TaxTMI 
TaxTMI 
2023 (12) TMI 1362
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The brief facts of the case are as under: [4.1] The petitioner is a company incorporated under the Companies Act with its shareholders being citizen of India. The petitioner - Safal Constructions Pvt Ltd (incorporated on 21st February 1995) amalgamated Bsafal Infra Heights Private Limited (incorporated on 12th September 2016) vide order of the National Company Law Tribunal at Ahmedabad in CP(CAA) No. 63/NCLT/AHM/2017 dated 11th April 2018 under the provisions of Sections 230-232 of the Companies Act, 2013. Subsequently, the name of the amalgamated company was changed from Bsafal Infra Heights Private Limited to Safal Constructions (India) Pvt Ltd vide order of the Ministry of Corporate Affairs dated 24th July 2018. [4.2] The petitioner is engaged in the business of construction and development of properties. The petitioner filed its return of income for the Assessment Year 2016-17 on 17th October 2016 declaring an income of "Rs.12,61,49,500/- under the Income Tax, 1961 (for short, "the Act"). The return was process under Section 143(1) of the Act. [4.3] Pursuant to search in the case of Claris Group, a third party, notice under Section 153C of the Act was issued in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Section 148 dated 16th May 2023 is challenged on the ground that such notice is illegal since the time period to file a return of income is less than the statutory time period of 90 days given is only 30 days instead of 90 days to file return of income as per Section 148 of the Act which is amended with effect from 1st April 2023. [6] Learned Senior Advocate Mr. Soparkar submitted that with effect from 1st April 2023, Section 148 of the Act has been amended by substituting the words "such period, as may be specified in such notice" by the words "a period of three months from the end of the month in which such notice is issued, or such further period as may be allowed by the Assessing Officer on the basis of an application made in this regard by the assessee". It was submitted that the impugned notice at Annexure : E dated 16th May 2023 is issued after 1st April 2023. However, para 2 of the impugned notice provides only about 30 days from service of the notice to file a return in the prescribed form for the Assessment Year 2016-17. It was, therefore, submitted that as per the statutory provision with effect from 1st April 2023, it is mandatory to provide a minimum period of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, profits or gains or recompute the loss or depreciation allowance; and the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under section 22, sub-section (2). The proviso to sub-section (1) of section 34 begins by stating that the Income-tax Officer shall not issue a notice under clause (a) of sub-section (1) for any year, unless he has recorded his reasons for doing so, and in any case falling under clause (ii), unless the Central Board of Revenue, and in any other case, the Commissioner, is satisfied on such reason recorded that it is a fit case for the issue of such notice. In the instant case, the Income-tax Officer has issued the notice purporting to be under section 34(1) with the approval of the Commissioner. Under section 22 (2) of the Act, the notice required to be served upon the party concerned must require him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and, therefore, when one reads section 34 (1) with the proviso to section 22 (2), it is obvious that the notice in connection with the reassessment proceedings under section 34 (1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Income-tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. In our opinion, this contention is well founded. The notice prescribed by Section 34 cannot be regarded as a more procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. That is the view taken by the Bombay and Calcutta High Courts in the CIT v. Ramsukh Motilal (1955) 27 ITR 54 and R. K. Das & Co. v. CIT (1956) 30 ITR 439 and we think that that view is right." [9] It was, therefore submitted that this petition deserves to be allowed on the ground that notice under Section 148 of the Act for reopening of the assessment for the Assessment Year 2016-17 is bad and illegal. [10] Learned Senior Advocate Mr. Soparkar, without prejudice to the above legal contentions, submitted that the Assessing Officer has passed an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assessment Year 2016-17 on the basis of the information relating to the Assessment Year 2015-16 being the entries from 28th April 2014 to 27th April 2015 by segregating the entries from 1st April 2015 to 27th April 2015. [13] It was, therefore, submitted that the impugned notices are bad in law as the Assessing Officer could not have assumed the jurisdiction under Section 147 read with Sections 148 and 148A of the Act. [14] Per contra, learned advocate Mr. Patel for the respondent submitted that in the present case, Suspicious Transaction Report was received by the Investigation Wing of the Department, wherein laundering of huge sum of money by the petitioner group was suspected. [15] It was submitted that inquiry was conducted by the DDIT (Investigation), Unit-2(1), Ahmedabad and the Suspicious Transaction Report and details collected in the course of inquiry was uploaded by the DDIT (Investigation), Unit, Ahmedabad on the insight portal of the Department and the same was visible to the office of the respondent on 27th March 2023. On the basis of such report, it is revealed that the petitioner - assessee had carried out suspicious high value bank transactions amount to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct and the notice under Section 148 of the Act is issued after obtaining necessary approval from the specified authority under Section 151 of the Act read with Section 149(1)(b) of the Act before passing the impugned order and issuance of notice. After considering and dealing with all the contentions raised by the assessee, it was thought fit by the Assessing Officer to assume jurisdiction as the income of Rs. 86,63,62,755/- pertaining to the period from 1st April 2015 to 27th April 2015 as escaped assessment. Learned advocate Mr. Patel invited the attention of this Court to the detailed reasons given by the Assessing Officer in paras 6.1 to 6.6 of the impugned assessment order passed under Section 148A(d) of the Act, to submit that the Assessing Officer has given cogent reasons for coming to the conclusion that income has escaped assessment and it is a fit case to reopen the assessment proceedings for the Assessment Year 2016-17. It was, therefore, submitted that the escapement of income pertains to the period from 1st April 2015 to 27th April 2015 and therefore, the same is time barred. [20] Learned advocate Mr. Patel submitted that the petitioner has failed to provide an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch credit entries amounting to Rs. 86,63,62,755/- pertained to the period 01.04.2015 to 27.04.2015. The assessing officer (AO), having satisfied with the information in possession and after considering the submission of the assessee, passed the order u/s 148A(d) dated 16.05.2023 deciding the present case as a fit case to issue notice u/s. 148 of the Act. The AO had obtained the necessary approval from the Specified Authority u/s. 151 of the Act r.w.s. 149[1](b) of the Act before passing the impugned order under Section 148A(d) of the Act dated 16.05.2023. The assessing officer in the aforesaid order has duly considered and dealt with all the contentions raised by the assessee in its submission. In paras 6 (6.1 to 6.6) to 9 of the order under Section 148A(d) of the Act, it has been clearly explained by the AO after considering the submissions of the assessee in detail how income in relation to impugned credit entries amounting to Rs. 86,63,62,755/- pertaining to 01.04.2015 to 27.04.2015 has escaped assessment for A.Y. 2016-17. It is therefore submitted that in view of the above, the impugned notice u/s. 148A(b), order u/s. 148A(d) and the notice u/s. 148 are just, proper a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Indian Constitution cannot be invoked in tax matters as the Income Tax Act, 1961 provides complete machinery for assessment/re-assessment. The petitioner, Gulmuhar Silk Pvt. Ltd., had challenged an order passed under Section 148A(d) of the Income Tax Act, 1961 contending that the impugned order dated 28.03.2022 is a nonspeaking order that does not deal with the contentions raised by the petitioner in reply to the impugned Show Cause Notice. The division bench of the Hon'ble High Court observed that though it is the petitioner's case that the impugned order in erroneous on facts, yet the Court was of the opinion that the petitioner would have ample opportunity during the course of proceedings before different statutory forums to show that the finding of fact arrived at was erroneous. While dismissing the petition, the Hon'ble Court held that: "Moreover, at this stage, no assessment order has been passed and it has only been observed that it is a fit case for issuance of notice under Section 148 of the Act. In fact, the Supreme Court in the case of Commissioner of Income Tax and Ors. Vs. Chhabil Das Agarwal, (2014) 1 SCC 603 has held that as the Income Tax Act, 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the assessee suffered prejudice on account of shorter period mentioned in the notice and therefore, it was held that it is not permissible to quash the block assessment proceedings merely on the ground that the period mentioned in the notice was lesser than the statutory period specified under Section 158BC(a) of the Act. [23] It was submitted that considering the above submissions, this petition deserves to be dismissed. [24] Having heard the learned advocates for the respective parties and having considered the facts of the case, two issues are raised on behalf of the petitioner - assessee challenging the impugned assessment order passed under Section 148A(d) of the Act and the issuance of notice under Section 148 of the Act on 16th May 2023. [25] The first issue pertains to the legal submissions made on behalf of the assessee to the fact that the notice issued under Section 148 of the Act mentioned only the period of 30 days instead of 90 days as per the provisions under Section 148 of the Act which existed on the date of issuance of notice dated 16th May 2023. [26] Therefore, it would be germane to refer to the provisions of Section 148 of the Act which existed pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court.] Explanation 2.-For the purposes of this section, where,- (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1 st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Section 148A(d) of the Act. Section 148A of the Act reads as under: "148A. Conducting inquiry, providing opportunity before issue of notice under section 148. The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice: Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section." [31] The third proviso to Section 148 of the Act reads as under: "Provided also that any return of income, required to be furnished on assessment under this section and furnished beyond the period allowed shall not be deemed to be a return under Section 139." [32] The above third proviso is inserted by the Finance Act, 2023 with effect from 1st April 2023. However, as per the provisions of Section 148 of the Act, the notice would relate back to the issuance of notice under Section 148A(b) of the Act. In the facts of the case, if the notice under Section 148A(b) is to be issued on 16th May 2023, the same would be time barred for reopening of the assessment for the Assessment Year 2016-17. The assessment proceedings have been initiated prior to 31st March 2023. Such notice shall have to be con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns intended to be exhaustive and are evolved keeping in view the context of disciplinary enquiries and orders of punishment imposed by an employer upon the employee):... (3) In the case of violation of a procedural provision, the position is this: procedural provisions are generally meant for affording a reasonable and adequate opportunity to the delinquent officer/employee. They are, generally speaking, conceived in his interest. Violation of any and every procedural provision cannot be said to automatically vitiate the enquiry held or order passed. Except cases falling under - 'no notice', 'no opportunity' and 'no hearing' categories, the complaint of violation of procedural provision should be examined from the point of view of prejudice, viz., whether such violation has prejudiced the delinquent officer/employee in defending himself properly and effectively. If it is found that he has been so prejudiced, appropriate orders have to be made to repair and remedy the prejudicate, including setting aside the enquiry and/or the order of punishment. If no prejudice is established to have resulted therefrom, it is obvious, no interference is called for.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sal of the notice under Section 148A(b) of the Act, after referring to the Suspicious Transaction Report, the petitioner - assessee was called upon to submit the following details: "2. In view of the above, you are requested to submit following details:- * Furnish complete details of nature of business carried out by you. Source of income and annual accounts with all schedules and annexures for the F.Y 2014-15 to F.Y. 2015- 16. Please also submit a detailed note including nature of income, source of income and detailed narration of all the transaction carried out by you for the period starting from 01.04.2014 to 31.03.2016. * Please furnish detailed narration of all the transactions (all Credits & Debits entries) as reflected in bank account A/c. 018905500280 held by you, starting from 01.04.2014 to 31.03.2016, clearly specify the counterparty along with PAN and address to the transactions, the purpose & Source of transaction and the manner of accounting these transactions. Please also furnish the details of other bank account statements for the aforesaid period, clearly specifying the counterparty along with PAN and address to the transactions, the purpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Suspicious Transaction Report. [38] On perusal of the impugned order under Section 148A(d) of the Act, the Assessing Officer did not consider any of the contentions raised on behalf of the assessee on merits and reiterated only extract from the Suspicious Transaction Report in para 6.2 of the order. The assessee has been given the entire details of transaction in reply along with the annexures, however, the Assessing Officer did not consider the same and only observed that the assessee did not adduce any supporting document establishing the identity of the parties, genuineness of transaction and creditworthiness of the counter parties justifying the bank account transactions carried out are related to the business parties of the assessee. On perusal of the record, it appears that the petitioner - assessee has submitted all the details along with reply filed on 9th May 2023,. In such circumstances, in view of the above facts, the impugned assessment order under Section 148A(d) of the Act is not sustainable as the Assessing Officer has failed to set out any opinion on the basis of the available information and material on record to arrive at the finding that it is a fit case to....