Wp/9937/2022 Of Late Mr. Lakhpatrai Agarwal Thru L/H Sunil L Agarwal v. Assistant Commissioner Of Income Tax, Circle 7 And Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO. 9937 OF 2022 .. Petitioner .. Respondents Mr. Sham Walve a/w. Mr. Abhishek Khandelwal for the petitioner.Mr. Ajeet Manwani a/w. Ms. Samiksha Kanani, for respondent. CORAM : DHIRAJ SINGH THAKUR & KAMAL KHATA, J.: 4TH JANUARY, 2023.: 10TH FEBRUARY 2023. KAMAL KHATA, J.: 4TH JANUARY, 2023.: 10TH FEBRUARY 2023. RESERVED ON PRONOUNCED ONPRONOUNCED ON JUDGEMENT: (PER KAMAL R. KHATA, J) 1.The present petition is filed by the legal heir of Late Mr.Lakhpatrai Agarwal who seeks to challenge the inaction on the part ofthe respondents, in complying with the direction and order dated 18thFebruary, 2010 passed by the Income Tax Appellate Tribunal (DRAFT‘ITAT’) bynot completing assessment in time as per the provisions of the IncomeTax Act, 1961 (for short ‘the Act’) and consequently not issuing therefund and the jewellery seized in the course to the petitioner. Brief facts: - 2.On 13th August 2002 a survey under Section 133A and searchunder Section 132(1) of the Act was conducted at the residentialpremises of Late Mr. Lakhpatrai Agarwal. 3.During search, jewellery pertaining to the petitioner was seizedand the petitioner’s father gave a statement under Section 132(4) of theAct admitting to undisclosed income to the tune of Rs. 28,04,308/-. 4.Thereafter, a notice under Section 158BC of the Act was issuedand served upon the assessee calling upon him to file his income taxreturn. Upon receipt of the notice, the petitioner’s father filed his returnof income for the block period 1st April, 1996 to 13th August, 2002declaring undisclosed income amount of Rs.28,04,308/- in form ofFixed Deposit Receipts (“FDRs”) (Rs. 20,00,000/- being the principalamount and Rs. 8,04,308/- being the interest portion). DRAFT 5.The respondents undertook correspondence with the bankmanager to ascertain full particulars of the FDRs involving thepetitioner’s father and the Bank Manager, furnished the requisite data.After consolidating the data, the undisclosed income by the Petitioner’sfather was not adequate to meet the discrepancy in the FDRs. On 29thDecember, 2004, the block assessment order under Section 158BC(c) ofthe Act was passed assessing Rs. 52,82,278/- as against the declaredreturn of income of Rs. 28,04,308/-. 6.Being aggrieved by the block assessment order and the additionmade thereto, the petitioner preferred an appeal before Ld.Commissioner of Income Tax (Appeals) (for short ‘CIT(A)’) who passedan order confirming the additions made by the AO in the blockassessment order. 7.Being aggrieved by the order passed by the CIT(A), the petitionerpreferred an appeal before the Income Tax Appellate Tribunal (ITAT).The ITAT, partly allowed the appeal citing violations of principles ofnatural justice on the ground that the petitioner ought to have beenallowed to cross examine the statement made by the bank manager orDRAFTrebut the claims made by him with evidence. A miscellaneousapplication was filed by the petitioner before the ITAT to bring onrecord certain facts that purportedly were recorded incorrectlyinadvertently in the order dated 18th February 2010 that came to bedismissed in July 2011. 8.On 6th March 2018, the petitioner addressed a letter to therespondent, to bring on record the fact that since the AO had not actedupon the order dated 18th February 2010 passed by the ITAT by whichthe matter was remanded back, as per Section 153(3) of the Act the timelimit for completion of such assessment proceedings viz. nine months had elapsed and consequently the respondent was called upon to refundRs.7,39,083/- the tax paid with applicable interest totaling toRs.14,33,821/-. 9.Since there was no revert, the petitioner addressed two otherletters dated 2nd May 2018 and 17th August 2018 and once again calledupon the respondents to refund the amounts with applicable interest asclaimed in the letter dated 6th March 2018. 8.On 6th March 2018, the petitioner addressed a letter to therespondent, to bring on record the fact that since the AO had not actedupon the order dated 18th February 2010 passed by the ITAT by whichthe matter was remanded back, as per Section 153(3) of the Act the timelimit for completion of such assessment proceedings viz. nine months had elapsed and consequently the respondent was called upon to refundRs.7,39,083/- the tax paid with applicable interest totaling toRs.14,33,821/-. 9.Since there was no revert, the petitioner addressed two otherletters dated 2nd May 2018 and 17th August 2018 and once again calledupon the respondents to refund the amounts with applicable interest asclaimed in the letter dated 6th March 2018. 10.In the meantime, on 24th May 2018, the petitioner addressed aletter to the CIT and sought migration of PAN from the secondDRAFTrespondent to the first respondent. 11.On 23rd October 2018, the petitioner addressed a letter to thesecond respondent requesting him to look into the matter of grantingrefund due to the petitioner. Since there was no revert, the petitionerfiled a grievance on the PG portal. By an email dated 20th October 2021,the IT department sought time to enable them to address the grievanceand refer it to the jurisdictional AO. In reply by email, on the same day,the petitioner gave the PAN to the IT department. Since there was noresolution, the petitioner once again addressed a letter dated 8th January 2022 and also sent an e-mail dated 10th January 2022 to the principalCCIT, Revenue Secretary and the Chairman of Central Board of DirectTaxes (CBDT) and informed them that the grievance petition made onthe CPGRAM portal was disposed of without issuance of refund. Thepetitioner then filed an appeal on the CPGRAM portal which is stillpending. 12.The learned counsel for the petitioner submitted that thepetitioner has not received any response to the two follow up emailsdated 14th February 2022 and 18th April 2022 to the 10th January 2022email addressed to the Principal CCIT, Revenue Secretary and theDRAFTChairman of CBDT. 13.The learned counsel submitted that on 13th July 2022, thepetitioner received an intimation letter along with notice under Section143(2) r/w. Section 158BC(c) r/w. Section 254 of the Act from theAssistant Commissioner of Income Tax Circle (7), Pune, stating that theITAT has set aside the order and remanded the matter to the AO. Furthernotice u/s 143(2) was issued on 1st May 2022 fixing a date of hearingon 8th August 2022. In view of the aforesaid it was submitted that the petitioner filed the present petition for seeking refund of the tax paidand return of the jewellery seized. 14.The learned counsel for the petitioner submitted that Section153(3) provides that any order of fresh assessment in pursuance of anorder under Section 254, 263 or 264 should be made within a period of9 months from the end of the financial year in which the order isreceived consequently, the AO now seeking to give effect to the saidorder of the ITAT dated 18th February 2010 is time barred. 15.The petitioner relied upon the judgment of the Delhi High CourtDRAFTin the case of Commissioner of Income Tax v/s. Bhan Textile (P) Ltd.1 insupport of his contention that the AO seeking to give effect to the orderdated 18th February 2010 is barred by limitation. He further relied uponthe decision of the Kerala High Court at Ernakulam in the case of Dr. R.P. Patel v/s. Assistant Commissioner of Income Tax, Circle - 12 whichheld that even if one issue has been remanded back to file for AO’sconsideration, the limitation entailed under the provisions of Act wouldapply. 1[[2008] 300 ITR 176 (Delhi)] 2[2014] 51 Taxmann.com pg. 81 (cochin) 7/13 15.The petitioner relied upon the judgment of the Delhi High CourtDRAFTin the case of Commissioner of Income Tax v/s. Bhan Textile (P) Ltd.1 insupport of his contention that the AO seeking to give effect to the orderdated 18th February 2010 is barred by limitation. He further relied uponthe decision of the Kerala High Court at Ernakulam in the case of Dr. R.P. Patel v/s. Assistant Commissioner of Income Tax, Circle - 12 whichheld that even if one issue has been remanded back to file for AO’sconsideration, the limitation entailed under the provisions of Act wouldapply. 1[[2008] 300 ITR 176 (Delhi)] 2[2014] 51 Taxmann.com pg. 81 (cochin) 7/13 16.He submitted the petitioner ought to have been given anopportunity to cross examine the bank manager as directed by the ITATvide their order dated 18th February 2010. Further, by not giving achance for cross examining the bank manager and completing theassessment within the stipulated time provided under Section 153(3) forwhich the matter remanded back to the AO, led to the action of the AObeing contrary to the provisions of the Act and violated of principles ofnatural justice. 17.He submitted that in view of the inaction on the part of the AO fora considerable period of time beyond stipulated period and not grantingDRAFTrefund to the petitioner is ex-facie contrary to Articles 265A and 300 ofthe Constitution of India. Consequently, the prayers in the petitiondeserve to be granted as prayed. 18.The learned counsel for the Respondent relied upon the wordingsof section 153(3) which reads as under: “ Notwithstanding anything contained in sub-section (1) and(2), an order of fresh assessment in pursuance of an orderunder section 254 or section 263 or section 264, setting asideor cancelling an assessment, may be made at any time beforethe expiry of nine months from the end of the financial year inwhich the order under section 254 is received by the PrincipalChief Commissioner or Chief Commissioner or PrincipleCommissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by thePrincipal Commissioner or Commissioner. [Provided that where the order under section 254 isreceived by the Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner or Commissioner or,as the case may be, the order under section 263 or section 264is passed by the Principal Commissioner or Commissioner onor after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words “nine months”, thewords “twelve months” had been substituted]” He submitted that the section envisages ‘receipt of the order’ by thePrincipal Chief Commissioner or such other person as mentioned in thesection for limitation to commence. DRAFT19.The Learned Counsel for the Respondent relied upon paragraph 3of the letter dated 30th May 2022 annexed at page 138 of their replydated 28th September 2022 to contend that the ITO has not ‘received’the order dated 18th February 2010 therefore the time periodprescribed by Section 153(3) of the IT Act will not commence andconsequently their action was within the time prescribed and wasrequired to be completed on or before 30th September 2023. 20.The Learned Counsel further contended that receipt of the letterdated 6th March 2018 would not entitle the Petitioner to contendcommencement of the limitation period. 21.The learned counsel relied upon paragraphs 4.3 to 4.8 of the replyto show the steps taken by the respondents pursuant to the ITAT orderdated 18th February 2010. 22.He submitted that the proceedings u/s 143 (3) r.w.s. 158BC r.w.s254 were pending and the order would be finalised after giving ampleopportunity to the Petitioner and will also clarify whether there will berefund or demand in the said case; and refund if any would be made indue course. He submitted that the Petition accordingly deserved to bedismissed. Conclusion: 23.We have heard the counsels at length and have also perused theproceedings. 20.The Learned Counsel further contended that receipt of the letterdated 6th March 2018 would not entitle the Petitioner to contendcommencement of the limitation period. 21.The learned counsel relied upon paragraphs 4.3 to 4.8 of the replyto show the steps taken by the respondents pursuant to the ITAT orderdated 18th February 2010. 22.He submitted that the proceedings u/s 143 (3) r.w.s. 158BC r.w.s254 were pending and the order would be finalised after giving ampleopportunity to the Petitioner and will also clarify whether there will berefund or demand in the said case; and refund if any would be made indue course. He submitted that the Petition accordingly deserved to bedismissed. Conclusion: 23.We have heard the counsels at length and have also perused theproceedings. 24.It is not in dispute that the DCIT Central Circle 2(2) Pune receivedthe letter from the Petitioner as more particularly stated in paragraph4.4 of the reply and that a letter was sent on 9th February 2022 to theITAT requesting for a copy of the ITAT order dated 18th February 2010. 25.Upon inquiry with the respondent’s counsel by this Court, hefairly admitted that the letter mentioned in paragraph 4.4 of the replywas referring to the letter dated 6th March 2018 though not mentionedtherein. Besides this the learned counsel for the Petitioner also drew ourattention to letter dated 19th July 2022 addressed by ITAT Pune to thePetitioner annexed as Exhibit N to the Petition at pages 96 being thecovering letter and Serial no 921 at pages 97 & Serial No. 925 at page98 to contend that the order dated 18th February 2010 was received bythe respondent and sent to the CIT Central Pune-37. 26.We are unable to agree with the respondent’s Counsel’scontention that they have not received the order dated 18DRAFTth February2010. The Section 254 (3) itself provides for ITAT to send a copy of theorder to both the assessee and to the Commissioner; therefore, the onuswould lie on the respondent to prove that they had not received the saidorder. If we had to accept the contention of the Respondent it wouldhave led to extending the time for compliance with the order dated 18thFebruary 2010 for almost 12 years at least in this case. Further, it wouldlead to shifting the onus on the assessee to oversee that the PrincipalCommissioner or Commissioner, as the case may be, receives the copy ofthe order. We don’t agree as it does not appear to be the intention of thelegislature. We are unable to accede to the contention of the respondent to construe the words “is received” in section 153(3) to mean “till itsreceived”and thereby extend the limitation in perpetuity. It has to be areasonable period of time especially when the respondents are a party tothe proceeding. 27.Be that as it may, the respondents who were party to theproceedings could have requested for a copy of the order from the ITATat least a month after the order was passed on 18th February 2010. Onewould have at least expected that after receiving the letter from thePetitioner on 6th March 2018 the respondent could have requested for acopy from the ITAT, as they eventually did on 9th February 2022 orDRAFTcould have requested the assessee to forward a copy of the said orderpursuant to the receipt of the letter dated 6th March 2018. 28.Having failed to take steps to comply with the order dated 18thFebruary 2010 and even within 9 months after receipt of the letteraddressed by the Petitioner on 6th March 2018, we direct therespondents to issue a refund of 7,39,083/- plus additional interest₹(under section 244A of the Act) till date of payment to the Petitioner andto release the jewellery seized within two weeks from the date of thisorder. 29.Petition disposed of with no order as to costs. 30.Parties to act on the authenticated copy of this order. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.) DRAFT