CENTURY TRADESERVE LIMITED vs. INCOME-TAX DEPARTMENT

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 10596 of 2021

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE J.B.PARDIWALA

and HONOURABLE MS. JUSTICE NISHA M. THAKORE

========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ========================================================== CENTURY TRADESERVE LIMITED Versus INCOME-TAX DEPARTMENT ========================================================== Appearance: MR CHINTAN DAVE FOR HLP ASSOCIATES LLP(9263) for the Petitioner(s) No. 1 MR MR BHATT FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 18/01/2022

ORAL JUDGMENT

(PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE) 1. By this writ application, the writ applicant being a Public Page 1 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 Limited Company through its Director / Authorized Representative has invoked an extraordinary writ jurisdiction of this Court under Article 226 of the Constitution of India and has prayed for the following reliefs: “(A) Your Lordships may be pleased to issue a writ of mandamus and / or an appropriate writ, order or direction, quashing and setting aside the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 along with notice dated 18.06.2021 issued under Section 143(2) read with Section 147 of the Income Tax Act, 1961 for Assessment Year 2013-14; (B) Pending admission, hearing and final disposal of this petition, Your Lordships may kindly be pleased to stay the further proceedings pursuant to the issuance of the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 along with notice dated 18.06.2021 issued under Section 143(2) read with Section 147 of the Income Tax Act, 1961 for Assessment Year 2013-14; (C) Your Lordships may be pleased to grant such other and further relief and / or order in the interest of justice in favour of the petitioner.” 2. Brief facts, which emerges from the record of the writ application are summarized as under: 2.1 The writ applicant is a Public Limited Company registered under the provisions of the Companies Act, 1956 and is engaged in the business of trading and service. The writ applicant- assesee has filed its return of income for A.Y. 2013-14 declaring its gross income total income as ‘NIL’ on 28.09.2013. On 18.09.2014, the intimation was received from the Revenue Department under Page 2 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 Section 143(1) of the Income Tax Act, 1961 ( for short, ‘the act’), however, no scrutiny assessment was done for the relevant period. 2.2 On 05.02.2021, the original Company Century Polyfil Ltd. was renamed as Century Tradeserve Ltd. and necessary incorporation was reported to the Registrar of the Companies. 2.3 Suddenly, on 31.03.2021, the impugned notice came to be issued seeking initiation of reassessment proceedings for A.Y. 2013-14. On 27.04.2021, the writ applicant Company had submitted its revised return of income for the relevant A.Y. responding to the aforesaid notice under Section 148 of the Act and had further prayed for supply of reasons for reopening. 2.4 It is the case of the writ applicant that the respondent department instead of supply of reasons proceeded further by issuing notice dated 18.06.2021, under Section 142(1) of the Act, thereby calling upon the writ applicant Company to submit supporting documents, if any, which was expected to be submitted on or before 21.07.2021. 2.5 The writ applicant has placed on record the letter dated 10.06.2021, which claims about reasons for reopening assessment of the year under consideration, being supplied, however, it is the specific case of the writ applicant Company that no such attachment of reasons was actually served upon the writ applicant Company. Thus, in absence of reasons for reopening being not been supplied or served, the writ applicant has approached this Court by way of this writ application challenging the impugned notice, more particularly, on the ground that the same seeks reopening beyond the period of four years. Page 3 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 3. During pendency of this petition, the writ applicant had submitted draft amendment seeking incorporation of the relevant details in the memo of the petition as regards the communication dated 10.06.2021 and had thereby contended that though the communication states that the attachment has been enclosed which according to the respondent Authority are the reasons that were recorded for reopening for the relevant A.Y., however, it was categorically contended that no attachment has ever been served upon the writ applicant. 4. Considering the aforesaid stand of the writ applicant, this Court vide order dated 03.08.2021 had passed the following order: “Draft amendment as prayed for is granted. Fresh amended Memo of petition be furnished within two days. After the amended petition is furnished, Notice be issued to the respondent returnable on 17.08.2021. Direct service is permitted.” 5. On 17.08.2021, when this petition was taken up for hearing, Mr. M.R. Bhatt, the learned senior counsel appearing for the respondent department had placed on record the copy of screen shot of the portal of the Department and has submitted that the attachment contained the reasons for reopening of the A.Y. under consideration. 6. Subsequently, an affidavit-in-reply has been filed by I.T.O., Ward-1(1)(3), Ahmedabad, wherein the respondent authority has categorically denied the fact of non supply of reasons and has placed on record cogent material including the extract of portal reflecting attachment file as well as the reasons. 7. The writ applicant has submitted affidavit-in-rejoinder dealing Page 4 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 with the aforesaid affidavit of the Department and has reiterated that the reasons were never supplied to the writ applicant before notice dated 18.06.2021 issued under Section 143(2) read with Section 147 of the Act, which was served upon the writ applicant. It is further contended that the respondent Authority under the garb of technical error are now coming up with a case to serve the reasons recorded at a very belated stage of the reassessment proceeding, which is otherwise impermissible in the eye of law. In the peculiar facts and circumstances, the writ applicant has prayed for direction to quash and set aside the impugned notice and consequential actions. 8. Mr. Bhatt, the learned senior counsel assisted by Mr. Munjal Bhatt, learned advocate appearing for the respondent Authority has raised preliminary objection that the present writ application is premature at this stage, more particularly, when the writ applicant has sought relief to quash and set aside the notice under Section 147 read with Section 148 of the Act. So far the contention raised by the writ applicant with regard to the violation of the principles of natural justice inasmuch as non-supply of the copy of the reasons recorded with regard to the satisfaction arrived at by the respondent Authority of issuance of the notice under Section 147 read with Section 148 of the Act is concerned, it is submitted that the attachment containing the reasons recorded by the Assessing Officer was duly uploaded on the portal along with communication dated 10.06.2021, which can be verified from the case history downloaded from the Income Tax Business Application (ITBA) portal. The extract of the same is annexed and placed on record the reasons recorded by the Assessing Officer for reopening the relevant assessment year under consideration, which is produced at page 41 of the aforesaid reply. It is therefore submitted that the Page 5 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 mandate cast upon the assessing officer by the supreme Court in the case of GKN Driveshaft’s stands discharged and has prayed to not to entertain this petition, at this stage. 9. In light of the peculiar facts and circumstances of the case, only limited question of law, which arises for our consideration is whether the writ applicant, an assessee is justified in invoking extraordinary writ jurisdiction at the notice stage when the notices have been issued under Sections 143(2) and 148 of the act, subsequently being furnished with the reasons recorded for reopening the assessment under consideration. 10. We have heard learned counsels representing the respective parties and have also perused the record and the material placed for consideration of this Court. The limited issue, which we are required to decide is with regard to service of the reasons recorded by the Assessing Officer for reopening of the relevant assessment year. At this stage, it would be relevant to consider the contents of the notice dated 18.06.2021 issued under Section 143(2) read with Section 147 of the Income Tax Act. The same reads thus: “GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD 1(1)(3), AHMEDABAD. To CENTURY TRADESERVE LIMITED 405, ASIATIC TRADE CENTRE, NR. JAIN TEMPLE, NAVRANGPURA, AHMEDABAD 380009, Gujarat India PAN: Assessment DIN & Notice No. Dated: Page 6 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 AACC7700Q Year: 2013-14 ITBA/AST/F/143(2)_4/2021 22/1033545620(1) 18/06/2021 Notice under section 143(2).read with section 147 at the income tax Act, 1951(Act Dear Taxpayer Thank you for filing your return of income for Assessment Year 2013-14 in response to notice under section 145 of the Act, vide Ack no.345340441270421 on 27/04/2021 2. While acknowledging the care and diligence you have taken in preparing the return, there are certain issues as mentioned below which need further clarification:- Issues as per reasons recorded for reopening 3. In view of the above, you may submit your response with supporting documents (if any) on the above mentioned issues to undersigned electronically in ‘E-proceedings' facility through your account in e-Filing website (www.incometandiefing.

govt.in

) at your convenience on or before 21/07/2021 4. In course of assessment proceedings, if required specific questionnaire(s) or requisition(s) for information/document may be issued subsequently. 5. A brief note on E- Proceeding is enclosed for your kind reference. In case you require any assistance in filing your response you may contact toll free Call Centre number 1800 103 4215 Enclosure: As above Yours faithfully BABULA GOPAL UNNITHAN WARD 1(1)(3)AMEDABAD” 11. Upon bare reading of the contents of the aforesaid notice dated 18.06.2021, it transpires that there is reference to the issue as per the reasons recorded for reopening and at the end of para 5 referred to above mentions about enclosed note. Even otherwise as per the affidavit-in-reply filed by the respondent Authority, the history downloaded from the Income Tax Business Application Page 7 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 portal refers to the communication dated 10.06.2021 which also mentions about the attachment annexed with the said communication dated 10.06.2021. Bare reading of the relevant extract of web page of the portal indicates about the attachment annexed with the communication dated 10.06.2021, more particularly, under the column view other action, there is reference to view attach document file. The said document is suggestive of the fact that in fact the document in the nature of attachment was very much available on the Income Tax Business Application portal. However, without going into the aforesaid controversy of service of reasons recorded by the Assessing Officer seeking reopening of the assessment under Section 147 of the Act, to balance equity we find it appropriate to relegate the writ applicant to submit it’s objections along with necessary documents, if any, which the writ applicant may propose to rely, in response to the reasons being produced before this Court as reflected from page 41 onwards. 12. For the reasons stated hereinabove, the writ applicant is permitted to approach the respondent Authority to submit the objections against the reasons for reopening of the relevant A.Y. under consideration with necessary documents, if any, within a period of two weeks from the date of receipt of the copy of this order. The writ applicant is at liberty to take all legal contentions as may be permissible in law. On receipt of such objections along with documents, if any, the respondent Authority is hereby directed to look into the matter and take decision in accordance with law. We clarify that even otherwise we have not gone into merits of the legality and validity of the impugned notice. Page 8 of 9

C/SCA/10596/2021 JUDGMENT DATED: 18/01/2022 13. The petition stands disposed of in the aforesaid terms. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) Y.N. VYAS Page 9 of 9