Section 148 Of The Act v. Signature Not Verifiedsigned By: Sreevidyasigning Time: 12/6/20233:48:27 Pm

1 IN THE HIGH COURT OF MADHYA PRADESHAT INDOREBEFORE HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI & HON'BLE SHRI JUSTICE PRANAY VERMAON THE 29[th] OF NOVEMBER, 2023 WRIT PETITION No. 9753 of 2023 BETWEEN:- RAJENDRA KUMAR SODANI HUF THROUGH KARTARAJENDRA KUMAR SODANI S/O SHRI KAILASHPRASAD SODANI, AGED 62 YEARS, OCCUPATION:BUSINESS R/O 102, SAKAR NEST, R.S. BHANDARI MARGINDORE (MADHYA PRADESH) .....PETITIONER (SHRI ABHISHEK TUGNAWAT, COUNSEL FOR THE PETITIONER). AND 1.INCOME TAX OFFICER INDORE AAYAKARBHAWAN, CGO COMPLEX, INDORE (MADHYAPRADESH)BHAWAN, CGO COMPLEX, INDORE (MADHYAPRADESH) 2.PR. CHIEF COMMISSIONER OF INCOME TAX (M.P.AND C.G.), AAYKAR BHAWAN, HOSHANGABADROAD, ARERA COLONY, BHOPAL (MADHYAPRADESH)AND C.G.), AAYKAR BHAWAN, HOSHANGABADROAD, ARERA COLONY, BHOPAL (MADHYAPRADESH) .....RESPONDENTS (MS. VEENA MANDLIK, COUNSEL FOR THE RESPONDENTS). This petition coming on for hearing this day, Justice Sushrut Arvind Dharmadhikari passed the following: ORDER The present writ petition under Article 226 of the Constitution of Indiahas been filed challenging the order dated 22.07.2022 (Annexure P/6) passedunder Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to asthe 'Act' for brevity) and notice dated 23.07.2022 (Annexure P/7) issued under Section 148 of the Act. 2. The brief facts of the case are that the petitioner seeks to challengethe legality, validity and propriety of the notice dated 23.07.2022 issued underSection 148 of the Act seeking to reopen the assessment for the AssessmentYear 2016-17 which is based on the order dated 22.07.2022 under Section148(A)(d) of the Act issued by the respondent No.1. Both, the order and thenotice are illegal, without jurisdiction, arbitrary, in violation of the principles ofnatural justice. 3. Learned counsel for the petitioner contended that despite absenceo f any information suggesting that income chargeable to tax has escapedassessment, the impugned order under Section 148A(d) has been passedresulting in issuance of notice under Section 148 of the Act. He further arguedthat without taking into account the reply submitted by the petitioner/assessee,the impugned order / notice have been passed. Thirdly, learned counsel for thepetitioner submitted that no proper opportunity of hearing was afforded to thepetitioner before passing such an order. 4. Learned counsel for the petitioner has placed reliance on thejudgment of the Apex court in the matter of Union of India & Ors. vs. AshishAgarwal, 2023 (1) SCC 617; Red Chilli International Sales vs. IncomeTax Officer and Anr., 2023 SC OnLine SC 237; judgment passed by theHigh of Madhya Pradesh at Indore in case of Principal Commissioner ofTax-I vs. Shri Pukhraj Soni passed in Income Tax Appeal No. 53/2017dated 06.02.2019 and the order passed by the High Court of Madhya Pradeshat Jabalpur in case of Sita Ram Gautam vs. Deputy Commissioner ofIncome Tax in Writ Petition No. 8416 of 2023 dated 20.04.2023. 5. Per contra, learned counsel appearing for the respondents raised apreliminary objection with respect to maintainability of the petition against theshow-cause notice. She further submitted that the reopening of assessment is atthe very initial stage and premature and thereafter, as per the provisions of law,there would be various opportunities to the petitioner/assessee to raise theirgrievance and submit reply. In view of the aforesaid, this petition deserves tobe dismissed on this ground alone. 6 . Learned counsel for the respondent further argued that earlier 5. Per contra, learned counsel appearing for the respondents raised apreliminary objection with respect to maintainability of the petition against theshow-cause notice. She further submitted that the reopening of assessment is atthe very initial stage and premature and thereafter, as per the provisions of law,there would be various opportunities to the petitioner/assessee to raise theirgrievance and submit reply. In view of the aforesaid, this petition deserves tobe dismissed on this ground alone. 6 . Learned counsel for the respondent further argued that earlier assessment notice issued under Section 148 of the Act was subjected tochallenge before the Apex Court on the ground that the same is bad in law inview of the amendment made in the Finance Act, 2021 which has amended theIncome Tax Act by introducing new provisions i.e. Sections 147 to 151 of theAct with effect from 1st of April, 2021. It is also argued that the Apex Courthas allowed the appeals in part modifying the impugned orders to the extent thatthe notice issued under Section 148 of the Act may be deemed to have beenissued under Section 148A of the Act as substituted by the Finance Act, 2021and construed or treated to be a show-cause notice in terms of Section 148A(b)of the Act and granted 30 days' time to the Assessing Officer to provide therespective assessees' information and material relied upon by the revenue sothat the assessee can reply to the show cause notices within two weeks of thenotice. It is contended that in view of the modified directions issued by theApex Court in the aforesaid case, the authorities have issued the impugnednotice of assessment asking a response within 30 days from the petitioner. Asfar as the contention of the petitioner that impugned orders/notices are withoutjurisdiction as the same is hit by limitation, a remedy of challenging the same,even the question of limitation is available to the petitioner in terms of Section 246 of the Act, wherein a provision of appeal is provided. The appellateauthority can look into the legality and validity of the impugned notices as wellas the orders issued by the authorities in terms of the modified directions issuedby the Apex Court and therefore, the present petition against the show-causenotice is not maintainable in view of the judgment in the case of Union of India vs. Kunishetty Satyanarayan, (2006) 12 SCC 28 for want of alternativeefficacious remedy to the petitioner. 7. Heard learned counsel for the parties. 8. The procedure to be followed by the Assessing Officer (AO) before issuance of notice of Income escaping assessment under Section 148A is as follows : (a) Conduct enquiry with respect to the income which has escaped assessment (priorapproval of specified authorities might be required in some cases [Section 148A(a)]. (b) Issue a show cause notice to the taxpayer and provide reasonable opportunity ofbeing heard within in the time specified in notice (7 to 30 days) and may be extendedfrom time to time. [Section 148A(b)]. (c) Consider the reply of the taxpayer furnished in response to Point (b). [Section148A(c)]. (d) Decide whether it is a fit case for issue of notice under Section 148 by passing anorder with the prior approval of specified authority based on the evidence availableand reply furnished by the taxpayer). [Section 148A(d)]. 9. The aforesaid steps/procedure have been followed by the Assessing Officer prior to issuance of notice under Section 148A(d) of the Act andthereafter, only notice has been issued under Section 148 of the Act. 1 0 . Section 148A has been introduced in the Income Tax Act witheffect from 01.04.2021. This Section provides that before issuing notice, theAssessing Officer shall conduct an inquiry and provide an opportunity of beingheard to the assessee. After taking into consideration the reply filed by theassessee, the Assessing Officer shall decide by passing an order, whether the 5 9. The aforesaid steps/procedure have been followed by the Assessing Officer prior to issuance of notice under Section 148A(d) of the Act andthereafter, only notice has been issued under Section 148 of the Act. 1 0 . Section 148A has been introduced in the Income Tax Act witheffect from 01.04.2021. This Section provides that before issuing notice, theAssessing Officer shall conduct an inquiry and provide an opportunity of beingheard to the assessee. After taking into consideration the reply filed by theassessee, the Assessing Officer shall decide by passing an order, whether the 5 case is fit for issuance of notice under Section 148 of the Act and a certifiedcopy of such order passed under Section 148 (A)(d) of the Act along with suchnotice have to be served upon the assessee. The limitation for issuance ofnotice under Section 148 is provided in Section 149 of the Act. In normalcases, no notice shall be issued if three years have elapsed from the end of therelevant assessment year. Notice beyond the period of three years from the endo f the relevant assessment year can be issued where the Assessing Officerwould not be in possession of books of accounts or other documents orevidence which would reveal that the income chargeable to tax, represented inthe form of asset, which has escaped assessment, amounts to or is likely toamount to fifty lacs rupees or more for that year. In such cases, notice can beissued beyond the period of three years but not beyond the period of 10 yearsfrom the end of the relevant assessment year. Notice under Section 148 of theAct can be issued when there is information with the Assessing Officer whichsuggests that the income chargeable to tax has escaped assessment in the caseof an assessee for the relevant assessment year. The specified authority forapproving inquiries, providing an opportunity for passing orders under Section148 of the Act and for issuance of notice under Section 148 of the Act is thePrincipal Commissioner or Principal Director or Commissioner or Director, ifthree years or less than three years have elapsed from the end of the relevantassessment year or Principal Chief Commissioner or Principal Director Generalor Chief Commissioner or Director General if more than three years haveelapsed from the end of the relevant assessment year. 11. Now it would be advantageous to deal with the judgments cited by the learned counsel for the petitioner. In the matter of Ashish Agrawal(supra), the Apex Court has laid down the procedure to be adopted under the newly added Section 148A of the Act. The relevant paras are as under:- ''25.1 The respective impugned section 148 notices issued to the respectiveassessees shall be deemed to have been issued under section 148A of the IT Actas substituted by the Finance Act, 2021 and treated to be showcause notices interms of section 148A(b). The respective assessing officers shall within thirty daysfrom today provide to the assessees the information and material relied upon by theRevenue so that the assessees can reply to the notices within two weeks thereafter; 25.2 The requirement of conducting any enquiry with the prior approval of thespecified authority under Section 148A(a) be dispensed with as a onetime measurevis à vis those notices which have been issued under Section 148 of theunamended Act from 01.04.2021 till date, including those which have beenquashed by the High Courts; 25.3 The assessing officers shall thereafter pass an order in terms of section148A(d) after following the due procedure as required under section 148A(b) inrespect of each of the concerned assessees; 25.4 All the defences which may be available to the assessee under section 149and/or which may be available under the Finance Act, 2021 and in law andwhatever rights are available to the Assessing Officer under the Finance Act, 2021are kept open and/or shall continue to be available and; 25.3 The assessing officers shall thereafter pass an order in terms of section148A(d) after following the due procedure as required under section 148A(b) inrespect of each of the concerned assessees; 25.4 All the defences which may be available to the assessee under section 149and/or which may be available under the Finance Act, 2021 and in law andwhatever rights are available to the Assessing Officer under the Finance Act, 2021are kept open and/or shall continue to be available and; 25.5 The present order shall substitute/modify respective judgments and orderspassed by the respective High Courts quashing the similar notices issued underunamended section 148 of the IT Act irrespective of whether they have beenassailed before this Court or not. 28. In view of the above and for the reasons stated above, the present Appeals areallowed in part. The impugned common judgments and orders passed by the HighCourt of Judicature at Allahabad in W.T. No. 524/2021 and other allied taxappeals/petitions, is/are hereby modified and substituted as under: 28.1 The impugned section 148 notices issued to the respective assessees whichwere issued under unamended Section 148 of the IT Act, which were the subjectmatter of writ petitions before the various respective High Courts shall be deemedto have been issued under section 148A of the IT Act as substituted by theFinance Act, 2021 and construed or treated to be showcause notices in terms ofsection 148A(b). The assessing officer shall, within thirty days from today provideto the respective assessees information and material relied upon by the Revenue, sothat the assesees can reply to the showcause notices within two weeks thereafter; 28.2 The requirement of conducting any enquiry, if required, with the priorapproval of specified authority under section 148A(a) is hereby dispensed with asa onetime measure vis à vis those notices which have been issued under section148 of the unamended Act from 01.04.2021 till date, including those which havebeen quashed by the High Courts. 28.3 Even otherwise as observed hereinabove holding any enquiry with the priorapproval of specified authority is not mandatory but it is for the concernedAssessing Officers to hold any enquiry, if required; 28.4 The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following theprocedure as required under section 148A may issue notice under section 148 (assubstituted); 28.5 All defences which may be available to the assesses including those availableunder section 149 of the IT Act and all rights and contentions which may beavailable to the concerned assessees and Revenue under the Finance Act, 2021and in law shall continue to be available.'' 1 2 . In the matter of Red Chilli International Sales (supra), the Apex Court held that the provisions of reopening under the Income Tax Act,1961 have undergone an amendment by the Finance Act, 2021 andconsequently the matter would require a deeper and in-depth considerationkeeping in view the earlier case law. Consequently, the Apex Court set aside theorder passed by the High Court and held that the petition would be maintainableand the issue would be examined in depth by the High Court if and when itarises for consideration. 28.5 All defences which may be available to the assesses including those availableunder section 149 of the IT Act and all rights and contentions which may beavailable to the concerned assessees and Revenue under the Finance Act, 2021and in law shall continue to be available.'' 1 2 . In the matter of Red Chilli International Sales (supra), the Apex Court held that the provisions of reopening under the Income Tax Act,1961 have undergone an amendment by the Finance Act, 2021 andconsequently the matter would require a deeper and in-depth considerationkeeping in view the earlier case law. Consequently, the Apex Court set aside theorder passed by the High Court and held that the petition would be maintainableand the issue would be examined in depth by the High Court if and when itarises for consideration. 13. In the matters of Gian Castings Private Limited Vs. CentralBoard of Direct Taxes and others, CWP No.9142 of 2022 dated02.06.2022, and Anshul Jain Vs. Principal Commissioner of Income Taxand another, CWP 10219 of 2022 , the Punjab and Haryana High Court atChandigarh while dealing with a similar issue held that where the proceedingshave not even been concluded by the statutory authority, the writ Court shouldnot interfere at such premature stage. It is further held that it is not a case wherefrom a bare reading of notice it can be axiomatically held that the authority hasclutched upon the jurisdiction not vested in it. The correctness of order underSection 148A (d) of the Act is being challenged on the factual premisecontending that jurisdiction though vested has been wrongly exercised. There isa vexed distinction between jurisdictional error and error of law/fact within thejurisdiction and for rectification or errors statutory remedy has been provided. 8 The order passed by the High Court of Punjab and Haryana has been affirmedby the Apex Court in SLP(C) No.10762 of 2022 order dated 17.06.2022 andSLP No.14823/2022 order dated 02.09.2022 respectively. 14. This Court has culled out the foundational prerequisite of Section 148A of the Act, as aforesaid, to emphasize that if the inquiry contemplated inSection 148A is interpreted to mean a detailed inquiry where both sides canseek and adduce evidence/material (documentary/ocular), then the entire objectbehind Section 148A would stand defeated. 1 5 The object behind Section 148A as is evident from the findings inthe fountainhead decision of GKN Driveshafts (India) Ltd. vs. Income Tax Officer and others, 2003(1) SCC 72 is to enable the assessee to be informedof the reasons and information suggesting that income chargeable to tax hasescaped assessment and, therefore, in turn to empower the assessee to prepareand file an effective reply and thereafter the Assessing Officer to pass an orderunder Section 148A(d), followed by issuance of notice under Section 148 of IT Act. 16. The object behind insertion of Section 148A by the Legislature w.e.f. 01.04.2021 inter alia appears as follows:- (a) to prevent rampant and casual issuance of notice u/S. 148 by the Revenue; (b) to save unnecessary harassment to the assessee of being subjected to re-opening a case under Section 148; (c) to save the Revenue of the time and energy which may be vested pursuingfrivolous and fruitless proceedings u/S 148 17. Considering the aforesaid, normally, the writ Court should notinterfere at such premature stage when the proceedings initiated against theassessee are yet to be concluded by the statutory authorities. 18. In view of the aforesaid, this Court refrains to interfere with the 9 order(s)/notice(s) impugned. Pertinently, the question of going into the veracityand genuineness of the material/evidence forming the opinion of the AssessingOfficer suggesting that income of petitioner/assessee has escaped assessmentought not to be gone into while exercising writ jurisdiction under Article 226 orsupervisory jurisdiction under Article 227 of the Constitution of India. (c) to save the Revenue of the time and energy which may be vested pursuingfrivolous and fruitless proceedings u/S 148 17. Considering the aforesaid, normally, the writ Court should notinterfere at such premature stage when the proceedings initiated against theassessee are yet to be concluded by the statutory authorities. 18. In view of the aforesaid, this Court refrains to interfere with the 9 order(s)/notice(s) impugned. Pertinently, the question of going into the veracityand genuineness of the material/evidence forming the opinion of the AssessingOfficer suggesting that income of petitioner/assessee has escaped assessmentought not to be gone into while exercising writ jurisdiction under Article 226 orsupervisory jurisdiction under Article 227 of the Constitution of India. 19. Consequently, the present petition deserves to be and is herebydismissed with liberty to the petitioner to avail the statutory alternative remedyunder the Income Tax Act in accordance with law, if so advised. (S. A. DHARMADHIKARI)JUDGEvidya (PRANAY VERMA)JUDGE