Wtax/1076/2023 Of Smart Vishwas Society v. Assistant Commissioner Of Income Tax And 2 Others

Chief Justice's Court Case :- WRIT TAX No. - 1076 of 2023 Petitioner :- Smart Vishwas SocietyRespondent :- Assistant Commissioner Of Income Tax And 2 OthersCounsel for Petitioner :- Raghubir Saran AgrawalCounsel for Respondent :- Gaurav Mahajan,Manu Ghildyal Hon'ble Pritinker Diwaker,Chief JusticeHon'ble Ashutosh Srivastava,J. Heard Ms. Kavita Jha, learned counsel for the petitioner through videoconferencing and Sri Manu Ghildyal, learned counsel for the Income TaxDepartment. The challenge laid in this writ petition is to the impugned notice dated 30.03.2023issued under Section 148A(b) of the Income Tax Act by the Respondent No.1 forthe Assessment Year 2016-17 as also the order dated 26.04.2023 passed underSection 148A(d) of the Act and consequent initiation of the reassessmentproceedings under Section 148 of the Act for the Assessment Year 2016-17. It is the case of the petitioner that it is a charitable society duly registered with theOffice of the Registrar of Society, Meerut. The petitioner filed a return of incomefor Assessment Year 2016-17 on 22.09.2016 declaring total income as Nil. A noticeunder Section 143(2) of the Income Tax Act was issued by the Respondent No.1 on21.08.2017. Thereafter the notice under Section 142(1) of the Act was issued by theRespondent No.2 on 26.12.2017 requiring the petitioner to provide variousinformation in respect of the Assessment Year 2016-17. The petitioner in responseto the said notice submitted a reply annexing various documents. The RespondentNo.2 being satisfied with the reply/documents filed, passed the order under Section143(3) of the Act on 02.02.2018 without any adverse comment or inference andaccepted the returned income as declared by the petitioner. In spite of the orderdated 02.02.2018, a notice dated 19.02.2021 under Section 131(1A) of the Act wasissued by the Deputy/Assistant Director of Income Tax (Investigation) Unit 2,Meerut requiring the petitioner to file various documents as also the details ofdonations paid by the petitioner. The petitioner submitted a detailed reply on03.03.2021, 15.02.2023, 17.02.2023 and 10.03.2023 providing all the details asprovided in response to the notice under Section 142(1) of the Act. The RespondentNo.1 thereafter relying on an ex-parte report of the Deputy Director Income Tax(Investigation) Unit-2, Meerut, issued the impugned notice dated 30.03.2023 underSection 148A(b) of the Act for the Assessment Year 2016-17. The petitioner isstated to have filed detailed reply to the notice under Section 148A(b) of the Act on10.04.2023. The reply has not found favour with the Respondent No.1 and theimpugned order has been passed on 26.04.2023 under Section 148A(d) of the Act. Learned counsel for the petitioner has argued that the impugned order passed by theRespondent No.1 is per se illegal and is liable to be set aside by this Courtinasmuch as reassessment proceedings initiated merely on the basis of change ofopinion is impermissible in law; there cannot be any information and/or suggestionin respect of escapement of income in the case of the petitioner which is the sine-qua-non for initiating action under Section 148 of the Act; the reassessmentproceeding resorted to merely conduct verification is not permissible in law; thenon sharing of the information/material purportedly relied upon in the impugnednotice is in contravention of the provisions of Section 148A of the Act; theimpugned order under Section 148A(d) has been passed mechanically withoutapplication of mind and is in gross violation and contravention of the procedureprescribed under Section 151A of the Act. It is thus prayed that the impugnedorders are liable to be set aside. Reliance has been placed on interim order passedby a Coordinate Bench of this Court in Writ (Tax) No.719 of 2023. Sri Manu Ghildyal, learned counsel for the Income Tax Department, in oppositionto the writ petition, submits that the objections filed by the petitioner have beenduly considered and the Assessing Officer has found that it is a fit case to issuenotice under Section 148. He submits that the original assessment proceedingspursuant to which assessment order had been passed under Section 143(3) onlycalled for donations received by the assessee. While the present information leadingto issuance of notice under Section 148A(b) is based on input by the DeputyDirector Income Tax (Investigation) Unit-2, Meerut, to enquire as to thegenuineness of the persons/entitled to whom donations have been given by theassessee. Since no enquiry was made by the Assessing Officer at the time oforiginal assessment with regard to the donations given by the assessee. There wasno occasion for the assessee to reply to the same at that point of time. Even if theinformation is said to have been furnished by the assessee at the time of the originalproceedings, the Assessing Officer had no occasion to consider the same in the lightof the information which came subsequently to the knowledge of the Department interms of the explanation to Section 147 of the Act. The ground for "change ofopinion" canvassed on behalf of the assessee does not arise as no opinion couldhave been formed with reference to donations given by assessee. It is furthercontended that the consideration at the stage of passing order under Section148A(d) islimited to ascertainment of information with the Assessing Officer thatincome of assessee has escaped assessment to tax. Final determination on thequestion whether income of assessee has actually escaped assessment is then to bemade after notice under Section 148, by passing an order of assessment orreassessment under Section 147 subject to the provisions of Section 148 to 153 ofthe Act. It is also argued that the petitioner is at liberty to raise all factualissues/objections at the appropriate stage of the proceedings and no prejudice isbeing caused to the petitioner. It is contended that this Court would not be justifiedin embarking upon the correctness or otherwise of the information available withthe Assessing Officer while taking decision under Section 148A(d) of the Act.Reliance has been placed upon a decision of a Coordinate Bench of this Court in Writ (Tax) No.561 of 2023 (Deepak Kumar Yadav Vs. Principal Commissioner ofIncome Tax and another) decided on 05.05.2023. It is accordingly prayed that thewrit petition no substance and warrants rejection at the threshold. We have heard learned counsel for the parties and have given over anxiousconsideration to the rival submissions. We have also perused the records. We find substance in the submissions of Sri Manu Ghildyal, learned counsel for theIncome Tax Department. The Respondent No.1 has proceeded to pass an order on26.04.2023 under Section 148A(d) of the Income Tax Act, 1961 rejecting theobjections of the petitioner to the show cause notice dated 30.03.2023 underSection 148A(b) of the Income Tax Act on the ground that information suggeststhat income chargeable to tax for the Assessment Year 2016-17 has escapedassessment within the meaning of Section 147 of the Income Tax Act. As per reportof Deputy Director Income Tax (Investigation) Unit-2, Meerut, during the course ofthe proceedings the assessee has not produced any supporting documentaryevidences in respect of the donation given to the tune of Rs.3,44,55,000/- for theFinancial Year 2015-16 relevant to Assessment Year 2016-17. The Income Tax Act, 1961 does not contemplate any detailed adjudication on themerits of information available with the Assessing Officer at the stage of passingorder under section 148A(d) of the Act of 1961. In our considered view there is aspecific purpose for not introducing any further enquiry or adjudication in thestatute, on the correctness or otherwise of the information, at this stage. The reasonfor it is obvious. Under the scheme of the Act a detailed procedure has beenprovided under Section 148 for issuance of notice whereafter the assessingauthority has to determine, in the manner specified, whether income has escapedassessment and the defence of assessee, on all permissible grounds, remains opento be pressed at such stage. The ultimate determination made by the AssessingAuthority under Section 147 for reassessment is otherwise subject to appeal underSection 246-A of the Act. Merits of the information referable to Section 148A thusremains subject to the reassessment proceedings initiated vide notice under Section148 of the Act. It is for this reason that issues which require determination at thestage of reassessment proceedings and in respect of which departmental remedy isotherwise available are not required to be determined at the stage of decision by theAssessing Authority under Section 149A(d). The scope of decision under Section148A(d) is limited to the existence or otherwise of information which suggests thatincome chargeable to tax has escaped assessment. Thus, in our opinion, the impugned order under Section 148A(d) of the Act andnotice under Section 148 would not warrant any interference under Article 226 ofthe constitution of India as challenge to such order would be available to anassessee while challenging the order passed in reassessment proceedingsconsequent to the notice issued under Section 148 of the Act. The Apex Court inthe case of Anshul Jain Vs. Principal Commissioner, Income Tax, reported in(2002) 143 taxman.com 38 observed as under:- "What is challenged before the High Court was the re-opening notice under Section148A(d) of the Income Tax Act, 1961. The notices have been issued, after consideringthe objections raised by the petitioner. If the petitioner has any grievance on meritsthereafter, the same has to be agitated before the Assessing Officer in the re-assessment proceedings. Under the circumstances, the High Court has rightly dismissed the writ petition. No interference of this Court is called for. The present Special Leave Petition stands dismissed." In view of the above, we find no merit in the challenge laid to the order dated30.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 as well asto the notice dated 30.03.2023 under Section 148 of the Act. The writ petition, asframed, fails and is dismissed. No order as to costs. Order Date :- 26.9.2023 pks (Ashutosh Srivastava, J) (Pritinker Diwaker, CJ)