Raninder Singh v. Commissioner Of Income Lax, Patiala And Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Date of decision: November 29, 2018CWP No.5872 of 2018 (O&M)CWP No.5872 of 2018 (O&M) Raninder Singh _... Petitioner Versus Commissioner of Income lax, Patiala and another ....Respondents CWP No.5873 of 2018 (O&M) Raninder Singh Petitioner Versus Commissioner of Income Tax, Patiala and another ....Respondents CORAM: HON'BLE MR. JUSTICE A.B. CHAUDHARIHON'BLE MR. JUSTICE H.-S. MADAAHON'BLE MR. JUSTICE H.-S. MADAA Present:Ms. Rameeza Hakeem, Advocate andMr. Sehaj Bir Singh, Advocate for the petitioner.Mr. Sehaj Bir Singh, Advocate for the petitioner. Mr. Rajesh Katoch, Standing Counsel for the respondents. A.B. CHAUDHARI,J 5555 By these two writ petitions, the petitioner has sought quashingof assumption of jurisdiction under Section 148 of the Income Tax Act,1961 (for short 'I.T. Act’) dated 23.03.2016 for the assessment year 2006-2007 (in CWP No.5813 of 2018) and for the assessment year 2007-2008.in CWP No.5872 of 2018) (Annexure P-1) and has further put tochallenge the assessment orders dated 14.02.2018 (Annexure P-17), soalso notices dated 14.02.2018 under Section 156 of the I.T. Act and underSection 271(1)(c) read with Section 274 of the I.T. Act (Annexures P-18 and P-19), tor the assessment year 2006-2007 (in CWP? No.5813 of 2010 CWP No.5872 of 2018 (O&M) AND-).CWP No.5873 of 2018 (O&M) and for the assessment year 2007-2008 (in CWP No.5872 of 20180respectively. HKACT 2.The petitioner had filed return on Q2.11.2006 for theassessment year 2006-2007 declaring income olf42,15,250/- and filedreturn on 13.10.2018 for the assessment year 2007-2008 declaring incomeot|42,09,914/-. The returns were processed under Section 143(1) of theLT. Act. Notice under Section 148 dated 23.03.2016 was issued for re-assessment, but the petitioner did not receive the said notice. The revenuealleged that the notice under Section 142(1) dated 25.07.2016 and dated07.11.2016 had not been received back undelivered and that notice dated25.07.2016 was accompanied by the 'reasons to believe’. Unless, there iscompliance of notice under Section 148, there could be no occasion forsupply of ‘reasons to believe’. On 22.11.2016, another notice underSection 144 of the I.T. Act was issued to him as to why the assessmentshould not be madeex partewith the proposal for addition of income ofL15,96,74,220/- and|L31,40,29,200/-. The allegations in the notice dated22.11.2016 as per 'reasons to believe’ were that the petitioner is the settlerof "The Jacaranda Trust' and is beneficial owner holding 100%shareholding in the companies, namely M/s Mulwala Holding Limited,M/s Limerlock International Ltd., M/s Chillingham Holdings Ltd. and M/sAllworth Venture Holdings Ltd. That the assessment by the Trust wereheld by him he being the beneficiary. The petitioner received notice dated CWP No.5872 of 2018 (O&M) AND-3-CWP No.5873 of 2018 (O&M) 22.11.2016 and attended the proceedings denying each and everyallegation and also further specifically denying the receipt of any of theearlier notices including the notice under Section 1438 dated 23.03.2016Referring to sub-section 6 of Section 78 of the Evidence Act, 1872 (forShort ‘Evidence Act’), the petitioner invited attention of the Departmentthat the trust deed at Sr. No.13 was a typed copy of deed bearing noSignatures and none of the documents had any sanctity in law they notbeing authenticated or certified by the legal keeper thereof, ascontemplated by law and therefore, the revenue should supply legaldocuments to enable the petitioner to file objections to the proceedings.Still without complying with the said legal demand, a notice dated16.12.2016 was issued to him as to why the assessment should not befinalized by 20.12.2016. 3.On 20.12.2016, the petitioner repeated his request andreiterated his stand that the notices and the documents, i.e. authenticatedwere not received by the petitioner and would definitely file his returns/ 3.On 20.12.2016, the petitioner repeated his request andreiterated his stand that the notices and the documents, i.e. authenticatedwere not received by the petitioner and would definitely file his returns/ objections to ‘reasons to believe’ on receipt thereof. Respondent No.2,however, continued to ask the petitioner to file return/objection withoutcomplying with the legal demand for the relevant legal documents and theproceedings went on. 4AOn 30.01.2018, respondent No.2 required the petitioner toshow cause as to why addition of|415,96,74,220/- be not made asundisclosed investments. Having not received the documents as sought by CWP No.5872 of 2018 (O&M) ANDCWP No.5873 of 2018 (O&M) -4. the proceedings without supplying the documents, the petitionerultimately asked for inspection, and thereafter, filed objections on13.02.2018, which were duly received by the respondents as to theassumption of jurisdiction under Section 148. After receipt of theobjections, aS above on 13.02.2018, drastically on the next day, L.e.14.02.2018, the impugned order was made with the assessment of totalincome with addition of|L16,37,37,556/-. On the same day, demand noticewas sent under Section 156 of the I.T. Act along with re-assessment orderdated 14.02.2018. All that was done without having considered theobjections. The reason for not considering objections was that it was “notfeasible” to pass separate speaking order in respect of the objectionsraised, though, it was agreed by respondent No.2 that speaking order wasnecessary. The petitioner, has therefore, put to challenge all the aboveorders in both these writ petitions. ARGUMENTS 5.In support of the writ petitions, Ms. Rameeza Hakeem, learnedcounsel for the petitioner submitted that the petitioner had filed hisobjections on 13.02.2018 which is not in dispute. She submitted that afterreceipt of the objections, the same are mandatorily required to beconsidered and a 'speaking order' is required to be made and served on thepetitioner. Upon such ‘speaking order’ being made, the petitioner would beentitled to take up his legal remedies. The petitioner is also entitled toraise the plea of limitation which is the legal plea. However, the revenue CWP No.5872 of 2018 (O&M) AND-5-CWP No.5873 of 2018 (O&M) 14.02.2018. The reason for not adjudicating on the objection isunwarranted. She, therefore, prayed for allowing the petition in entiretyand in the alternative tor remand. 6.Per contra, learned counsel for the respondents-Income TaxDepartment vehemently opposed the writ petitions. He, however, fairlyStated that the Apex Court has held that the adjudication on the objections,if any, filed by the assessee 1s mandatory. He also stated at the Bar thatindeed no adjudication on the objection dated 13.02.108 has been madenor any speaking order has been passed. He, however, fervently contendedthat the said defect would be a curable defect and hence, the assessmentorders need not be quashed. He suggested that the Department can beasked to decide the objections even now which the Department would doby considering factual and legal aspects. He also submitted in thealternative that the Department be permitted to pass the ‘speaking order'and the assessment orders simultaneously. According to him, such acourse of action has been allowed by the Madras High Coutt. T.In reply, the learned counsel for the petitioner, however,submitted that the petitioner has a remedy in law to challenge the‘speaking order’ which cannot be taken away by allowing such a prayer formaking 'simultaneous order’. She also contended that legal plea includingthe one of limitation ought to be considered by the authority as thepetitioner has a right to raise any legal objection. CONS[TDERATIO We have heard learned counsel for the rival parties at length. CWP No.5872 of 2018 (O&M) ANDCWP No.5873 of 2018 (O&M) T.In reply, the learned counsel for the petitioner, however,submitted that the petitioner has a remedy in law to challenge the‘speaking order’ which cannot be taken away by allowing such a prayer formaking 'simultaneous order’. She also contended that legal plea includingthe one of limitation ought to be considered by the authority as thepetitioner has a right to raise any legal objection. CONS[TDERATIO We have heard learned counsel for the rival parties at length. CWP No.5872 of 2018 (O&M) ANDCWP No.5873 of 2018 (O&M) Learned counsel for the respondents-Income Tax Department fairly statedthat the adjudication on the objections filed by the petitioner on13.02.2018 should have been made as the same is mandatory. The variousaverments in the petition made by the petitioner about non-service ofnotice under Section 148 dated 23.03.2016, notice under Section 142 (1)dated 25.07.2016 and 07.11.2016 are not required to be considered for thesimple reason that the counsel for the revenue has agreed that theobjections having been filed on 13.02.2018 should have been decided. Inother words, with this premise, whether notices were served on thepetitioner nor not, loses significance. The ultimate object of service ofnotice on the petitioner was to give him an opportunity to file theobjections. OQThe conceded position by both the parties in these presentpetitions is that the objections on facts as well as on the question of laware required to be decided/adjudicated by the authority in accordance withlaw and that is mandatory as held by the Apex Court. In our opinion, ifadjudication of the objections after having received the same in the wakeof the same being mandatory, the submission made by the learned counselfor the respondents-revenue that the same would be a curable defect, doesnot appeal to us. If it is mandatory to decide the objections one way or theother, it cannot be said that the non-decision thereof would be curable.There is another reason for saying so, namely that if the objections aredecided against the Assesse on facts as well as on law, he will have hisMAHAVIR SINGHown remedy. We are, therefore, unable to agree with the learned counsel2018.12.04 10:26I attest to the accuracy andauthenticity of this documentChandigarh CWP No.5872 of 2018 (O&M) AND-/]CWP No.5873 of 2018 (O&M) for the revenue that non-decision of the objections would be a curabledefect. We, therefore, hold that the objections dated 13.02.2018 havingbeen received by the revenue not having been adjudicated would renderthe consequent actions or orders illegal. 10.It is then significant to note that in the impugned order thereason given for not deciding the objections is strange by saying that itwas “not feasible” to pass a Separate speaking order, though, it wasnecessary. From the reading of the impugned order, it appears that theauthority found that there was undue delay caused by the petitioner in theproceedings and that is why the authority thought it not feasible to passseparate orders on the objections raised. The counsel for the petitioner hasseriously disputed that the petitioner caused any delay. We are unable toagree with the reason given by the authority since the objections ought tohave been decided, as fairly stated by the counsel for the revenue. Ll.The next submission made by the learned counsel for therevenue that the revenue should be allowed to decide the objections now and the impugned orders should not be quashed, is having no forcebecause as a sequel the impugned orders become illegal and will have tobe quashed. 12.The next submission made by the learned counsel for therevenue is that the revenue should be permitted to pass speaking order soalso fresh assessment orders simultaneously. This submission has beenobjected to by the learned counsel for the petitioner on the ground that the CWP No.5872 of 2018 (O&M) AND-§-CWP No.5873 of 2018 (O&M) Ll.The next submission made by the learned counsel for therevenue that the revenue should be allowed to decide the objections now and the impugned orders should not be quashed, is having no forcebecause as a sequel the impugned orders become illegal and will have tobe quashed. 12.The next submission made by the learned counsel for therevenue is that the revenue should be permitted to pass speaking order soalso fresh assessment orders simultaneously. This submission has beenobjected to by the learned counsel for the petitioner on the ground that the CWP No.5872 of 2018 (O&M) AND-§-CWP No.5873 of 2018 (O&M) objections of the petitioner, if any, cannot be taken away. We find merit inher submission. The petitioner may have his legal remedy. The Courtcannot prevent him. 13.Learned counsel for the petitioner then submitted that thepetitioner should be given an opportunity to raise objections regardinglimitation in respect of the proceedings in question. In our opinion, therecan be no prohibition for the petitioner in raising the question of law,namely the issue of limitation before the authority and therefore, thepetitioner is always at liberty to do so. All the question of law and theobjections raised by the petitioner will have to be decided by the authorityaccording to law. The averments made in the petition about furnishing ofdocuments as contemplated by Section 78(6) of the Evidence Act is amatter of legal objection which may be decided by the authority. 14.In the result, we are of the view that the proceedings inquestion are required to be remitted to the respondents for fresh hearingand the decision/adjudication according to law. We, therefore, make thefollowing order:- ORDER (1)CWP? No.5872 of 201and.CWP? No.5873 of 2018are partlyallowed;allowed; (11)Impugned orders dated 23.03.2016 (Annexure P-1), orderdated 14.02.2018 (Annexure P-17) and consequential twonotices dated 14.02.2018 (Annexures P-18 & P-19) in both thewrit petitions, are quashed and set aside;dated 14.02.2018 (Annexure P-17) and consequential twonotices dated 14.02.2018 (Annexures P-18 & P-19) in both thewrit petitions, are quashed and set aside; (111)The proceedings which are the subject matter of both these CWP No.5872 of 2018 (O&M) ANDCWP No.5873 of 2018 (O&M) writ petitions are remitted to the respondents for fresh hearingand disposal on the objections dated 13.02.2018 on facts andin addition to the legal objections, if any, including one oflimitation and disposal according to law, within six monthsfrom the date of obtaining certified copy of this order;(iv)No order as to costs. (A.B. CHAUDHARI)JUDGE November 29, 2018mahavir (H.S. MADAAN)JUDGE Whether speaking/ reasoned;NoWhether Reportable:No