TMI Blog2017 (1) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the petitioner that the Authority has not proceeded as per relevant provisions of the Act or is proceeding in the mater in defiance of the fundamental principles of judicial procedure, or has not/is not providing proper opportunity of hearing to the petitioner. - Decided against assessee. - Writ Petition (M/S) No. 2804 of 2016 - - - Dated:- 26-12-2016 - Hon ble V. K. Bist, J. Mr. Mohit Maulekhi, Advocate for the petitioner Mr. H.M. Bhatia, Standing Counsel for the respondent JUDGMENT Hon ble V.K. Bist, J. Petitioner has approached this Court seeking following reliefs:- i) A writ, order or direction in the nature of certiorari quashing the impugned notice u/s 148 of the Income Tax Act, 1961 dated 31.03.2016 issued by the respondent, proposing to reassess the income for the year A.Y. 2009-10 and pursuant reassessment proceedings (Annexure-1). ii) A writ, order or direction in the nature of mandamus directing the respondent restraining them from proceeding any further in pursuance of notice u/s 148 of the Income Tax Act, 1961 dated 31.03.2016 (Annexure-1). 2. Brief facts of the case, as necessary in the writ petition are, that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total ₹ 3,00,00,000/-) jointly with his father in law on 08.08.2008 and 11.07.2008 respectively. Therefore, the figure of ₹ 66,76,000/-, alleged to have escaped assessment, is unfounded and factually wrong and is not related to any land sale made by the petitioner/assessee and therefore this information is wrong. c) The petitioner/assessee submitted his return of income disclosing the income of ₹ 13,12,594/- from the AOP and half share in the land sale i.e. ₹ 1.50 Crores and accordingly paid the tax on that. d) That, for the relevant year, a notice u/s 142(1) of the Income Tax Act, 1957 No.150/746 dated 26.8.2011 was also issued to the Assessee. It is the case of the petitioner that the petitioner/assessee had also brought to the notice of the respondent that apart from completely erroneous appreciation of the factual position, the Department had initiated proceedings for the relevant year vide notice no.150/746 dated 26.8.2011 issued u/s 142(1) of the Act which ought to have concluded on or before of 31.3.2012 in view of section 153 of the Act and this fact does not find place in the reasons recorded by the Assessing Officer and approved by the Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe that income chargeable to tax has escaped assessment. It is also the case of the petitioner that he has already been assessed and taxed in his capacity of the Principal Member of the AOP. The petitioner/assessee had placed on record the duly Audited Report and Audited Final Accounts submitted u/s 44AB of the Act and the same were perused and Assessment completed u/s 143 for the A.Y. 2009-10. It is alleged that the respondent, as an afterthought, sought to reopen the case by issuing a notice u/s 148 of the Act for which service on the petitioner/assessee ought to have been effected on or before 31.03.2016. According to the petitioner, in the instant case, the first notice u/s 148 dated 31.3.2016 was served upon the petitioner/assessee vide letter dated 27.5.2016 which was time barred and not maintainable in the eyes of law and as such the subsequent notice u/s 142(1) alongwith letter dated 7.6.2016 is patently illegal. Service of valid notice is a condition precedent for re- assessment u/s 148 of the Act which has not been done in the present case since the service is beyond the period of limitation and that too alongwith a letter dated 27.05.2016 which ostensibly is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2015 giving him compliance date for 04.11.2015. This letter was duly received by the assessee on 21.10.2015. In response, the assessee submitted his written reply which was received in this office on 11.03.2016. 6. That as per assessee s written submission, he is claiming that above transactions are relating to the AOP (M/s Maruti Sah Brothers) PAN AABAM0677P. 7. That the above submission of the assessee is not justified, since the aggregate cash deposit amounting to ₹ 1,74,76,000/- should have been deposited to AOP s account if the transaction belonged to the AOP. 8. That the assessee s statement/written view is contradictory itself because in the computation of income for A.Y. 2009-10 given by the assessee reflected Short Term Capital Gain which he paid on the transaction of sale of immovable property on 11.07.2008. 9. That it is evident from his written submission that he had knowingly left two transaction namely cash deposit amounting to ₹ 33,00,000/- and sold of immovable property to ₹ 75,00,000/- in his computation of income for A.Y. 2009-10. 10. That on the basis of above, it becomes a reason to believe that the income amountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes on accounts significant account policies of the AOP, M/s Maruti Sah Bros does not own any bank account so in view of this submission of the assessee it is concluded that the entire banking transactions of the AOP are routed through the personal bank account of the assessee, Shri Maruti Nandan Sah. As per the AIR information the assessee has sold immovable properties for ₹ 75,00,000/- on 08.08.2008 for ₹ 67,76,000/- on 11.07.2008 respectively. The assessee has willfully concealed the information regarding sale of immovable property on 08.08.2008 though he has paid taxes on short term capital gain on account of sale of immovable property on 11.07.2008 only i.e. for ₹ 67,76,000/-. The assessee s version that amount of ₹ 67,76,000/-, alleged to have escaped assessment, if unfounded factually wrong and is not related to land sale made by him and his information is wrong is contradictory itself since he has paid taxes on short term capital gain for A.Y. 2009-10. 25. That in reply to the facts mentioned in Para No. 15 of the affidavit it is submitted that the reason recorded for initiating proceeding u/s 148 are based on the documentary evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee filed objections in response to the reasons recorded for initiating proceedings u/s 148 dated 07.06.2016 stating therein that the Assessee being the Principal Member routed few of its sales and purchases through his bank account which were disclosed in the book of accounts of the AOP, therefore the deposits of ₹ 33,00,000/- stands explained at the time of enquiry proceedings relevant to the AIR and there was no escapement of income on this count. 6. Learned counsel for the petitioner further submits that the reason that the property sold on 08.08.2008 for ₹ 75,00,000/- is escaped from tax is false and incorrect because the assessee has disclosed the true and correct sale proceed ₹ 1.50 Crores (half share in the sale proceed of ₹ 3.00 Crores) in its return for income for the relevant year. The finding that the assessee has calculated the capital gain on the property sold on 11.07.2008 and offered to tax as STCG (Short Term Capital Gain) is also false and baseless. Therefore, the reopening proceedings consequent to the above reason is also, incorrect, illegal and unlawful therefore is liable to be cancelled. 7. Learned counsel for the petitioner fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under Section 143(3) or Section 144 of the Act is an integral part of the assessment proceeding, it is not possible to split the assessment proceeding and confine it up to the stage of inquiry under Sections 142 and 143 and exclude the making of the order of assessment from its ambit . 9. Per contra, learned counsel for the respondent reiterates his case what is said in the counter affidavit and submits that the notice dated 31.03.2016 was served in the premises of the assessee and the authorized representative, available on the premises of the assessee, received the said notice and as per the Judgment of Hon ble Apex Court in the case of GKN Drive Shafts (India) Ltd. vs. Income Tax Officer 2003(1) SCC 72, the Income Tax Department is duty bound to give the opportunity of the hearing to the petitioner. In the present case, in compliance to notice, the assessee himself represented his case through his authorized representative, filing the objection against the said notice before the Assessing Officer and he never raised this plea at any point of time. 10. Learned counsel for the respondent further contends that so far as the argument of the learned counsel for the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years and for that the Income Tax Officer before issuing notice to the petitioner got the prior approval from the Principal Commissioner of Income Tax, Haldwani and as such notice issued to the petitioner is perfect and as per law. In support of his case, learned counsel has also placed reliance upon paragraph 18 of the judgment rendered by Hon ble Apex Court in the case of ACIT vs. Rajesh Jhavari Stock Brokers Pvt. Ltd. AIR 2007 SC 2163, and submitted that issuance of notice to the petitioner is in accordance with law. Paragraph 18 of the judgment is reproduced below: 18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. 12. I have considered the submissions of learned counsel for the parties. The petitioner has raised many points for the consideration of the Court to entertain the writ petition and to quash the notice issued under Section 148 of the Act. Section 148 of the Act provides for issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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