M/S Jainsons Agrochem Industries, G-66-68, Agro Food Parkboranada Jodhpur v. Principal Commissioner Of Income Tax, (Pcit) Paota Croad, Jodhpur, Rajasthan

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Civil Writ Petition No. 2136/2024 M/s Jainsons Agrochem Industries, G-66-68, Agro Food ParkBoranada Jodhpur 342001, Rajasthan India through itsAuthorised Representative Prashant Bohra S/o Sohan Lal Jainage48 Years R/o. 21, Prem Nagar, Khema Ka Kua, Pal Road, Jodhpur. ----Petitioner Versus 1. Principal Commissioner of Income Tax, (PCIT) Paota CRoad, Jodhpur, Rajasthan, 342010Road, Jodhpur, Rajasthan, 342010 2. Deputy Commissioner of Income Tax, Circle 3, Jodhpur. ----Respondents For Petitioner(s) : Mr. Sanjay Jhanwar, Sr. Advocate through VC assisted by through VC assisted by Mr. Prakul Khurana For Respondent(s): Mr. K.K. Bissa HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE MUNNURI LAXMANOrder 15/04/2024 1.This writ petition has been preferred under Article 226 of theConstitution of India claiming the following reliefs: "It is therefore, most respectfully prayed that the writpetition of the Petitioner may kindly be allowed and by anappropriate writ, order or direction, the Hon’ble Court mayfurther be pleased to:- A. Declare that the impugned proceedings under Section 263of the Income Tax Act, 1961 by Respondent has becometime barred and therefore continuation of same is non-estand void ab initio and accordingly Issue writ in the nature ofCertiorari, or any other appropriate writ, order or directionto quash the Notice dated 09.01.2024 (Annexure-6) issuedby Respondent fixing 16.01.2024 as the date of hearing ofcase on merits including consequential order passed, if any during the pendency of the writ petition. B. Any other appropriate order or direction, which thisHon'ble Court considers just and proper in the facts andcircumstances of this case, may kindly be passed in favourof the Petitioner. C. Allow the Writ Petition with costs; D. Any other order/direction, which Hon'ble court deemsappropriate.” 2.Brief facts of the case, as placed before this Court byMr. Sanjay Jhanwar, learned Senior Counsel assisted by Mr. PrakulKhurana appearing for the petitioner-firm, are that the petitionerfiled his income tax return on 24.09.2013 declaring a total incomeof Rs.4,98,43,110/-. In the said income tax return, the petitionerhas also reflected a Dividend income of Rs.21,58,735/- receivedfrom investment in Mutual Funds of UTI Ltd. and tax paid on theshort term capital gain. Upon the scrutiny of the petitioner’sincome tax return, a notice was issued by the respondents and theassessment under Section 143(3) of the Income Tax Act, 1961(hereinafter referred to as the ‘Act of 1961’) was done by theconcerned authority, while passing a detailed assessment orderdated 08.01.2016. A notice was issued to the petitioner underSection 154 of the Act of 1961 on 18.10.2016 proposing to rectifythe said assessment order dated 08.01.2016 pertaining to theearned Dividend income and expenditure under Section 14A of theAct of 1961 read with, Rule 8D of the Income Tax (FifthAmendment) Rules, 2008. The petitioner duly submitted its reply,upon which the respondents did not rectify the assessment order,while retaining original position thereof. 3.Thereafter, the petitioner was issued a re-assessment noticeunder Section 147 of the Act of 1961 on the ground that there was a short fall of an amount of Rs.2,32,330/- in job charges account,during the F.Y. 2012-13 and relevant A.Y 2013-14. Accordingly,the reassessment order was passed on 25.03.2022. 4.The present controversy has arisen because the respondentshave issued another notice for the hearing dated 09.01.2024 tothe petitioner under Section 263 of the Act of 1961 invoking therevisional jurisdiction relating to the rate of tax on the factsobserved in the said notice. 5.Learned Senior Counsel for the petitioner has drawn theattention of this Court towards the judgment rendered by theHon’ble Apex Court in the case of Commissioner of Income Tax 3.Thereafter, the petitioner was issued a re-assessment noticeunder Section 147 of the Act of 1961 on the ground that there was a short fall of an amount of Rs.2,32,330/- in job charges account,during the F.Y. 2012-13 and relevant A.Y 2013-14. Accordingly,the reassessment order was passed on 25.03.2022. 4.The present controversy has arisen because the respondentshave issued another notice for the hearing dated 09.01.2024 tothe petitioner under Section 263 of the Act of 1961 invoking therevisional jurisdiction relating to the rate of tax on the factsobserved in the said notice. 5.Learned Senior Counsel for the petitioner has drawn theattention of this Court towards the judgment rendered by theHon’ble Apex Court in the case of Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd., reported in (2023) 152 taxman.com 591 (SC)whereby in paragraph No.2,the question of law has been framed, which has been answered inparagraph No.3 of the said judgment. The said paras 2 & 3 read as under: "2. The following question of law arises for considerationof this Court in the present appealof this Court in the present appeal “i) whether in the facts and circumstance of the case andin law, the period of limitation for passing order underSection 263 of the Income Tax Act, 1961 has to bereckoned from the date of the original assessment orderor from the date of the reassessment order?” 3. At the outset, it is required to be noted and it is not indispute that as such, the Commissioner exercised powersunder Section 263 of the Act with respect to the issuesdispute that as such, the Commissioner exercised powersunder Section 263 of the Act with respect to the issues which were not covered in the re-assessmentproceedings. Therefore, the issues before theCommissioner while exercising the powers under Section263 of the Act relate back to the original AssessmentOrder and, therefore, the limitation would start from theoriginal Assessment Order and not from theReassessment Order. We are fortified with our view byproceedings. Therefore, the issues before theCommissioner while exercising the powers under Section263 of the Act relate back to the original AssessmentOrder and, therefore, the limitation would start from theoriginal Assessment Order and not from theReassessment Order. We are fortified with our view by the decision of this Court in the case of Commissioner ofIncome Tax, Chennai v. Alagendran Finance Ltd. (2007) 7SCC 215. As observed and held by this Court in theaforesaid decision, once an order of assessment is re-opened, the previous Order of Assessment is re-opened,the previous order of assessment will be held to be setaside and the whole proceedings would start afresh butthe same would not mean that even when the subjectmatter of re-assessment is distinct and different, theentire proceedings of assessment would be deemed tohave been re-opened. Meaning thereby, only in a casewhere the issues before the Commissioner at the time ofexercising powers under Section 263 of the Act relate tothe subject matter of re-assessment, the limitation wouldstart from the date of Re-assessment Order. However, ifthe subject matter of the re-assessment is distinct anddifferent in that case the relevant date for the purpose ofdetermination of period of limitation for exercising powersunder Section 263 of the Act would be the date of theoriginal Assessment Order.” 6.Learned Senior Counsel for the petitioner has also taken thisCourt to the provisions of Section 263(2) of the Act of 1961, whichreads as follows: - “(2) No order shall be made under sub-section (1) after theexpiry of two years from the end of the financial year inwhich the order sought to be revised was passed.” 6.Learned Senior Counsel for the petitioner has also taken thisCourt to the provisions of Section 263(2) of the Act of 1961, whichreads as follows: - “(2) No order shall be made under sub-section (1) after theexpiry of two years from the end of the financial year inwhich the order sought to be revised was passed.” 6.1. Learned Senior Counsel further placed reliance on thejudgment rendered by a Division Bench of this Hon’ble Court inthe case of Chambal Fertilisers and Chemicals Limited Vs.Principal Commissioner of Income Tax & Anr. (D.B. CivilWrit Petition No.5144/2022) decided on 26.02.2024, andsubmits that once an order of assessment is re-opened, ordinarily,the previous order of assessment would be set aside, and the whole proceedings would start afresh; but in the present case,since the subject matter of reassessment is distinct and different,the entire proceedings of assessment should not be deemed tohave been reopened. 6.2. Learned Senior Counsel also submits that the impugnednotice dated 09.01.2024 is ex facie illegal because the issuesbefore the Commissioner at the time of exercising powers underSection 263 of the Act of 1961 relates to the subject of theoriginal assessment order, and not the reassessment order.Learned Senior Counsel further submits that since thereassessment order is distinct and different, therefore, the periodof limitation for exercising the powers under Section 263 of theAct of 1961 by the Commissioner would relate back to the originalassessment order. 7.On the other hand, learned counsel appearing on behalf ofthe respondents, while opposing the aforesaid submissions madeon behalf of the petitioner, submits that on a bare perusal of thereassessment order, it is clear that the said order is a summarizedone providing no cogent reasons for justifying the revisionproceedings. However, he admits that the only issue that wasconsidered in such adjudication is the acceptability or otherwise ofthe shortfall of Rs.2,32,330/- in the job charges account, keepingthe total assessed income as Rs. 5,03,43,110/-. 7.1. Learned counsel further submits that the order dated25.03.2022 is cryptic and does not touch the core issue of theescaped assessment and does not contain the legal requirementsas to the purpose for which Section 147 of the Act of 1961 has been invoked. He further takes this Court to Sections 147 & 148of the Act of 1961, which read as follows:- "147. Income escaping assessment.—If the [Assessing Officer] [has reason to believe] that any income chargeableto tax has escaped assessment for any assessment year, hemay, subject to the provisions of sections 148 to 153, assessor reassess such income and also any other incomechargeable to tax which has escaped assessment and whichcomes to his notice subsequently in the course of theproceedings under this section, or recompute the loss or thedepreciation allowance or any other allowance, as the casemay be, for the assessment year concerned (hereafter in thissection and in sections 148 to 153 referred to as the relevantassessment year) Provided that where an assessment under sub-section (3) ofsection 143 or this section has been made for the relevantassessment year, no action shall be taken under this sectionafter the expiry of four years from the end of the relevantassessment year, unless any income chargeable to tax hasescaped assessment for such assessment year by reason ofthe failure on the part of the assessee to make a returnunder section 139 or in response to a notice issued undersub-section (1) of section 142 or section 148 or to disclosefully and truly all material facts necessary for his assessment,for that assessment year: Provided further that nothing contained in the first provisoshall apply in a case where any income in relation to anyasset (including financial interest in any entity) locatedoutside India, chargeable to tax, has escaped assessment forany assessment year Provided further that nothing contained in the first provisoshall apply in a case where any income in relation to anyasset (including financial interest in any entity) locatedoutside India, chargeable to tax, has escaped assessment forany assessment year Provided also that the Assessing Officer may assess orreassess such income, other than the income involvingmatters which are the subject matters of any appeal,reference or revision, which is chargeable to tax and hasescaped assessment. 148. Issue of notice where income has escapedassessment.—[(1)] Before making the assessment, reassessment or recomputation under section 147, theAssessing Officer shall serve on the assessee a noticerequiring him to furnish within such period, *** as may bespecified in the notice, a return of his income or the incomeof any other person in respect of which he is assessableunder this Act during the previous year corresponding to therelevant assessment year, in the prescribed form and verifiedin the prescribed manner and setting forth such otherparticulars as may be prescribed; and the provisions of thisAct shall, so far as may be, apply accordingly as if suchreturn were a return required to be furnished under section139: Provided that in a case— (a) where a return has been furnished during the periodcommencing on the 1st day of October, 1991 and ending onthe 30th day of September, 2005 in response to a noticeserved under this section, and (b) subsequently a notice has been served under sub-section(2) of section 143 after the expiry of twelve months specifiedin the proviso to sub-section (2) of section 143, as it stoodimmediately before the amendment of said sub-section bythe Finance Act, 2002 (20 of 2002) but before the expiry ofthe time limit for making the assessment, re-assessment orrecomputation as specified in sub-section (2) of section 153,every such notice referred to in this clause shall be deemedto be a valid notice: Provided further that in a case— (a) where a return has been furnished during the periodcommencing on the 1st day of October, 1991 and ending onthe 30th day of September, 2005, in response to a noticeserved under this section, and (b) subsequently a notice has been served under clause (ii)of sub-section (2) of section 143 after the expiry of twelvemonths specified in the proviso to clause (ii) of sub-section(2) of section 143, but before the expiry of the time limit formaking the assessment, reassessment or recomputation asspecified in sub-section (2) of section 153, every such noticereferred to in this clause shall be deemed to be a validnotice.” 7.2. Learned counsel thus placed reliance on that prescription ofSection 147 of the Act of 1961, which provides that for thepurpose of assessment and reassessment or re-computation of theescaped assessment, any issue(s) which come to the noticesubsequently in the course of proceedings, ought to have beentaken into consideration by the authority, while initiating theproceedings under Section 147 of the Act of 1961, and since suchproceedings have been illegally drawn without taking into dueconsideration the complete spectrum of reassessment and re-computation, therefore, the order dated 25.03.2022 is ex facieillegal, unlawful and cannot withstand the scrutiny of law, andthus, amenable to revisional jurisdiction under Section 263 of theAct of 1961 by the Commissioner. 7.3. Learned counsel further submits that the powers of theCommissioner under Section 263 of the Act of 1961 are wide andrelate back to the reassessment order, as the reassessment orderhas been illegally passed, thus reopening of the same would meanthat the whole proceedings requires to be adjudicated afreshmeaning thereby, the entire proceedings of assessment would bedeemed to have been reopened. 7.3. Learned counsel further submits that the powers of theCommissioner under Section 263 of the Act of 1961 are wide andrelate back to the reassessment order, as the reassessment orderhas been illegally passed, thus reopening of the same would meanthat the whole proceedings requires to be adjudicated afreshmeaning thereby, the entire proceedings of assessment would bedeemed to have been reopened. 8.In the rejoinder arguments, learned Senior Counsel for thepetitioner submits that the assessment order in itself contains thelimited ambit of the job work charges. He further demonstratesthe ambit upon which the notice was given, which precedes theorder of assessment passed on 25.03.2022 (Annexure -5) andreasons recorded in communication dated 10.01.2022, paragraphNo.6 of which deals with the basis of forming reason to believeand details of escapement of income, and categorically, the notice was issued stating the reasons due to which the reassessmentauthority believed that an income to the tune of Rs.2,32,330/- hasescaped the due assessment, within the meaning of Section 147of the Act of 1961. 9.Heard learned counsel for the parties as well as perused therecord of the case along with the judgments cited at Bar. 10.This Court, on a careful perusal of the judgment rendered bythe Hon’ble Apex Court in the case of Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd. (supra)followed by the Hon’ble Division Bench of this Court in the case ofChambal Fertilisers and Chemicals Limited (supra) finds thatthe reassessment order in its original form the consequential orderpassed on 25.03.2022 are strictly within the ambit of the escapedassessment of job charges to the tune of Rs.2,32,330/-. It is notthe case of the petitioner that the original assessment order couldnot have been within the ambit of Section 263 of the Act of 1961under the revisionary jurisdiction but the petitioner’s contention islimited to the extent that once the reassessment of the escapedassessment in limited jurisdiction has happened on 25.03.2022,the revision would also have the same limited ambit for thepurpose of limitation prescribed in Section 263(2) of the Act of1961, which is of two years only, for the purpose of job workcharges, which would encompass the controversy as regards theimpugned notice. 11.This Court is conscious of the fact that the petitioner mayhave had a case to challenge the original assessment order, but atthe same time, has lost the battle in terms of the Law ofLimitation as the Hon’ble Apex Court in Commissioner of Income Tax Vs. Industrial Development Bank of India Ltd. (supra)in whichithas been clearly laid down that if the subjectmatter of the reassessment is distinct and different, in that casethe relevant date for the purpose of determination of the period oflimitation for exercising powers under Section 263 of the Act of1961 would be the date of original assessment order, which makesthe revision proceedings to be ex facie illegal on the face of it oncount of limitation. 12.Thus, in light of the aforesaid observations, the impugnednotice dated 09.01.2024 issued under Section 263 of the Act of1961 alongwith entire proceedings pursuant thereto are quashedand set aside, on count of being barred by limitation.13.The instant writ petition stands allowed in the above terms.All pending applications stand disposed of. (MUNNURI LAXMAN),J (DR. PUSHPENDRA SINGH BHATI),J 9-Dharmendra Rakhecha & PoonamS/-