Shri Ritesh Chhabria vs. Income Tax Officer 4(1)

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WP/10675/2024HC Madhya Pradesh14 May 2024Bench: HON'BLE SHRI JUSTICE RAJ MOHAN SINGH4 pages
For Petitioner: Aditya Chhajed
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned order dated 13.03.2024 was passed in utter violation of the principles of natural justice. A perusal of the impugned order revealed that in paragraph 4.4, the conclusion was drawn on the ground that in the absence of any reply or detailed/supporting documents, the assessee had nothing to explain regarding transactions with unregistered GST entities. This conclusion directly contradicted the fact that the assessee had filed a reply on 08.03.2024, as evidenced by the acknowledgement number and the subsequent submissions by both parties. The Court, relying on the ratio of Whirlpool Corporation Vs. Registrar of Trademarks, Mumbai, Magadh Sugar & Energy Ltd. Vs. State of Bihar & others, and Dinesh Kumar Chhaganbhai Nandani Vs. Income Tax Officer, found that an exception to the rule of alternate remedy arose due to the violation of natural justice. Consequently, the impugned order was quashed, with liberty to the assessing officer to pass a fresh order in accordance with law within one month. The assessee was also granted liberty to supplement its partial reply with a detailed one within one week.

What were the facts?

The petitioner, Shri Ritesh Chhabria, filed a writ petition challenging an order dated 13.03.2024 passed by the Assessing Officer under Section 147 read with 144 read with Section 144B of the Income Tax Act. The petitioner contended that a reply to a show-cause notice dated 06.03.2024 was filed on 08.03.2024. Initially, the respondents disputed the filing of this reply, but the petitioner provided an acknowledgement number. The respondents' reply dated 11/13-05.2024 admitted the petitioner's response but stated it was unclear and that the purchases were from unregistered entities. The impugned order, however, concluded that no reply or supporting documents were provided, leading to the purchase consideration remaining unexplained.

What were the issues?

1. Whether the Assessing Officer considered the reply filed by the assessee on 08.03.2024 before passing the impugned order under Section 147 read with 144 read with Section 144B of the Income Tax Act? Assessee's Contention: The assessee argued that a reply was indeed filed on 08.03.2024, and the impugned order incorrectly concluded that no reply was submitted. The petitioner relied on the acknowledgement number provided as proof of filing. Revenue's Contention: The revenue, while acknowledging a response was filed on 08.03.2024, argued that it was unclear and that the assessee made purchases from unregistered entities without proper explanation. However, the revenue's primary defense seemed to be that the assessee's response was not sufficiently detailed, which was contradicted by the impugned order's statement that no reply was filed at all.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE RAJ MOHAN SINGH & HON'BLE SHRI JUSTICE VIVEK JAIN ON THE 14th OF MAY, 2024 WRIT PETITION No. 10675 of 2024 BETWEEN:- SHRI RITESH CHHABRIA S/O SHRI RAJESH CHHABRIA OCCUPATION: WHOLESALE TRADER R/O 191 NEW SINDHI COLONY BERASIA ROAD BHOPAL (MADHYA PRADESH) .....PETITIONER (BY SHRI ADITYA CHHAJED -ADVOCATE) AND 1. INCOME TAX OFFICER 4(1) OFFICE AT AAYKAR BHAWAN 18 NARMADAPURAM RD ZONE I ARERA HILLS BHOPAL (MADHYA PRADESH) 2. NATIONAL FACELESS ASSESSMENT CENTRE (NAFAC) , OFFICE AT 4TH FLOOR MAYUR BHAWAN CONNAUGHT CIRCUS NEW DELHI 110001 DELHI PCCIT. NEAC@INCOMETAX.GOV.IN (DELHI) .....RESPONDENTS (BY SHRI SIDDHARTH SHARMA - ADVOCATE) This petition coming on for admission this day, Justice Raj Mohan Singh passed the following: ORDER The petitioner has preferred this writ petition against the order dated 13.03.2024 passed by the Assessing Officer, Income Tax Department under Section 147 read with 144 read with Section 144 B of the Income Tax Act. 2. The primary contention of learned counsel for the petitioner is that in 1 Signed by: ARVIND KUMAR MISHRA Signing time: 5/15/2024 11:33:26 AM Signature Not Verified response to show-cause notice dated 06.03.2024, a reply was filed on 08.03.2024 with acknowledge No. 137061781080324. Vide the aforesaid reply, the petitioner projected the same to be a partial response. Initially the factum of reply by the petitioner was seriously disputed by the learned counsel for the respondents. Faced with situation, learned counsel for petitioner filed I.A. No. 5872/2024 along with additional document viz A/1, indicating filing of response with acknowledgement number. The respondents have also filed its response vide reply dated 11/13-05.2024, wherein it has been pleaded that final show- cause notice was issued on 06.03.2024 and the order was passed on 13.03.2024. The Assessee made response to the show-cause notice dated 06- 03-2024 on 08-03.2024, but the assessee responded in a very unclear manner. The assessee simply submitted that the assessee made purchase from unbranded entities and made contention that these were exempted purchases. But, the entities from which purchase were made, were unregistered entities and the assessing officer has considered the reply made by the assessee on 08.03.2024. 3. In view of the aforesaid reply to I.A. No. 5872/2024 and the force with which learned counsel for both the parties have projected their cases, it became onerous task for the court to peruse the ground on which the impugned order has been passed. 4. Perusal of the impugned order P/1 would show that in para No. 4.4 conclusion was drawn on the ground that in absence of any reply or detailed/ supporting documents having been provided, it is concluded that the assessee has nothing to explain regarding the transactions made with the tabulated unregistered GST entities. It has been further observed that since the assessee 2 Signed by: ARVIND KUMAR MISHRA Signing time: 5/15/2024 11:33:26 AM Signature Not Verified has failed to submit proper explanation regarding purchase of goods from unregistered GST entities, the amount of purchase consideration from the referred 8 parties remained unexplained. Perusal of aforesaid conclusion would make it abundantly clear that the reply dated 08.03.2024 has not been considered by the assessing officer in any manner. 5. At this stage without making any observation on the merits of the case, we deem it appropriate to consider the present writ petition on the strength of ratio of Whirlpool Corporation Vs. Registrar of Trademarks, Mumbai (1998)8 SCC 1, Magadh Sugar & Energy Ltd. Vs. State of Bihar & others 2021 SCC OnLine SC 801 and Dinesh Kumar Chhaganbhai Nandani Vs. Income Tax Officer, 2023(6) TMI 935 . There is no complete bar in entertaining the writ petition in spite of existence of an alternate statutory remedy of appeal. Since the order has been passed in utter violation of principle of natural justice, therefore, the exception to Rule of alternate remedy arises in terms of circumstances enumerated by Hon'ble the Apex Court in Magadh Sugar & Energy Ltd. (supra). For the reasons recorded hereinabove, we deem it appropriate to quash the impugned order dated 13.03.2024 Annexure P/1, however with the liberty to the assessing officer to pass a fresh order in accordance with law, preferably within one month from the date of receipt of certified copy of this order. The assessee would also be at liberty to supplement to his partial reply by way of detailed reply within one week from today. On receipt of the reply by the assessee, the Assessment Officer shall proceed to take up the case and decide the same within one month in accordance with law. 6. The petition is disposed of accordingly. 3 Signed by: ARVIND KUMAR MISHRA Signing time: 5/15/2024 11:33:26 AM Signature Not Verified (RAJ MOHAN SINGH) JUDGE (VIVEK JAIN) JUDGE MISHRA

4 Signed by: ARVIND KUMAR MISHRA Signing time: 5/15/2024 11:33:26 AM Signature Not Verified

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