assessee. The reasonsrecorded were furnished to the Assessee on application. The objectionspreferred were considered with proper application of mind and it was repelledaccordingly. It was after analysis of the facts and figures in the light of therelevant provisions of law and binding precedents, that the reassessment wasfinalized. Instead of challenging the reassessment by way of effectivealternative remedy available under the statute, the Assessee simply rushed tothis Court by filing the writ petitions. The learned Single Judge referred to thesequence of events, the relevant provisions of law and almost all the relevantjudgments on the subject and recorded satisfaction on the procedure followed.It was accordingly, that interference was declined and the writ petitions weredismissed, setting the Appellant/Assessee at liberty to file statutory appeals, ifaggrieved, which is correct and proper in all respects. The learned counselsubmits that there is no violation of any principle of natural justice, nor theproceedings are in violation of statutory provisions and no such instance, to thecontrary, has been demonstrated by the Appellant/Assessee. 10.It is brought to the notice of this Court by the learned standing counsel for theRespondents that the dictum laid down by the Constitution Bench of the ApexCourt in Calcutta Discount (supra) sought to be relied on by the Appellants isnot applicable to the case in hand. It was also a case which involved the sale ofshares, which, of course was disclosed in the return, but notice ofreassessment was issued to the Assessee to show the intention of sale and theproceedings were pursued and finalized accordingly. Ultimately, the matterended up in the Supreme Court, when it was observed that the Assessee was only to give actual particulars with regard to the transaction to the authoritiesand it was not necessary for disclosing the intention for selling the shares;which made the Court to intervene and pass the verdict in favour of theAssessee. This does not come to the rescue of the Appellants. It is pointed outwith respect to the materials on record that the procedural requirements asexplained by the Apex Court in GKN Driveshafts (India) Ltd. vs. Income TaxOfficer & Others reported in (2003) 1 SCC 72 stand satisfied and that statutoryappeal is the appropriate remedy. 11.It is further pointed out that, some of the similar issues as involved in thepresent case were considered in the case of Assessee by name Kamala Ojhavs. Income Tax Officer 1 & Others in SLP No. 38102 of 2019. The notice andsuch other proceedings were subjected to challenge in the writ petition andduring pendency of the writ petition, the final assessment order was passed.The learned Single Judge allowed the main prayers which was the subjectmatter of challenge in the appeal preferred by the Revenue (in Writ Appeal No.293 of 2017). The Division Bench held that the course pursued by the learnedSingle Judge was not correct and accordingly, the judgment in the writ petitionwas set aside and the appeal preferred by the Revenue was allowed in thefollowing terms: 11.It is further pointed out that, some of the similar issues as involved in thepresent case were considered in the case of Assessee by name Kamala Ojhavs. Income Tax Officer 1 & Others in SLP No. 38102 of 2019. The notice andsuch other proceedings were subjected to challenge in the writ petition andduring pendency of the writ petition, the final assessment order was passed.The learned Single Judge allowed the main prayers which was the subjectmatter of challenge in the appeal preferred by the Revenue (in Writ Appeal No.293 of 2017). The Division Bench held that the course pursued by the learnedSingle Judge was not correct and accordingly, the judgment in the writ petitionwas set aside and the appeal preferred by the Revenue was allowed in thefollowing terms: “33. To sum up the matter, when there existedreason to belief which is formed on the basis ofmaterial available having nexus with the subject,writ Court ought not to have entertained the writpetition more so when assessment order havealready been passed during pendency of the writpetition, therefore, we set aside the order passed bythe writ Court and relegate the writ petitioner toprefer an appeal against the reassessment orderwhich may be filed within a period of 30 days fromtoday. The writ petitioner would be at liberty to raiseall grounds both factual and legal in the saidappeal. The appellate authority shall entertain theappeal for decision on merits without raisingobjection as to limitation.” reason to belief which is formed on the basis ofmaterial available having nexus with the subject,writ Court ought not to have entertained the writpetition more so when assessment order havealready been passed during pendency of the writpetition, therefore, we set aside the order passed bythe writ Court and relegate the writ petitioner toprefer an appeal against the reassessment orderwhich may be filed within a period of 30 days fromtoday. The writ petitioner would be at liberty to raiseall grounds both factual and legal in the saidappeal. The appellate authority shall entertain theappeal for decision on merits without raisingobjection as to limitation.” Though the Assessee took up the matter by filing the SLP before theApex Court, after condoning the delay, the SLP came to be dismissed;however, granting liberty to file statutory appeal within three weeks and to haveit disposed off on merits. It is true that no principle of merger is attractedbecause of the dismissal of the SLP, but we find no reason to differ from theview taken by the Division Bench in the writ appeal, with reference to thecourse to be pursued. 12. When the procedural requirements are satisfied, whether the inference drawn isbased on the relevant materials or not is a matter which may involve a factadjudication. This is not possible at the hands of this Court, in exercise of thejurisdiction under Article 226 of the Constitution of India. In other words, thenature of contentions raised by the Appellant/Assessee is with regard to thesatisfaction of the reasons for reopening the assessment after four years. Theapproval granted and the reasons which made the Income Tax Officer tobelieve that some income had escaped assessment have to be tested withregard to the actual facts and figures. This comes within the scope ofalternative remedy by way of appeal and no prejudice can be stated as causedto the Appellant/Assessee in this regard. To put it more clear, it is not a casewhere mere question of law is involved; such as violation/non-satisfaction of theparticular provisions or as to lack of competency of the authority who haspassed the order for proceeding further. Under similar circumstance, we havedeclined interference, without prejudice to pursue statutory remedy, as perjudgment dated 29.07.2019 in Writ Appeal 336 of 2019, a copy of which isplaced for perusal from the part of the Respondents. 13.The learned standing counsel for the Respondent/Revenue submits thatassessment proceedings were finalized in respect of 'five' different assessmentyears and hence five different writ petitions came to be filed by theAppellants/Assessee. Among the 'five', two writ petitions have already been withdrawn and the Assessees have chosen to avail the statutory remedy. As itstands so, no differential treatment is warranted in respect of the presentappeals. 14.In the above facts and circumstances, we hold that these appeals are notmaintainable and accordingly they are dismissed. This is without prejudice tothe rights and liberties of the Appellants/Assessee to move the statutoryauthority by way of appeal in accordance with law. It is further made clear that,our discussion is only to the extent of considering the maintainability and noopinion is expressed with regard to the merits involved. Sd/- Sd/- (P. R. Ramachandra Menon)(Parth Prateem Sahu) Chief Justice Judge