Prateek Bulls And Bears Private Limited v. Deputy Commissioner Of Income Tax, Circle

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 13177/2022 Prateek Bulls And Bears Private Limited, Having Its Address AtKothari House, A-495/a, Makarwali Road, Panchsheel Nagar, ABlock, Ajmer 305006 Through Its Director Shri Pradeep Kothari ----Petitioner Versus Deputy Commissioner Of Income Tax, Circle 2, Ajmer Having ItsAddress At Central Revenue Building, Opp. Sessions Court,Jaipur Road, Ajmer 305001 ----Respondent For Petitioner(s) : Mr. Siddharth Ranka withMr. Rohan ChatterMs. Apeksha BapnaFor Respondent(s): Mr. Parth Vashistha forMr. Shantanu Sharma HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE ASHUTOSH KUMAR Order 19/02/2025-AVNEESH JHINGAN, J (ORAL): 1.This petition is filed seeking quashing of the notice dated14.03.2022 issued under Section 148(b) of the Income Tax Act,1961 (for short ‘the Act’) for the Assessment Year 2018-2019 andthe order dated 31.03.2022 passed under Section 148A(d) of theAct. Facts: 2.The brief facts are that the petitioner filed the return for therelevant assessment year declaring the income ofRs.2,39,47,140/-. A notice dated 14.03.2022 under Section148A(b) of the Act was issued annexing the reason that in theassessment year 2018-19 there was a credit entry of Rs.4,50,00,000/- and debit entry of Rs.4,50,71,468/- in the bankaccount No.3042833. The petitioner in response dated 21.03.2022stated that the petitioner has no bank account having the numbermentioned in the notice. Further that the petitioner had a bankaccount with ICICI Bank, which was closed on 08.02.2010, theproof of closure of the bank account was enclosed. Order dated31.03.2022 was passed holding that the objections are nottenable for the failure of ICICI Bank to respond to the noticeissued on 25.03.2022 by the Assessing Officer (for brevity ‘AO’)under Section 133(6) of the Act. Submissions: 3.Learned counsel for the petitioner argued that petitionerdenied that the bank account mentioned in the notice belongs toit. The documents relating to closure of the bank account of thepetitioner with the ICICI Bank were attached. The objections weredecided in haste within six days of issuance of notice to bank.Submission is that the bank through an e-mail dated 06.04.2022and 18.05.2022 responded to the notice of AO. The factum ofclosure of account of the petitioner with the ICICI Bank wasaccepted. Further it was stated that the account numbermentioned in the notice does not exists with the bank. 4.Per contra the petitioner had not explained the entries in theaccount number mentioned in the notice rather had given adifferent account number which was closed. It is further submittedthat the e-mail was received after passing of the impugned order.Provisions & Guidelines: Section 148A: [Conducting inquiry, providing opportunitybefore issue of notice under section 148. The Assessing Officer shall, before issuing any notice under section 148:- (a) conduct any enquiry, if required, with the priorapproval of specified authority, with respect to theinformation which suggests that the incomechargeable to tax has escaped assessment; (b) provide an opportunity of being heard to theassessee,[***], by serving upon him a notice toshow cause within such time, as may be specifiedin the notice, being not less than seven days andbut not exceeding thirty days from the date onwhich such notice is issued, or such time, as maybe extended by him on the basis of an applicationin this behalf, as to why a notice under section 148should not be issued on the basis of informationwhich suggests that income chargeable to tax hasescaped assessment in his case for the relevantassessment year and results of enquiry conducted,if any, as per clause (a);(c) consider the reply of assessee furnished, ifany, in response to the show-cause notice referredto in clause (b); (b) provide an opportunity of being heard to theassessee,[***], by serving upon him a notice toshow cause within such time, as may be specifiedin the notice, being not less than seven days andbut not exceeding thirty days from the date onwhich such notice is issued, or such time, as maybe extended by him on the basis of an applicationin this behalf, as to why a notice under section 148should not be issued on the basis of informationwhich suggests that income chargeable to tax hasescaped assessment in his case for the relevantassessment year and results of enquiry conducted,if any, as per clause (a);(c) consider the reply of assessee furnished, ifany, in response to the show-cause notice referredto in clause (b); (d) decide, on the basis of material available onrecord including reply of the assessee, whether ornot it is a fit case to issue a notice under section148, by passing an order, with the prior approvalof specified authority, within one month from theend of the month in which the reply referred to inclause (c) is received by him, or where no suchreply is furnished, within one month from the endof the month in which time or extended timeallowed to furnish a reply as per clause (b)expires: Providedthat the provisions of this section shall notapply in a case where,- (a) a search is initiated under section 132orbooks of account, other documents or any assetsare requisitioned under section 132Ain the case ofthe assessee on or after the 1st day of April, 2021;or (b) the Assessing Officer is satisfied, with theprior approval of the Principal Commissioner orCommissioner that any money, bullion, jewelleryor other valuable article or thing, seized in asearch under section 132or requisitioned undersection 132A, in the case of any other person onor after the 1st day of April, 2021, belongs to theassessee; or (c) the Assessing Officer is satisfied, with the priorapproval of the Principal Commissioner orCommissioner that any books of account ordocuments, seized in a search under section 132or requisitioned under section 132A, in case of anyother person on or after the 1st day of April, 2021,pertains or pertain to, or any informationcontained therein, relate to, the assessee; or (d) the Assessing Officer has received anyinformation under the scheme notified undersection 135A pertaining to income chargeable totax escaping assessment for any assessment yearin the case of the assessee.] Explanation.—For the purposes of this section,specified authority means the specified authorityreferred to in section 151.] [Prior approval for assessment, reassessment orrecomputation in certain cases.” Relevant clauses of guidelines dated 01/08/2022 forissuance of notice u/s 148 of the Act. xxxxxxxxxxxxxxxxxxxxxx “iv.The “specified authority” for the seekingapproval for conducting enquiry u/s 148A(a), passingorder u/s 148A(d) and issuance of notice u/s 148shall be: v. Explanation 2 to section 148 of the Act providesthat if a survey u/s 133A of the Act (other than undersection 133A (2A)) was conducted in the case of theassessee on or after 1 April, 2021, the Assessingofficer shall be deemed to have information which suggests that income chargeable to tax has escapedassessment. However, it is to clarify that the dueprocedure as prescribed u/s 148A needs to befollowed in such cases also before issuing a notice u/s148 of the Act. (refer proviso to section 148A). vi.The AO shall, if required, undertake enquiries onany "information" received/available with him whichsuggests that the income chargeable to tax hasescaped assessment in a previous year only with thepriorapprovalof "specifiedauthority". v. Explanation 2 to section 148 of the Act providesthat if a survey u/s 133A of the Act (other than undersection 133A (2A)) was conducted in the case of theassessee on or after 1 April, 2021, the Assessingofficer shall be deemed to have information which suggests that income chargeable to tax has escapedassessment. However, it is to clarify that the dueprocedure as prescribed u/s 148A needs to befollowed in such cases also before issuing a notice u/s148 of the Act. (refer proviso to section 148A). vi.The AO shall, if required, undertake enquiries onany "information" received/available with him whichsuggests that the income chargeable to tax hasescaped assessment in a previous year only with thepriorapprovalof "specifiedauthority". vii. If the result of enquiry/information availablesuggests that the income chargeable to tax hasescaped assessment, the AO shall provide anopportunity of being heard to the assessee by issuinga show cause notice u/s 148A(b) of the Act. The saidnotice shall provide between 7 to 30 days' time to theassessee for submitting the reply. A template of showcause notice is enclosed at Annexure-A1 viii. If an assessee requests for a personal hearing,the same may be dealt with following the principle ofnatural Justice by giving a reasonable period forcompliance of notice specifying the date of hearing. ix. As per 3rd proviso to section 149, for thepurposes of computing the period of limitation as perthis section, the time or extended time allowed to theassessee, as per show-cause notice issued underclause (b) of section 148A or the period during whichthe proceeding under section 148A is stayed by anorder or injunction of any court, shall be excluded. x. Further as per 4th proviso to Section 149, whereimmediately after exclusion of the period referred toin the immediately preceding proviso (i.e. 3rdproviso), the period of limitation available to theAssessing Officer for passing an order under clause(d) of Section 148A is less than seven days, suchremaining period shall be extended to seven daysand the period of limitation under this sub-sectionshall be deemed to be extended accordingly. xi. The AO has to consider the reply of assesseefurnished, if any, in response to the show causenotice referred to in clause(b) of Section 148A beforepassing the order u/s 148A(d). xii. The AO shall mandatorily pass a speaking orderu/s 148A(d) in all cases with the 'prior approval of'-the specified authority(AnnexureA2) for such orderu/s. 148A(d), expect in the cases covered in Para 2.1 (iii) above of these guidelines, irrespective of whetherissuance of notice u/s 148 is being recommended ornot. A template of such order u/s. 148A(d) is-enclosed at AnnexureA3. xiii. Once an order under clause(d) of Section 148Ahas been passed, no further approval is required forissuance of notice u/s 148 by the AO, with effectfrom 1.4.2022.* (* except for cases in which procedure under Section 148A is being applied for implementation of the Hon’ble Supreme Court’sjudgment in the case of UOI Vs. Ashish Agarwal (2022 SCC OnlineSC 543) dated 4.5.2022 for which specific instruction dated 11.5.2022 has been issued”). Annexure-A1 is reproduced hereinbelow:- GOVERNMENT OF INDIAMINISTRY OF FINANCEINCOME TAX DEPARTMENTOFFICE OF THE --------------(Designation of AO along with Office address) To, Notice under clause (b) of Section 148A of the-Incometax Act, 1961 Sir/Madam/M/s xiii. Once an order under clause(d) of Section 148Ahas been passed, no further approval is required forissuance of notice u/s 148 by the AO, with effectfrom 1.4.2022.* (* except for cases in which procedure under Section 148A is being applied for implementation of the Hon’ble Supreme Court’sjudgment in the case of UOI Vs. Ashish Agarwal (2022 SCC OnlineSC 543) dated 4.5.2022 for which specific instruction dated 11.5.2022 has been issued”). Annexure-A1 is reproduced hereinbelow:- GOVERNMENT OF INDIAMINISTRY OF FINANCEINCOME TAX DEPARTMENTOFFICE OF THE --------------(Designation of AO along with Office address) To, Notice under clause (b) of Section 148A of the-Incometax Act, 1961 Sir/Madam/M/s 1. Whereas I have information which suggests thatincome chargeable to tax for the Assessment Year__________ has escaped assessment within themeaning of Section 147 of the Income Tax Act, 1961.The details of the information/enquiry conducted onwhich reliance is being placed, along with supportingdocuments, are enclosed with this notice.2. You are required to show-cause as to why, inview of the details contained in enclosures mentionedin point number 1 above, a notice under Section 148of the Income Tax Act, 1961 should not be issued.3.You may submit your reply to this notice, alongwith supporting documents (if any) on the abovementioned issues on or before _______ electronicallyat www.incometax.gov.in. Guidelines for Enclosures •The AO should enclose copy of all the relevant‘information’ available on which reliance is beingplaced, along with supporting documents (if any).•In the cases where information is received fromthe investigation wing or any other law enforcementagency, details of letter, brief summary of informationalong with relevant portion of such report and detailsof relied upon documents may be enclosed. Such aportion as does not bear reference to the assesseeconcerned may be appropriately redacted. •Details of enquiry conducted, if any, may beshared if reliance is being placed by the AO on it.•Judicial order (i.e., case laws) on which relianceis being placed, if any. Refer Explanation 1 and Explanation 2 of Section 148for what constitutes “information”. Analysis and Conclusion: 5.Section 148A of the Act stipulates that before initiating theproceedings under Section 148 of the Act, with prior approval ofthe specified authority the A.O. if so, required may conduct anenquiry with regard to the information suggesting escapedassessment. The assessee is to be provided an opportunity ofhearing by issuing notice specifying the date of not less thanseven days but not exceeding thirty days, which may be extendedon application. The information relied upon for reassessment andoutcome of enquiry if conducted any, is to be supplied. In case ofinformation having been received from investigating wing or otheragency, brief summary of information along with relevant portionof report and details of documents relied upon is to be supplied.The decision that if it is a fit case for issuance of notice underSection 148 is to be taken with prior approval of the specifiedauthority, on the basis of material available on record and afterconsidering the reply filed by the assessee. The order is to bepassed within one month from ending of the month when reply was filed and in case no reply was filed within one month from endof month when time to file reply expires. 6.The proviso to Section 148A of the Act provides exception tothe applicability of Section 148A of the Act.” was filed and in case no reply was filed within one month from endof month when time to file reply expires. 6.The proviso to Section 148A of the Act provides exception tothe applicability of Section 148A of the Act.” 7.From perusal of the reasons annexed with the notice issuedunder Section 148A(b) of the Act, it is evident that name of thebank in which the account was maintained is not mentioned.Inspite of the mandate of Section 148A of the Act, circulars andguidelines issued by the department that material relied uponshould be supplied to the assessee, the casualness in which thereasons are supplied, is evident. Vague information was suppliedand in absence of name of bank it becomes impossible for theassessee to file response. 8.The petitioner filed objections on 21.03.2022 denying thatthe account number does not belong to it, giving details of thebank account with the ICICI Bank which was closed, the proofthereof was annexed. The AO issued notice to the bank on25.03.2022 and without waiting for reasonable time or givingreminder or making any efforts to verify the fact from the bank,brushed aside the objections stating that no response has beenreceived from the bank. 9.In the reply filed by respondent before this court, the e-mailreceived from the bank that the account of the petitioner with theICICI Bank was closed in the year 2010 and further that theaccount number mentioned in the notice does not exist with theICICI Bank has not been denied. 10.It would be appropriate to note that the e-mail was of Apriland May, 2022 and respondent filed reply on 22.02.2023 i.e. almost eight months after receipt of the e-mail. In reply filed,there is no pleading that the bank account number mentioned inthe notice was of some other bank than ICICI or that there is evena prima-facie material with the department that the bank accountmentioned in the notice belonged to the petitioner. There is noreason put-forth for hurriedly passing the impugned order withinfive days of sending email. 11.The objections were not decided in accordance with Section148A and the guidelines issued for procedure to be followed inproceedings under Section 148A of the Act. 12.Even before this Court, the department miserably failed toput an iota of evidence to even prima-facie show that the bankaccount mentioned in the notice belonged to the petitioner andeven at this stage, the name of the bank of which account numberbelongs is not disclosed. 13.The impugned order is quashed and the writ petition isallowed. (ASHUTOSH KUMAR),J (AVNEESH JHINGAN),J Monika/Tanisha/61 Whether Reportable:Yes