M/S Daulat Ram Tirlok Chand v. Assistant Commissioner Of Income Tax

C.W.P. No. 18449 of 1991 [ 1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 18449 of 1991 (O&M)Date of decision: 7.1.2011 M/s Daulat Ram Tirlok Chand ..Petitioner v. Assistant Commissioner of Income Tax .. Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Akshay Bhan, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondent. ... Rajesh BindalJ. The petitioner has approached this court by filing the presentpetition seeking quashing of notices (Annexures P4 and P5) and theproceedings initiated in consequence thereof. Further prayer has been madefor a direction to the respondent to refund the amount of tax alreadydeposited by him at the time of filing of return. The facts, as stated in the petition, are that the petitioner-firmsubmitted his return of income for the assessment year 1987-88 on31.8.1987 disclosing his taxable income at ` 77,208/-. On 6.8.1991, therespondent issued notice to the petitioner under Section 143(3) of theIncome-tax Act, 1961 (for short, `the Act') for assessing the income, whichallegedly escaped assessment. Reply to the notice was submitted.Thereafter, notice under Section 148 of the Act was issued to the petitioneron 16.9.1991 asking the petitioner to file the return. The same was replied toby the petitioner stating therein that no notice under Section 148 of the Act, C.W.P. No. 18449 of 1991 [ 2] as stated in notice dated 16.9.1991, was ever received by the petitioner inMarch, 1990. No assessment on the basis of return initially filed by thepetitioner can be framed at this stage, as the same got time barred on31.3.1990 and in case no assessment had been framed originally,proceedings under Section 148 of the Act could not be initiated. Thepetitioner also asked for reasons, if any, recorded for issuance of noticeunder Section 148 of the Act, though return was also filed under protest.Challenge was made in the petition to the notice issued for re-assessment. Itwas also prayed that during the year in question, the petitioner haddeposited ` 6,250/- as advance tax and no regular assessment having beenframed assessing that amount of tax, the same deserves to be refunded tohim. Reply to the petition was filed by the department controvertingthe allegations raised by the petitioner in the petition. The prayer was fordismissal of the writ petition.The petitioner filed replication reiterating what was stated inthe petition. Learned counsel for the petitioner submitted that after the filingof return for the assessment year in question on 31.8.1987, no assessmentwas framed. Section 153(1)(a)(iii) of the Act provides for limitation forframing the assessment in terms of which no order of assessment could bepassed under Section 153 of the Act or under Section 144 of the Act at anytime after the expiry of two years from the end of assessment year, in whichthe income was first assessable. In the present case, the assessment yearbeing 1987-88, the assessment at the most could be framed upto 31.3.1990.The notice, which was allegedly issued under Section 148 of the Act inMarch, 1990, was never served upon the petitioner. The fact that noassessment was framed is evident from a communication dated 26.11.1990received by the petitioner from the Assistant Commissioner of Income-tax,Investigation Circle, Ambala, wherein it was stated that from the memory ofthe signatory of the communication and his staff members, assessment ofthe petitioner under Section 143(3) of the Act was never completed. If theassessment had not been completed, there was no question of issuance ofnotice under Sections 147/148 of the Act. Further, at the time of issuance ofnotice under Section 148 of the Act in March, 1990, as is sought to be C.W.P. No. 18449 of 1991 [ 3] claimed by the department, the assessment proceedings itself were pending. As far as claim for refund of the amount of advance tax by thepetitioner is concerned, the petitioner fairly stated that he does not wish topress for that relief. On the other hand, learned counsel for the revenue inter-aliasubmitted that the petitioner in the present case has effective alternativeremedy to approach the officer concerned by raising whatever objection hewishes to raise to the initiation of proceedings under Sections 147/148 ofthe Act. He further submitted that assessment of the petitioner in fact wasframed during the period of limitation. Thereafter, search and seizureoperation was carried out at the premises of the petitioner on 5.5.1989 andcertain incriminating documents were found. The proceedings underSections 147/148 of the Act were initiated in March, 1990 on the basis ofthe incriminating material found during the course of search. The factsregarding completion of assessment, search and seizure operation have beenmentioned in the reasons recorded for re-opening of the assessment of thepetitioner. He further submitted that on account of fire in the income-taxoffice at Ambala on 21.9.1990 and at Kurukshetra on 22.9.1990 duringAnti-Mandal Commission agitation, lot of records were burnt whichincluded some record seized from the petitioner during the search andseizure operation. Learned counsel further submitted that the name of thepetitioner appeared at Sr. No. 75 in the list submitted to the Commissionerof Income Tax, which contained the names of cases where notices underSection 148 of the Act were issued. From the list, it was evident thatassessment proceedings against the petitioner under Sections 147/148 of theAct were pending, as the notice had been served upon him on 31.3.1990,though there was no written proof available as the record had been burnt inthe fire. Summing up the submissions, learned counsel stated that in viewof the peculiar facts and circumstances of the case when part of the recordhas been burnt in the fire, but still there is some material available with thedepartment which established that assessment of the petitioner had beencompleted prior to the search and seizure operation carried out at hispremises and thereafter notice under Sections 147/148 of the Act wasissued. As there was no case made out by the petitioner for quashing of thenotice and consequential proceedings initiated thereupon, mere reliance C.W.P. No. 18449 of 1991 [ 4] upon a letter written by the Assistant Commissioner of Income-tax,Investigation Circle, Ambala, which is based upon his memory is neitherhere nor there. Heard learned counsel for the parties and perused the paperbook. As far as the claim for refund of amount of advance taxdeposited by the petitioner is concerned, the petitioner himself was fairenough to state that he does not press for the relief. Even otherwise, it is notadmissible to him considering the judgment of Hon'ble the Supreme Courtin Commissioner of Income Taxv. Shelly Products and another, (2003) 261ITR 367 (SC). C.W.P. No. 18449 of 1991 [ 4] upon a letter written by the Assistant Commissioner of Income-tax,Investigation Circle, Ambala, which is based upon his memory is neitherhere nor there. Heard learned counsel for the parties and perused the paperbook. As far as the claim for refund of amount of advance taxdeposited by the petitioner is concerned, the petitioner himself was fairenough to state that he does not press for the relief. Even otherwise, it is notadmissible to him considering the judgment of Hon'ble the Supreme Courtin Commissioner of Income Taxv. Shelly Products and another, (2003) 261ITR 367 (SC). As far as prayer for setting aside of the notices issued to thepetitioner under Sections 147/148 of the Act is concerned, in the factualmatrix, as have been narrated above, in our opinion, considering the case inhand to be peculiar on account of the fact that part of the records was burntin Anti-Mandal Commission agitation, but still the department claims thatthere is some supporting record available which establishes framing of theassessment; search and seizure operation and also issuance and service ofnotice under Sections 147/148 of the Act, in our opinion, the matter needsto be considered by the competent authority at the first instance, who willconsider the objections regarding initiation of re-assessment proceedingsand decide the same before proceeding further to frame the assessment. The writ petition is disposed of accordingly. ( Rajesh Bindal ) Judge 7.1.2011mk (Adarsh Kumar Goel) Judge