Keynote Marketing Private Limited vs. Principal Chief Commissioner Of Income Tax

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WP/14471/2024HC Madhya Pradesh20 December 2024Bench: HON'BLE SHRI JUSTICE VIVEK AGARWAL5 pages
For Petitioner: Uma Parashar
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the writ petition. It relied on a Coordinate Bench decision in M/s Amrit Homes Private Limited, which held that the veracity and genuineness of the material forming the Assessing Officer's opinion suggesting escaped income should not be examined in writ jurisdiction. The Coordinate Bench also noted that other High Courts were persuaded by the principle of reasonable opportunity, which is typically applied to non-taxing statutes, and that the plain meaning of taxing statutes should be given due consideration. Furthermore, the High Court cited the Supreme Court judgment in Celir LLP Vs. Bafna Motors (Mumbai) (P) Limited, emphasizing that when an alternative statutory remedy exists, it is not proper to interfere on merits and scuttle the reassessment process. Consequently, the petition was dismissed at the admission stage, with the petitioner free to avail the statutory alternative remedy.

What were the facts?

The petitioner, Keynote Marketing Private Limited, is challenging an order dated 19.03.2024, passed under Section 148-A(d) of the Income Tax Act, and a consequential notice requiring the filing of a return. The assessee had filed its return for AY 2018-19 on 10.07.2018, declaring an income of Rs. 27,52,230/-. On 16.02.2024, a notice under Section 148-A(b) was issued through the insight portal, citing risk management strategy by the CBDT. The petitioner submitted a reply on 23.02.2024, asserting that all share transactions were duly recorded and reported. The petitioner specifically highlighted a share purchase transaction of Rs. 5,21,35,445/- and a transaction with Epoch Mercantile Private Limited (Rs. 43,83,560/-) which it claims was with Sudama Investment Private Limited, not Epoch Mercantile.

What were the issues?

1. Whether the notice issued under Section 148-A(b) of the Income Tax Act, 1961, is valid, considering the petitioner's contention that the alleged escaped income is less than Rs. 50 Lakhs, thereby precluding reassessment beyond three years as per Section 149(1)(a)? Assessee's Contention: The petitioner argues that the notice is not maintainable because the quantum of the disputed transaction is less than Rs. 50 Lakhs. Therefore, the condition for issuing a notice beyond three years, requiring income likely to amount to Rs. 50 Lakhs or more to have escaped assessment, is not met. They rely on various High Court judgments including Divya Capital One (P.) Ltd. Vs. ACIT, Pratima Halder Vs. Union of India, and others. Revenue's Contention: The respondents rely on a Coordinate Bench decision of the same High Court in M/s Amrit Homes Private Limited Vs. Deputy Commissioner of Income Tax. This decision held that High Courts should not delve into the veracity of material forming the Assessing Officer's opinion in writ jurisdiction and that the plain meaning of the taxing statute should be given effect. The respondents argue that the petitioner has an alternative statutory remedy.

Which sections of the Income-tax Act were involved?

Section 148-A,Section 148-A(b),Section 148-A(d),Section 149(1),Section 149(1)(a)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BEFORE HON'BLE SHRI JUSTICE VIVEK AGARWAL & HON'BLE SHRI JUSTICE DEVNARAYAN MISHRA ON THE 20th OF DECEMBER, 2024 WRIT PETITION No. 14471 of 2024 KEYNOTE MARKETING PRIVATE LIMITED Versus PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX AND OTHERS Appearance: Shri G.N. Purohit, Senior Advocate assisted by Shri Uma Parashar, Advocate for the petitioner. Shri Siddharth Sharma, Advocate for the respondents, through video conferencing.

ORDER Per: Justice Vivek Agarwal This petition under Section is filed by the petitioner being aggrieved of order dated 19.03.2024, passed under Section 148-A(d) of the Income Tax Act, by the respondent No.2 in ITBA/AST/F/148A/2023-24/1062885147(1), so also the notice of the even date requiring assessee to file return within 90 days. 2. Petitioner's contention is that assessee is a Private Limited Company registered with the Registrar of Companies at Gwalior and is limited by shares. It had submitted its return of income for Assessment Year 2018-19, 1 WP-14471-2024 NEUTRAL CITATION NO. 2024:MPHC-JBP:63736 Signed by: ASHWANI PRAJAPATI Signing time: 23-12-2024 11:54:16 Signature Not Verified

on 10.07.2018, declaring total income of Rs.27,52,230/- (Rupees Twenty Seven Lacs, Fifty Two Thousand, Two Hundred and Thirty). On 16.02.2024, respondent No.2, issued a notice under Section 148-A (b), to show cause through insight portal in accordance with the risk management strategy formulated by the Central Board of Direct Tax (hereinafter referred to as CBDT), for verification of information tabulated in the show cause notice fixing the case for hearing on 23.02.2024. Petitioner had submitted its reply on 23.02.2024, along with supporting evidence to exhibit that all the transactions of sale and purchase of shares as mentioned in the show cause notice were duly recorded in the books of accounts of the assessee and were reported in the income tax return submitted by the assessee as also in the enclosed audit report. 3. Shri Purohit, learned Senior counsel for the petitioner submits that there was transaction of purchase of shares amounting to Rs.5,21,35,445/- (Rupees Five Crore, Twenty One Lacs, Thirty Five Thousand, Four Hundred and Forty Five only) and that transaction being crystal clear, there was no occasion for the respondent No.2, to issue a notice. 4. It is submitted that even the transaction amounting to Rs.43,83,560/- (Rupees Forty Three Lacs, Eighty Three Thousand, Five Hundred and Sixty only), with Epoch Mercantile Private Limited is wrongly reflected, inasmuch as, there is no transaction with Epoch Mercantile Private Limited and only one transaction is with Sudama Investment Private Limited. Thus, it is submitted that since the quantum of transaction is less than 50 lacs, no notice could have been issued under Section 49(1)(b) of the Income Tax Act, on the 2 WP-14471-2024 NEUTRAL CITATION NO. 2024:MPHC-JBP:63736 Signed by: ASHWANI PRAJAPATI Signing time: 23-12-2024 11:54:16 Signature Not Verified

ground that notice can be issued beyond a period of three years as mentioned in Clause (a) of Section 149(1), only when the Assessing Officer as in his possession books of accounts or other documents or evidence, which reveal that the income chargeable to tax, represented in the form of assets, which has escaped assessment amounts to or is likely to amount to 50 Lakh rupees or more for that year. Thus, it is submitted that notice is not called for and should be quashed. 5. In support of his contention, reliance is placed on the judgment of various High Courts, which are as under :- Divya Capital One (P.) Ltd. Vs. Assistant Commissioner of Income Tax [(2022) 139 taxmanncom 461 (Delhi), Pratima Halder Vs. Union of India and others (2024) 468 ITR 23 (Cal), Chotanagpur Diocessan Trust Association Vs. Union of India, (2024) 464 ITR 748 (Jharkhand), Best Buildwell (P)Ltd. Vs. Income Tax Officer & Ors. (2022) 288 Taxmann 670 (Del), (5) Excel Commodity & Derivative (P) Ltd. Vs. Union of India (2023) 455 ITR 341 (Cal), Sevensea Vincom (P) Ltd. Vs. Principal Commissioner of Income Tax & others (2024) 465 ITR 331 (Jharkhand), Abul Majeed Vs. Income Tax Officer (2022) 447 ITR 698(Raj), Ganesh Dass Khanna & Ors Vs. Income Tax Officer & Ors. (2024) 460 ITR 546(Del), Digi 1 Electronics (P) Ltd. Vs. ACIT (2023) 458 ITR 478 (Bom), Anwar Mohammed Shaikh Vs. ACIT (2023) 148 Taxmann. com 288 (Bom), Sanath Kumar Murali Vs. ITO (2023) 455 ITR 370 (Kar), Smt. Vasanti Ramdas Pai Vs. ITO (2024) 159 Taxmann.com392 (Kar), Vinod Lalwani Vs. Union fo India (2023) 146 taxmann.com 204 (CG). 3 WP-14471-2024 NEUTRAL CITATION NO. 2024:MPHC-JBP:63736 Signed by: ASHWANI PRAJAPATI Signing time: 23-12-2024 11:54:16 Signature Not Verified

6.

Shri Siddharth Sharma, learned counsel for respondents, in his turn, places reliance on the Division Bench decision of this Court in M/s Amrit Homes Private Limited Vs. Deputy Commissioner of Income Tax and another in Writ Petition No.15244/2023(O), to submit that all these judgments of various High Courts have been considered by the Coordinate Bench and in para 10, 11 & 12, it has held as under :- "10....Pertinently, these Courts have not considered the foundational principle of interpretation of taxing statute i.e. nothing can be read into or implied and the plain meaning of the words used in the taxing statute are to be given there due meaning. These High Courts have been persuaded by the principle of reasonable opportunity which is ordinarily applied while interpreting non-taxing statute. Thus, in the humble considered opinion of this Court, the judgments of these High Courts do not have persuasive value. 11.Pertinently, the question of going into the veracity and genuineness of material/evidence forming the opinion of the Assessing Officer suggesting that income of petitioner/assessee has escaped assessment ought not to be gone into while exercising writ jurisdiction under Article 226 or supervisory jurisdiction under Article 227 of the Constitution. Thus, the ground of reliability and tenability of the evidence/material is not considered herein. 12. Consequently, the present petition deserves to be and is hereby dismissed at the admission stage itself with liberty to petitioner to avail the statutory alternative remedy under the Income Tax Act in accordance with law." 7. Thus, it is submitted that since petitioner has an alternative statutory 4 WP-14471-2024 NEUTRAL CITATION NO. 2024:MPHC-JBP:63736 Signed by: ASHWANI PRAJAPATI Signing time: 23-12-2024 11:54:16 Signature Not Verified

(VIVEK AGARWAL) JUDGE (DEVNARAYAN MISHRA) JUDGE remedy, petitioner be relegated to avail the same. 8. After hearing learned counsel for the petitioner and counsel for the department appearing through video conferencing, in view of the judgment of Coordinate Bench of this Court in M/s Amrit Homes Private Limited (supra), which is binding on this Court and also taking into consideration the law laid down in Supreme Court in Celir LLP Vs. Bafna Motors (Mumbai) (P) Limited [(2024) 2 SCC 1], since there exists an alternative statutory remedy, it will not be proper to advert to the merits of the case and scuttle the process of reassessment specially in view of the alternative statutory remedy as is available to the petitioner. 9. Accordingly, petition fails and is dismissed. However, petitioner will be free to avail such remedy, if so advised. A.Praj.

5 WP-14471-2024 NEUTRAL CITATION NO. 2024:MPHC-JBP:63736 Signed by: ASHWANI PRAJAPATI Signing time: 23-12-2024 11:54:16 Signature Not Verified

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