SWAL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This intra Court appeal filed by the writ petitioner is directed against the order dtd. 22/6/2022 passed in WPA 10858 of 2022. The appellant who shall be hereinafter referred to as assessee, filed the writ petition challenging the order passed under Sec. 148A (d) of the Income Tax Act, 1961 (The Act) dtd. 12/4/2022 on various grounds. The learned Single Bench was of the opinion that the order impugned in the writ petition has been passed after compliance of all the formalities required under the Act, there is no procedural irregularities or violation of principles of natural justice. Further, the learned Writ Court held that notices were issued to the assessee under Sec. 148A (b) of the Act and in response to which the assessee filed their objection and thereafter the Assessing Officer has passed the order under Clause (d) of Sec. 148A with elaborate discussion and reasons. Further, the learned Writ Court held that it cannot act as an appellate authority over the order impugned in the writ petition, more particularly, when there is no procedural irregularity or violation of principles of natural justice or the officer had contravened any of the statutory provisions and the reasoning and finding given by the Assessing Officer should not substituted by the Writ Court. Aggrieved by the same, the assessee is before us by way of this appeal.

(2.) Mr. R. K. Murarka, learned Senior Advocate appearing for the appellant submitted that the notices dtd. 21/3/2022 and 30/3/2022 are not notices issued under Sec. 148A (b) of the Act, but were notices of initial enquiry under Sec. 148A (a) of the Act. Further, the notices did not disclose any reasons / materials to suggest, in its Annexure 'A' or otherwise that any income of the assessee had escaped assessment within the meaning and purposes of Sec. 148 Explanation 1(i) read with Sec. 148A (b) of the Act. It is further submitted that in the main page of the notices which is a pre-printed form, it has been falsely alleged that the details of the information and enquiry, if conducted are enclosed with the notice in annexure. Further, it is submitted that Annexure A appended to the notices merely required the assessee to furnish all bank accounts maintained during the period under consideration and details of alleged funds received with documentary evidence and therefore, it is in the nature of general initial enquiry and not notice under Sec. 148A (b) of the Act. Further, it is submitted that the information/ material/ facts mentioned in the order dtd. 12/4/2022 were never disclosed to the assessee and they were not given any opportunity of being heard to deal with and rebut and furnish its submission in response to the alleged materials which has resulted in violation of principles of natural justice rendering the proceedings void ab initio. Further, it is submitted that the alleged materials referred to in the order dtd. 12/4/2022 are in fact, requisite information under Sec. 148 Explanation 1(i) of the Act and, therefore, the order is without jurisdiction. It is further submitted that the respondent has failed to discharge the initial burden which lies upon them to establish that conditions precedent to confer jurisdiction existed and were satisfied in the assessee's case. The appellant disputed the factum of the existence of legality and validity of alleged approvals of the third respondent to the impugned notices and the orders. It is further contended that in the scrutiny assessment under Sec. 143(3) of the Act, enquiry was conducted about the materials which were referred to in the notices dtd. 21/3/2022 and 30/3/2022 and the assessee had disclosed the requisite information under Sec. 142(2) of the Act and the present attempt of the respondent to re-open the assessment is a change of opinion. In support of his contention, the learned Senior Advocate referred to the decision of the Hon'ble Supreme Court in Union of India and Ors. Versus Ashish Agarwal 444 ITR 1 (SC) wherein the procedure which has been stipulated under Sec. 148A of the Act has been elaborately dealt with and submitted that such procedure was not adopted in the assessee's case. Reliance was placed on the decision of the Hon'ble Supreme Court in Kanwar Natwar Singh and Anr. Versus Directorate of Enforcement and Anr (2011) 330 ITR 374 (SC). Though the said decision arose out of proceedings initiated under the provisions of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, the decision was pressed into service for the proposition that materials are to be disclosed to the person concerned. In this regard, reference was also made to the CBDT Instruction No. 1 of 2022 dtd. 11/5/2022 which states the procedure which is required to be followed by the Assessing Officer in compliance with the order passed by the Hon'ble Supreme Court in Ashish Agarwal and in the case on hand the Assessing Officer failed to follow the said procedure. In support of his contention that the order passed by the authority should be a speaking order after considering objections filed by the assessee, reliance was placed on the decision in the case of Roquette Riddhi Siddhi (P.) Ltd. Versus Deputy Commission of Income Tax Circle 3(1)(2), Ahmedabad (2021) 130 taxmann.com 237 (Gujarat). Reliance was placed on the celebrated decision in the case of Calcutta Discount Co. Ltd. Versus Income Tax Officer (1961) 41 ITR 191 (SC) for the proposition that jurisdictional fact is a condition precedent before proceedings are initiated for re-assessment. For the proposition that it is not sufficient for the Assessing Officer to merely state that he has reasons to believe that income escaped assessment but he has to set out the material based on which he arrived at such belief, reliance was placed on the decision of the Hon'ble Supreme Court in Income Tax Officer Versus Madnani Engineering Works Ltd. (1979) 118 ITR 1 (SC) With regard to the need for recording satisfaction by the Assessing Officer, reliance was placed on the decision in Chhugamal Rajpal Versus S.P. Chaliha and Ors. (1971) 79 ITR 603 For the proposition that independent decision is required to be taken by the authority, reliance was placed on the decision in Johri Lal (H.U.F.) Versus CIT, U.P. (1973) 88 ITR 439 (SC) Decisions of this Court in Giridhar Gopal Dalmia Versus The Union of India and Ors. MAT 727 of 2022, dtd. 21/6/2022 and Babcock Borsig Limited Versus Union of India and Ors. MAT 849 of 2022, dtd. 21/6/2022 were referred to support the contention that without affording an opportunity of hearing the Assessing Officer, cannot decide the matter. Further, by referring to Explanation 1(i) in Sec. 148, information flagged in the case of the assessee with a risk management strategy formulated by the Board has to be disclosed to the assessee which has not been done in the instant case. On the above grounds, the learned Senior Counsel sought for setting aside the order passed in the writ petition and allowing the same.

(3.) Ms. Smita Das De, learned Standing Senior Counsel, appearing for the respondent sought to sustain the order passed in the writ petition and has drawn our attention to the notices issued under Sec. 148A (b) of the Act. It is submitted that the information based on which the Assessing Officer formed an opinion that income chargeable to tax for the Assessment Year 2018-19 has escaped assessment within the meaning of Sec. 147 of the Act have been clearly spelt out in the annexure to the notices and opportunity was granted to the appellant to furnish the material and make submissions and in the said annexure the assessee was also called upon to explain as to why the notice under Sec. 148 should not be issued in the assessee's case to reopen the assessment. It is submitted that the reply dtd. 30/3/2022 has been considered by the Assessing Officer and well reasoned order has been passed which was rightly not interfered by the learned Writ Court and consequently the learned Writ Court was fully justified in dismissing the writ petition. Further, it is submitted that the decisions in Giridhar Gopal Dalmia and Babcock Borsig Limited are clearly distinguishable on facts and cannot be applied to the assessee's case. With the above submission, the learned Senior Standing Counsel prayed for dismissal of the appeal.