C\/SCA\/230\/2019 JUDGMENT
\nIN THE HIGH COURT OF GUJARAT AT AHMEDABAD
\nR\/SPECIAL CIVIL APPLICATION NO. 230 of 2019
\nFOR APPROVAL AND SIGNATURE:
\nHONOURABLE MS.JUSTICE HARSHA DEVANI
\nand
\nHONOURABLE MR. JUSTICE BHARGAV D. KARIA
\n==========================================================
\n1 Whether Reporters of Local Papers may be allowed to
\nsee the judgment ?
\n2 To be referred to the Reporter or not ?
\n3 Whether their Lordships wish to see the fair copy of the
\njudgment ?
\n4 Whether this case involves a substantial question of law
\nas to the interpretation of the Constitution of India or any
\norder made thereunder ?
\n==========================================================
\nPANKAJBHAI JAYSUKHLAL SHAH C\/O. MEENA AGENCY LTD.
\nVersus
\nASST. COMMISSIONER OF INCOME TAX, CIRCLE 2 & 1 other(s)
\n==========================================================
\nAppearance:
\nMR DARSHAN B GANDHI(9771) for the Petitioner(s) No. 1
\nMR SP MAJMUDAR(3456) for the Petitioner(s) No. 1
\nMRS MAUNA M BHATT(174) for the Respondent(s) No. 1,2
\n==========================================================
\nCORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
\nand
\nHONOURABLE MR. JUSTICE BHARGAV D. KARIA
\nDate : 09\/04\/2019
\nORAL JUDGMENT
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\n(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
\n1. Rule. Mrs. Mauna Bhatt, learned senior standing counsel
\nwaives service of notice of rule on behalf of the
\nrespondents.
\n2. Having regard to the controversy involved in the present
\ncase, which lies in a narrow compass and with the consent
\nof the learned advocates for the respective parties, the
\nmatter was taken up for final hearing today.
\n3. By this petition under article 226 of the Constitution of
\nIndia, the petitioner has challenged the notice dated
\n29.3.2018 issued by the Incometax
\nofficer, Ward 2(2),
\nJamnagar under section 148 of the Income Tax Act, 1961
\n(hereinafter referred to as the \u201cAct\u201d) seeking to reopen the
\nassessment of the petitioner for assessment year 20112012.
\nIt appears that before this petition came to be filed,
\nthe Assessing Officer has proceeded further pursuant to
\nthe impugned notice and has passed the assessment order.
\nHowever, since the issue raised in the present petition is a
\njurisdictional issue, this court had issued notice in the
\nmatter.
\n4. The facts stated briefly are that, the petitioner herein filed
\nreturn of income for the assessment year 20112012
\non
\n1.9.2012 declaring total income of Rs.44,05,746\/.
\nThe
\nreturn was processed under section 143(1) of the Act.
\nThereafter, by the impugned notice dated 29.3.2018, the
\nIncometax
\nofficer Ward 2(2), Jamnagar, sought to reopen
\nthe assessment of the petitioner for the assessment year
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\n20112012.
\nIn response to the notice, the petitioner
\nsubmitted that the return filed by him on 31.8.2012 be
\ntreated as the return filed in response to notice under
\nsection 148 of the Act and requested the Assessing Officer
\nto supply a copy of the reasons recorded for reopening the
\nassessment.
\n4.1) It appears that after issuance of notice under section
\n148 of the Act, the charge over the petitioner’s case was
\ntransferred to the Assistant Commissioner of Income Tax
\n(ACIT) who is the current Assessing Officer of the
\npetitioner.
\n4.2) Upon receipt of the reasons recorded, the petitioner
\nfound that the same had been recorded by the Deputy
\nCommissioner of Income Tax (DCIT), Circle2,
\nJamnagar. It
\nappears that in the meanwhile, the petitioner participated
\nin the assessment proceedings. Thereafter, by a letter
\ndated 20.12.2018, the petitioner raised objections against
\nthe initiation of proceedings under section 148 of the Act.
\nBefore such objections could be decided by the respondent,
\nthe petitioner has filed the present petition seeking reliefs
\nnoted hereinabove.
\n5. Mr. Darshan Gandhi, learned advocate for the petitioner
\ninvited the attention of the court to the impugned notice to
\npoint out that the same has been issued by one Mr. Neeraj
\nKumar, Incometax
\nofficer, Ward 2(2), Jamnagar. Referring
\nto the reasons recorded, it was pointed out that the same
\nhas been recorded by one Mr. Chintamani V. Dingankar,
\nDeputy Commissioner of Incometax,
\nCircle2,
\nJamnagar.
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\nReference was made to section 148 of the Act, which
\nprovides for issue of notice where income has escaped
\nassessment and, more particularly, to subsection
\n(2)
\nthereof, which provides that the Assessing Officer shall,
\nbefore issuing any notice under this section, record his
\nreasons for doing so. It was submitted that the notice
\nunder section 148 of the Act is required to be issued by the
\nAssessing Officer who recorded the reasons; whereas in the
\nfacts of the present case, the reasons have been recorded
\nby the Deputy Commissioner of Incometax
\nwhereas the
\nimpugned notice has been issued by the Incometax
\nOfficer
\nand hence, the notice under section 148 of the Act is
\nwithout jurisdiction. In support of his submission, learned
\nadvocate for the petitioner has placed reliance upon the
\ndecision of this court in case of Hynoup Food & Oil
\nIndustries Ltd. v. Assistant Commissioner of Incometax,
\n307 ITR 115 (Gujarat), wherein the court after
\nreferring to the provisions of sections 147 and 148 of the
\nAct, held that when section 147 is read in conjunction with
\nsection 148(2) of the Act which mandates that the
\nAssessing Officer shall, before issuing any notice under
\nsection 148(1) of the Act, record his reasons for issuing the
\nnotice, it is clear that the officer recording the reasons
\nunder section 148(2) and the officer issuing notice under
\nsection 148(1) has to be the same person. The court further
\nobserved that the form of the notice itself indicates that the
\nauthority has to record \u2018whereas I have reason to believe
\nthat income liable to tax for the assessment year has
\nescaped assessment within the meaning of section 147 of
\nthe Incometax
\nAct, 1961′. Accordingly, the court held that
\nthe notice which was issued by an officer other than the
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\nofficer who had recorded the reasons was invalid. Mr.
\nGandhi submitted that the above decision would be
\nsquarely applicable to the facts of the present case and
\nhence, the impugned notice which is a jurisdictional notice
\nis invalid and without authority of law. It was, accordingly,
\nurged that the petition deserves to be allowed by setting
\naside the impugned notice.
\n6. Opposing the petition, Mrs. Mauna Bhatt, learned senior
\nstanding counsel for the respondents, submitted that in
\nthis case the petitioner has responded to the notice issued
\nunder section 148 of the Act and has participated in the
\nproceedings pursuant thereto, which have culminated into
\nthe impugned assessment order. It was submitted that the
\npetitioner is, therefore, required to be relegated to the
\nremedy of appeal under the relevant statutory provisions. It
\nwas further submitted that the petitioner has initially
\nparticipated in the proceedings under section 147 of the
\nAct and has belatedly raised the objections and before such
\nobjections could be dealt with, has approached this court,
\nand hence, this court may not entertain this petition at
\nthis stage.
\n6.1) As regards the contention raised by the petitioner that
\nthe notice under section 148 of the Act having been issued
\nby an officer other than the officer who recorded the
\nreasons for reopening the assessment, the attention of the
\ncourt was invited to the averments made in the affidavitinreply
\nfiled by the first respondent. It was submitted that
\nthe Assessing Officer namely, DCIT\/ACIT, Circle2,
\nJamnagar who was holding the jurisdiction over the case
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\nrecorded reasons on 27.3.2018. Thereafter, as per the
\nrequirement of the Incometax
\nAct, 1961, the approval of
\nthe Principal CIT, Jamnagar was sought to issue notice
\nunder section 148 of the Act on 27.3.2018. After such
\napproval was given on 28.3.2018, the notice under section
\n148 of the Act was issued on 29.3.2018. For the purpose of
\nexplaining as to why the notice was issued by the Income
\nTax Officer and not the Deputy Commissioner of Incometax
\nwho recorded the reasons, reference was made to the
\naverments made in paragraph 4 of the above affidavitinreply
\nreference to which shall be made hereinafter. It was
\nsubmitted that issuance of the notice by the Income Tax
\nOfficer is a procedural lapse which has happened on
\naccount of the mandate of eassessment
\nscheme and non
\nmigration of Permanent Account Number in time. It was
\nsubmitted that this being a procedural lapse, such defect
\nwould be covered under the provisions of section 292B of
\nthe Act and therefore, the impugned notice cannot be said
\nto be invalid. It was submitted that the petitioner having
\nparticipated in the reassessment proceedings, pursuant to
\nwhich the reassessment order came to be passed on
\n28.12.2018, it is not permissible for the petitioner to now
\nchallenge the impugned notice on the ground of invalidity,
\nin view of provisions of section 292B of the Act. It was,
\naccordingly, urged that the petition being devoid of merits,
\ndeserves to be dismissed.
\n7. Having regard to the conduct of the petitioner of
\nparticipating in the proceedings before the Assessing
\nOfficer and thereafter, at the later stage, filing objections
\nand approaching this court before such objections could be
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\ndisposed of, ordinarily this court would be reluctant to
\ninterfere in such a case, more so, when the assessment
\norder has already been passed, but having regard to the
\npeculiar facts of the case, where the very jurisdiction of the
\nAssessing Officer who issued the notice under section 148
\nof the Act is under challenge, this court has entertained
\nthe petition.
\n8. In the present case, what is the subject matter of challenge
\nis the notice issued under section 148 of the Act on the
\nground that the assumption of jurisdiction on part of the
\nAssessing Officer by issuance of such notice is invalid. The
\nsole contention on the basis of which such notice is
\nchallenged before this court is that the notice has been
\nissued by the Income Tax Officer, Ward No.2(2) Jamnagar,
\nwhereas the reasons have been recorded by the Deputy
\nCommissioner of Incometax,
\nCircle2,
\nJamnagar. In this
\nregard, reference may be made to section 147 of the Act
\nwhich provides that if the Assessing Officer has reason to
\nbelieve that any income chargeable to tax has escaped
\nassessment for any assessment year, he may, subject to
\nthe provisions of section 148 to 153, assess or reassess
\nsuch income and also any other income chargeable to tax
\nwhich has escaped assessment and which comes to his
\nnotice subsequently during the course of the proceedings
\nunder that section. Section 148 of the Act provides for
\nissue of notice where income has escaped assessment and
\nprovides that before making the assessment, reassessment
\nor recomputation under section 147 of the Act, the
\nAssessing Officer shall serve on the assessee a notice
\nrequiring him to furnish return of income as specified
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\nthereunder. Subsection
\n(2) thereof postulates that the
\nAssessing Officer shall, before issuing any notice under
\nthat section, record his reasons for doing so.
\n9. This court in Hynoup Food & Oil Industries Ltd. (supra),
\nhas on a conjoint reading of sections 147 and 148(2) of the
\nAct, held that the officer recording the reasons under
\nsection 148(2) of the Act and the officer issuing notice
\nunder section 148(1) of the Act has to be the same person.
\nIn this case, admittedly the officer who recorded the
\nreasons for reopening the assessment has not issued the
\nnotice under section 148(1) of the Act. In this regard, in
\nresponse to the averments made in the petition regarding
\nlack of jurisdiction on part of the Assessing Officer on the
\nground of the impugned notice having been issued by an
\nofficer other than the officer who recorded the reasons, the
\nfirst respondent has filed an affidavitinreply,
\nwherein it
\nhas been averred thus :
\n\u201c3. Xxxxxxx. So the Assessing Officer viz. the DCIT\/ACIT,
\nCir2,
\nJamnagar who was holding the jurisdiction over the
\ncase recorded reasons on 27\/03\/2018. Thereafter, as per
\nthe requirement of the Incometax
\nAct, 1961, the approval of
\nthe Pr.CIT, Jamnagar was sought to issue notice u\/s 148 on
\n27\/03\/2018. The Pr. CIT, Jamnagar gave the approval to
\nissue notice u\/s 148 on 28\/03\/2018. Subsequently, the
\nnotice u\/s 148 was issued on 29\/03\/2018.xxxxx
\n4. Xxxxxxx I submit that the reasons are recorded by Mr.
\nChintamani V. Dingankar, Deputy Commissioner of Income
\nTax, Circle2,
\nJamnagar having jurisdiction over the
\npetitioner. I submit that at the relevant point of time, the PAN
\nof the petitioner was lying with the Income Tax Officer, Ward
\n2(2), Jamnagar as he was holding territorial jurisdiction over
\nthe case and therefore, the impugned notice came to be
\nissued by the ITO, Ward 2(2) as the PAN could not be
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\nmigrated at the last moment to the DCIT, Circle2.
\nBut as the
\nincome of the assessee was more than Rs. 15 lakh, the
\nDCIT\/ACIT, Cir2,
\nJamnagar held the jurisdiction over the
\ncase as per CBDT Instruction. The notice u\/s 148 was
\nrequired to be issued by 31\/03\/2018 and the migration of
\nthe PAN was not possible in that short period. It is pertinent
\nto mention that as per the prevailing scheme of eassessment,
\nthe assessment was required to be made as eAssessment
\nand all the correspondences\/notices needed to
\nbe done online through the ITBA application as the such
\ncorrespondences\/notices then goes to the efiling
\naccount of
\nthe assessee which enable the assessee to respond through
\nhis\/her efiling
\naccount. As the PAN was lying in the
\njurisdiction of the Incometax
\nOfficer, Ward2(
\n2) Jamnagar,
\nthe notice was issued from petitioner’s Assessing Officer
\ncode. However, the assessment was completed by
\nDCIT\/ACIT, Circle2,
\nJamnagar who was holding the
\njurisdiction over the case and who recorded the reasons for
\nreopening and formed his belief for reopening u\/s 147. Since
\nthe assessment was completed by the same Assessing
\nOfficer who recorded the reasons for reopening and who
\nholding the jurisdiction over the case, the validity of issued
\nof notice is correct and it is not a case of borrowed opinion.It
\nwas a procedural lapse which was (sic. had) happened on
\naccount of mandate of eassessment
\nscheme and nonmigration
\nof PAN in time.\u201d
\n10.From the averments made in the affidavitinreply
\nfiled on
\nbehalf of the respondent, it is evident that it was the
\nDeputy Commissioner of Incometax,
\nCircle2,
\nJamnagar,
\nwho had jurisdiction over the petitioner. Previously the
\nIncometax
\nofficer, Ward 2(2), Jamnagar was having
\njurisdiction over the petitioner, however, as per the CBDT
\ninstructions, in view of the fact that the income of the
\nassessee was more than Rs.15 lakhs, DCIT\/ACIT
\nJamnagar held the jurisdiction over the petitioner. It
\nappears that it was not possible for the jurisdictional
\nAssessing Officer viz. the Deputy Commissioner of IncomePage
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\ntax to issue the notice under section 148 of the Act on or
\nbefore 31.3.2018 as migration of the Permanent Account
\nNumber was not possible within that short period.
\nTherefore, the Incometax
\nofficer has issued notice under
\nsection 148 of the Act instead of the jurisdictional
\nAssessing Officer. Thus there is an admission on part of
\nthe first respondent that the Deputy Commissioner of
\nIncometax,
\nCircle2,
\nJamnagar who had jurisdiction over
\nthe petitioner had not issued notice under section 148 of
\nthe Act but it is the Incometax
\nofficer, Ward 2(2),
\nJamnagar, who did not have any jurisdiction over the
\npetitioner, in respect of the present case, who had issued
\nsuch notice. As held by this Court in case of Hynoup Food
\n& Oil Industries Ltd. (supra), it is the officer who records
\nthe reasons who has to issue the notice under section
\n148(1) of the Act whereas in the present case the reasons
\nhave been recorded by the jurisdictional Assessing Officer,
\nwhereas the notice under section 148(1) of the Act has
\nbeen issued by an officer who did not have jurisdiction over
\nthe petitioner. Since the notice under section 148 of the
\nAct is a jurisdictional notice, any inherent defect therein
\ncannot be cured under section 292B of the Act. A notice
\nunder section 148(1) of the Act would be a valid notice if
\nthe jurisdictional Assessing Officer records the reasons for
\nreopening the assessment as contemplated under subsection
\n(2) of section 148 and thereafter the same officer
\nnamely the jurisdictional Assessing Officer issues the
\nnotice under section 148(1) of the Act. In the facts of the
\npresent case, while the reasons for reopening the
\nassessment have been recorded by the jurisdictional
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\ntax, Circle2,
\nJamnagar, the impugned notice under
\nsection 148(1) of the Act has been issued by the Income
\nTax Officer, Ward 2(2), Jamnagar who had no jurisdiction
\nover the petitioner, and hence, such notice was bad on the
\ncount of having been issued by an officer who had not
\nauthority in law to issue such notice. As a necessary
\ncorollary it follows that no proceedings could have been
\ntaken under section 147 of the Act in pursuance of such
\ninvalid notice. In the aforesaid premises, the impugned
\nnotice under section 148(1) of the Act as well as all the
\nproceedings taken pursuant thereto cannot be sustained.
\n11. It may be noted that before the Assessing Officer, during
\nthe course of assessment proceedings also, the petitioner
\nhad raised such objections with regard to the jurisdiction
\nof the Assessing Officer. However, the Assessing Officer has
\nproceeded further and instead of recording the objections
\nraised by the petitioner, namely that the notice has been
\nissued by the Income Tax Officer though the reasons have
\nbeen recorded by DCIT, has recorded that the notice was
\nissued by the DCIT, Circle2
\nand subsequently, ACIT was
\nholding charge of Circle2
\nand, therefore, there was no
\nharm in passing the assessment order. It, therefore,
\nappears that the Assessing Officer has not even understood
\nthe contention raised by the petitioner during the course of
\nassessment proceedings.
\n12. In light of the above discussion, the petition succeeds and
\nis accordingly allowed. The impugned notice dated
\n29.3.2018 issued under section 148 of the Income Tax Act,
\n1961, and all the proceedings pursuant thereto including
\nthe assessment order dated 28.12.2018 are hereby
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\nC\/SCA\/230\/2019 JUDGMENT
\nquashed and set aside.
\n13. Rule is made absolute accordingly with no order as to
\ncosts.
\n(HARSHA DEVANI, J)
\n(BHARGAV D. KARIA, J)
\nRAGHUNATH R NAIR
\nPage 12 of 12
\nDownloaded on : Fri Sep 06 19:03:59 IST 2019<\/p>\n","protected":false},"excerpt":{"rendered":"
Since the notice under section 148 of the Act is a jurisdictional notice, any inherent defect therein cannot be cured under section 292B of the Act. A notice under section 148(1) of the Act would be a valid notice if the jurisdictional Assessing Officer records the reasons for reopening the assessment as contemplated under subsection (2) of section 148 and thereafter the same officer namely the jurisdictional Assessing Officer issues the notice under section 148(1) of the Act.<\/p>\n