Wp/3292/2022 Of Rashmi Vinay Bhatt v. Per: Kamal Khata, J

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3292 of 2022 Mrs. Rashmi Vinay Bhatt…Petitioner Versus The Income – tax OfficerWard – 6(3)(1), Mumbai and Ors.…Respondents … Mr. Vipul B. Joshi a/w. Ms. Dinkle Hariya i/by Mr. Sameer G. Dalalfor the petitioner. Mr. Suresh Kumar a/w. Ms. Samiksha Kanani for the respondents. … CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ.DATE : 13TH MARCH 2023. [PER: KAMAL KHATA, J.] O R D E R 1.This Petition under Article 226 of the Constitution filed on20[th] April 2022 impugns notice dated 31[st] March 2021 issuedunder section (u/s) 148 of the Income Tax Act, 1961 (Act) forAssessment Year (AY) 2014-15 and the order dated 30[th] March2022 finalizing the reassessment u/s 147 r.w.s 144B of the Act. 2.The record indicates that the notice dated 31[st] March 2021 u/s 148 of the Act is issued after expiry of four years and the proviso to section 147 of the Act applies. Respondents have toshow there was failure to truly and fully disclose material facts asdecided by this Court in Ananta Landmark (P) Ltd. v DCIT CC 5(3)Mumbai.[1] 3.We have examined the reasons for initiation of proceedingsu/s 147 of the Act annexed to the Petition that are evidentlypremised on ‘information received from credible sources’. TheAssessment Officer (AO) records that the assessee had claimedexemption on the income from Long Term Capital Gain of₹.3,38,79,160/- and based on the information concluded that theassessee had obtained accommodation entries of the said amounton Penny Stock Transactions and consequently income hadescaped assessment. We find nothing to indicate failure to discloseany material fact. 4.This is yet another case, where we find that the assessee isbarely given time. The notice for initiation of the proceedings u/s147 of the Act was issued on 20[th] March 2022 (Sunday), the draftassessment order was issued on 22[nd] March 2022. The assesseewas expected to file all objections along with the documents on orbefore midnight of 26th March 2022. The letter intimating 1 [2021] 131 taxmann.com 52 schedule for personal hearing through video conferencing fixed on29[th] March 2022 at 9.30 a.m. was issued on 28[th] December 2022at 10.34 p.m. However, the request for rescheduling the hearingby a day to 30[th] March 2022 submitted by the Petitioner on 28thDecember 2022 at 11.37 p.m. was ignored and the AssessmentOrder was passed on 30[th] March 2022. 5.In complete contradiction to the record, the Reply filed bythe Respondent on 6[th] July 2022 states that: ‘the Petitioner failed to attend the personal hearing throughVideo Conferencing as per the given scheduled time and date andeven after waiting for around half an hour.’ This is clearly a misleading statement and contrary to therecord annexed in the Petition. We resist ourselves from initiatingperjury proceedings against the concerned officer and warn him todesist from making false statements on oath. 6.The averments in paragraph 4.21 of the reply which is asunder clearly indicate the hapless situation of the Respondent. “4.21 With reference to contents of Para No.4.10 ofthe writ petition, I say that As per notice u/s 148dated 31.03.2021, the petitioner was at the firstinstance required to furnish Return of Income in theprescribed format within 30 days from the service ofnotice. However, in response to the aforesaid noticeu/s 148 of the I.T. Act, 1961, the petitioner furnishedReturn of income on 02.12.2021 after a gap of almost 08 months from the date of the notice u/s 148 of theI.T. Act, 1961. 6.The averments in paragraph 4.21 of the reply which is asunder clearly indicate the hapless situation of the Respondent. “4.21 With reference to contents of Para No.4.10 ofthe writ petition, I say that As per notice u/s 148dated 31.03.2021, the petitioner was at the firstinstance required to furnish Return of Income in theprescribed format within 30 days from the service ofnotice. However, in response to the aforesaid noticeu/s 148 of the I.T. Act, 1961, the petitioner furnishedReturn of income on 02.12.2021 after a gap of almost 08 months from the date of the notice u/s 148 of theI.T. Act, 1961. Thereafter, notice u/s 143(2) of the I.T. Act, 1961dated 20.12.2021 could be issued online throughITBA system to the petitioner with reasons recordeduploaded as annexure. However, being involved inproceedings related with a number of time barringcases, as it came to the knowledge that the petitionerhas not received the reasons recorded along with thenotice u/s 143(2) ITBA system, the reasons recordedby the Jurisdictional Officer for initiation ofproceeding u/s 147 of the I.T. Act, 1961 was issuedonline to the petitioner on 20.03.2022.Subsequently, considering the fact that only 11 dayswere left for this time barring proceeding, a showcause notice along with draft Assessment order wasissued and served to the petitioner online on22.03.2022 to show cause by midnight of 26.03.2022as to why the proposed variation should not be madeas per the draft assessment order.” 7.Be that as it may, in our view, the following propositionsurged by the Learned counsel for Petitioner viz. -i.Notice uploaded on E fling portal without any realtime alert cannot be considered valid service: ii.The issuance of email attaching electronic notice to an -‘’unrelated email address does not constitute due dispatchand consequently invalid in law: upheld in the case of Sumeet Jeet Agarwal v ITO[2] are correct andsquarely applicable in the present case. In the present case, notice u/s 148 of the Act dated 31[st]March 2021, being the last day of limitation period of six yearswas not issued on the registered email address which was duly 2 (2022) 143 taxmann.com 11 (Delhi) intimated and also reflected in the returns of income filed by thePetitioner. In the case of Lok Developers v DCIT Circle 24(1)Mumbai[3] we have held that it is imperative for the AO to havechecked, if there was a change of address before initiating aproceeding, since a valid notice is a condition precedent andfailure of a valid notice would lead to a jurisdictional error thatwould vitiate the entire proceeding. Consequently for the samereasons, we hold and declare the entire proceedings in the presentcase as void. 8.The present case is also vitiated because the initiation ofproceedings is based on borrowed satisfaction withoutindependent application of mind which proposition issupported byvarious judgments of the Supreme Court as well as our Court inthe case of PCIT v Shodiman Investments (P) Ltd.[4 ] 9.In view of all the reasons aforesaid, we pass the followingorder- i.The impugned notice dated 31[st] March 2021 and theorder dated 30[th] March 2022, issued by Respondent No.1 for 3 Writ Petition No. 1983 of 2022 along with Writ Petition No. 3037 of 2022 decided on 15[th] February 2023 4 (2020) 422 ITR 337 (Bom)15[th] February 2023 4 (2020) 422 ITR 337 (Bom) 5/6 AY 2014-15 are quashed and set aside and all further action in respect thereof is prohibited; ii.Rule made absolute in above terms. No costs. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)