Wp/2867/2022 Of Bhavna Steel v. Date<Br>:Kamal Khata, Jj.<Br>17Th March 2023

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2852 of 2022ALONG WITH WRIT PETITION NO. 2867 OF 2022 Bhavna Steel…Petitioner Versus The Income Tax Officer– 5(1)(1), Mumbai and Anr. …Respondents … Mr. Rahul Sarda i/by Ms. Neelam Jadhav for the petitioner in bothpetitions. Mr. Akhileshwar Sharma a/w. Ms. Shilpa Goel for the respondentsin both petitions. … DATE [PER: KAMAL KHATA, J.] O R D E R 1.These two Writs are for two assessment year’s (‘AY’) 2016-17 and 2015-16, with common facts, and therefore a commonorder. For brevity, we advert to the facts stated in Writ PetitionNo. 2852 of 2022 as was argued. 2.This Petition under Article 226 impugns notice under section 148 of the Income-tax Act, 1961 (Act) dated 31[st] March1/7 2021 purportedly issued by Respondent No.1 proposing toreassess the income for the AY 2015-16 on an abandonedPermanent Account Number (PAN) that was issued wrongly to thePetitioner as company instead of a Partnership Firm. It alsoimpugns the order dated 30[th] March 2022 under section (u/s) 147r.w.s. 144 and the demand notices dated 30[th] March 2022 u/s 156,31[st] March 2022 u/s 274 read with (r/w) 271B and 31[st] March2022 u/s 274 r/w 271F of the Act. FACTS: 3.The Petitioner is a Partnership Firm engaged in the businessof trading in stainless steel since 1983. It is stated that presently,Mr. Mahendra Surajmal Shah and Mr. Akshit Mahendra Shah arepartners and their other family members were the erstwhilepartners of the Firm. It is stated that the Petitioner has two PANsviz. AAEFB9418R on which the petitioner is assessed since 2005-06 (referred to as the ‘correct PAN’) and issuedearlier (referred to as the ‘wrong PAN’) and is abandoned. It isstated that the Petitioners are not able to make statements as tothe circumstances in which the wrong PAN was in status of aCompany and not a Partnership Firm, why it was stopped beingused and a new one viz. the correct PAN was applied for andwrong PAN not surrendered and cancelled. It is further stated thatthe Petitioner has not registered the wrong PAN on the e-filing 2/7 portal and consequently has not registered the email or phone /mobile number under the wrong PAN. The Petitioner therefore hasno access to the e-filing portal under the wrong PAN. ThePetitioner has filed its return of income on 10[th] September 2016under the PAN as per the audited financialstatements. 4.It is the case of the Petitioner that, they received a ShowCause Notice on 26[th] March 2022 (dated 25[th] March 2022) underthe wrong PAN, alleging that they had failed to furnish returns forAY 2016-17 within 30 days of the notice issued u/s 148 of the Acton 31[st] March 2021. The notice also indicates the details thePetitioner failed to furnish pursuant to a notice dated 27[th]November 2021 u/s 142(1) of the Act and consequently, requiredto show cause why 18,58,84,574/- on account of bill of entry for₹imports (custom) should not be treated as their income. ThePetitioner was expected to reply on or before 28[th] March 2022since the assessment proceeding was getting time barred on 31[st]March 2022. 5.It is stated that as the Petitioner had no access to the e-filing portal, on Monday 28[th] March 2022 the Chartered Accountant(CA) was consulted and on 29[th] March 2022 the CA and partner 3/7 5.It is stated that as the Petitioner had no access to the e-filing portal, on Monday 28[th] March 2022 the Chartered Accountant(CA) was consulted and on 29[th] March 2022 the CA and partner 3/7 visited the Income Tax Office. A response was accordinglyprepared only on 30[th] March 2022 giving all requisite details. It isstated that, all the bills of entry mentioned in the informationsummary provided by the AO were accounted for and taxes werepaid on the profits computed under the correct PAN. It is the caseof the Petitioner that, the Respondent No. 1 refused to take thesubmissions on record and consequently they tried to scan anddeliver it on Respondent No.1’s email address but failed onaccount of the file size being too big. Consequently, the assessmentorder was passed without considering the Petitioner’s response on30[th] March 2022 and received by the Petitioner on 4[th] April 2022.In these circumstances, the Petitioner was constrained to file thisPetition on 7[th] April 2022. 6.This Court by its order dated 11[th] April 2022 directed theAssessing Officer (AO) to file an affidavit with regard to theallegations of the Petitioner which he did on 6[th] May 2022. Itstated that the Petitioner never proposed to file any letter orsubmissions on 30[th] March 2022 or on any other day andtherefore question of refusing to accept any letter or submissiondid not arise. 7.The Respondent No. 1 filed a further Affidavit dated 16[th]June 2022 dealing paragraph wise with the Petition. In support ofhis action he stated that, he had no option but to proceed with thereassessment as per the available records on account of time barexpiring on 31[st] March 2022. 8.This is a peculiar case. There are several unansweredquestions. On perusal of the record it is evinced that theRespondent No.1 has failed to make averments in their reply tothe Petition, with regard to the status of the wrong PAN in theirrecords. The Respondent No. 1 ought to have indicated in theirreply whether or not the Petitioner has filed any return of incomeon the wrong PAN since issued and as to when they stopped filingreturn of income under the wrong PAN as they possess thisinformation. This exercise, in our view, could have enabled thedepartment to issue the notice to the registered email address ofthe assessee and sent an alert on the registered mobile numberand prevented the consequences. 9.Be that as it may, the Respondent No. 1 has admittedly failedto follow up after the 30 days’ time period that expired pursuantto the issuance of the notice on 31[st] March 2021. In our view, thiswhole process could have been avoided had the Respondent No. 15/7 taken the steps in May 2021, that he took on 25[th] March 2022 orat least after 27[th ]November 2021 when notice u/s 142(1) wasissued. It was the duty of the Respondent No. 1 to have verifiedwhether the wrong PAN was registered on the e-filing portal,which was the last return of income filed under the wrong PANand the address and telephone number registered under thewrong PAN. Lastly, having met the CA and the partner, he couldhave extended the time and guided the Petitioner to file writtenresponse/submission on before 31[st] March 2022 in the office of theITO and accepted a copy of the same by hand delivery consideredit and then passed such orders as he deemed fit after dueapplication of mind and law. 10.On examination of the record it is evident that, the Petitionerhas filed their audited returns and also claimed to have paid theirtaxes for the relevant AY 2015-16 & 2016-17 but under the cor-rect PAN viz. PAN . In our view the Petitioner oughtto have taken all necessary steps to cancel and or surrender thewrong PAN which they failed to do. Both parties are at fault asmentioned hereinabove. 11.Be that as it may, we deem fit to pass the following order - 10.On examination of the record it is evident that, the Petitionerhas filed their audited returns and also claimed to have paid theirtaxes for the relevant AY 2015-16 & 2016-17 but under the cor-rect PAN viz. PAN . In our view the Petitioner oughtto have taken all necessary steps to cancel and or surrender thewrong PAN which they failed to do. Both parties are at fault asmentioned hereinabove. 11.Be that as it may, we deem fit to pass the following order - i.The impugned orders dated 30[th] March 2022, issued byRespondent No.1 for AY 2015-16 & 2016-17 are quashedand set aside;Respondent No.1 for AY 2015-16 & 2016-17 are quashedand set aside; ii.The Demand notices dated 30[th] March 2022, Noticesdated 31[st] March 2022 (i) u/s 274 r/w 271B, (ii) u/s 274 r/w271F and (iii) Notice dated 30[th] March 2022 u/s 274 r/w271(i)(c) of the Act are stayed. iii.Respondent No.1 is directed to cancel the wrong PANviz. PAN - in accordance with law and assess/reassess the Petitioner for AY 2015-16, & 2016-17, if re-quired, after considering the submissions and documents ofthe Petitioner as sought by the Notice dated 27[th] November2021 u/s 142(1) of the Act under the PAN inaccordance with law; iv.Rule made absolute in above terms. No costs. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)