SUPER SERVICE STATION vs. INCOME TAX OFFICER WARD 6(1)(5)

ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

dated

alongwith consequential  demand  notice dated 30.12.2019 (collectively   annexed   at   Annexure   A)   issued by the Respondent authority; B. Pending   notice,   admission   and   final   hearing of this petition, this Hon'ble Court may be pleased   to   stay   the   operation   and implementation   of   the   impugned   order   dated 30.12.2019   and   impugned   demand   notice   dated 30.12.2019  (collectively  annexed at Annexure A)   as   well   as   stay   penalty   proceedings ordered to be commenced as per the impugned order dated 30.12.2019; C. Ex parte ad interim relief in terms of prayer B may kindly be granted. C1. This Hon'ble Court may be pleased to issue a writ   of   mandamus   or   a   writ   in   nature   of mandamus   or   any   other   appropriate   writ   or order   quashing   and   setting   aside   the   bank attachment

notices

dated

filed

online statement   on   07.02.2017   showing   total   cash deposited by the petitioner, in compliance of the online report demanded by the respondent –   Income   Tax   Department   on   account   of   the demonetization   of   Rs.500/­   and   Rs.1000/­ currency notes w.e.f. 08.11.2016.

issued

summons

dated 21.03.2017 to the petitioners along with the questionnaire, wherein, it was mentioned that the petitioners had made a cash deposit of Rs.4,19,92,190/­ with HDFC Bank Limited. The petitioners   in   compliance   of   the   summons, furnished the details, and further clarified that   petitioners   had  deposited  cash  in  the bank after the demonetization   amounting to Rs.7,82,90,640/­ and not Rs.4,19,92,190/­ as mentioned in the summons.

were not submitted.

The petitioners by reply dated 12.12.2019 again clarified that the petitioners has submitted all the documents and details called for by the   earlier   notices.   The   petitioners   also visited   the   office   of   the   respondent   to inform   him   about   the   online   submission   of details, so as to avoid communication gap in this regard.

thereafter, received the impugned assessment order dated 30.12.2019   passed   by   the   respondent   making huge addition of more than Rs.13 Crore to the income of the petitioners, for which neither notice   was   given   by   the   respondent   to   the petitioner to show cause nor the respondent relied   upon   the   documents   and   information furnished by the petitioners. The respondent on the basis of the Income Tax details with the  department  came  to  the  conclusion  that the petitioners deposited cash amounting to Rs.19,76,23,060/­   during   the   period   of demonetization.   The   respondent,   therefore, made   an   addition   of   Rs.11,81,85,010/­   on account of cash deposited by the petitioners. The Assessing Officer also made an addition of Rs.51,99,656/­ on account of cash on hand and further added Rs.99,25,000/­ on account of time deposits with the bank, as per the information

received

and information collected  under  Section  133(6)  of  the  Act, 1961. The Assessing Officer thus assessed the income of Rs.13,45,28,236/­.

period

amounting

to Rs.19,76,23,060/­,   no   notice   was   given   by   the respondent calling upon the petitioners to show cause with regard to the additions made in the assessment   order.   It   was,   therefore,   submitted that, the impugned assessment order is required to be quashed and set aside.

amounting

for Rs.7,94,38,050/­.   Similarly,   the   details   with regard to the information collected under Section 133(6)   of   the   Act   from   the   bank   for   the   time deposit of Rs.99,25,000/­ was also not provided to   the   petitioners,   so   as   to   seek   explanation before making additions.

“14. The power to issue prerogative writs under Article   226   of   the   Constitution   is   plenary   in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the   nature   of   habeas   corpus,   mandamus, prohibition, quo warranto and certiorari for the enforcement   of   any   of   the   fundamental   rights contained   in   Part   III   of   the   Constitution   but also for “any other purpose”. 15. namely,   K.S.Rashid   &   Son   Vs.   The   Income   Tax Investigation Commissioner AIR 1954 SC 207 which reiterated the above proposition and held that where alternative remedy existed, it would be a sound   exercise   of   discretion   to   refuse   to interfere in a petition under  Article 226. This proposition   was,   however,   qualified   by   the significant   words,   "unless   there   are   good grounds   therefor",   which   indicated   that alternative   remedy   would   not   operate   as   an absolute   bar   and   that   Writ   Petition   under Article   226  could   still   be   entertained   in exceptional circumstances.

Bench

of this Court

in A.V.Venkateswaran, Collector  of Customs.  Bombay vs Ramchand Sobhraj Wadhwani & Anr. AIR 1961 SC 1506   and   was   affirmed   and   followed   in   the following words: "The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions   which   the   learned   solicitor   General formulated to the normal rule as to the effect of   the   existence   of   an   adequate   alternative remedy were by no means exhaustive and (2) that even beyond them a discretion vested in the High Court   to   have   entertained   the   petition   and granted   the   petitioner   relief   notwithstanding the existence of an alternative remedy. We need only   add   that   the   broad   lines   of   the   general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be   dependent   on   a   variety   of   individual   facts which   must   govern   the   proper   exercise   of   the discretion of the Court, and that in a matter which is thus per­eminently one of discretion, it is not possible or even if it were, it would not   be   desirable   to   lay   down   inflexible   rules which should be applied with rigidity in every case which comes up before the Court".

“6. Even   if   the   period   of   time   fixed   under Section 132 (5) is held to be mandatory that was satisfied when the first order was made. Thereafter   if   any   direction   is   given   under Section   132   (12)   or   by   a   Court   in   writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under Section 132 (5). Once the order has been made within ninety days the aggrieved person has   got   the   right   to   approach   the   notified authority under Section 132 (11) within thirty days and that authority can direct the Income­ tax Officer to pass a fresh order. We cannot accept   the   contention   on   behalf   of   the respondents   that   even   such   a   fresh   order should be passed within ninety days. It would make the sub­sections (11) and (12) of S. 132 ridiculous and useless. It cannot be said that what the notified authority could direct under Section 132 could not be done by a Court which exercises its powers under Article 226 of the Constitution. To hold otherwise would make the powers   of   courts   under   Article   226   wholly ineffective.   The   Court   in   exercising   its powers   under   Article   226   has   to   mould   the remedy to split the facts of a case. If in a particular case a Court takes the view that the Income­tax Officer while passing an order under Section 132 (5) did not give an adequate opportunity to the party concerned it should not be left with the only option of quashing it and putting the party at an advantage even though   it   may   be   satisfied   that   on   the material before him the conclusion arrived at by   the   Income­tax   Officer   was   correct   or dismissing the petition because otherwise the party would get unfair advantage. The power to quash   an   order   under   Article   226   can   be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it. But in the circumstances of a case the Court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the   order   of   the   authority   which   has   the jurisdiction is vitiated by circumstances like failure to observe the principles of natural justice   the   Court   may   quash   the   order   and direct the authority to dispose of the matter afresh   after   giving   the   aggrieved   party   a reasonable opportunity of putting forward its case. Otherwise, it would mean that where a Court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case. A Division Bench of the Punjab High Court, in C. I. T. v. Ramesh Chander ,93 ITR 450 at p. 478 = (1973) Tax LR 1427 at p. 1440 (Punj) ) took the view that what the notified authority could do under Section 132 (12) a Court could do in writ proceedings. Though the observation was obiter we consider that it is correct. In this connection we must refer to the decision of the Gujarat High Court, relied upon by the respondents,   in   Ramjibhai   Kalidas   v.   I.   G. Desai, (1971) 80 ITR 721 (Guj). In that case it was held that Rule 112­A, which provides that   a   show   cause   notice   in   respect   of   an inquiry under Section 132 (5) is to be made within 15 days from the date of the seizure, is mandatory and if that is not done no order under Section 132 (5) can be passed. It seems to have been admitted before the Bench by the Advocate General who appeared on behalf of the Revenue   that   he   did   not   dispute   that   the period of ninety days prescribed under Section 132 (5) is a mandatory period. That decision is,   therefore,   no   authority   for   the proposition   that   the   period   fixed   under Section 132 (5) is mandatory. But even if it were   the   decision   that   R.   112­A   is   also mandatory is clearly erroneous. When Section 132 (5) permits an Income­tax Officer to pass an order within ninety days that power cannot be in any way whittled down by a rule made under that section.

Syndicate

v.

Inland

Revenue Commissioners;   (1921­1KB   64   at   p.   71), referred to with approval in the decision in Commr. of Income­tax v. Ajax Products Ltd., 55 ITR 741 at p. 747 = (AIR 1965 SC 1358 at pp. 1361, 1362), that : "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One   can   only   look   fairly   at   the   language used." We do not consider that every provision of a taxing statute will fall within this rule. The question whether a certain provision of law is directory   does   not   fall   to   be   decided   on different standards because it is found in a taxing statute. There is no rule that every provision   in   a  taxing   statute   is   mandatory. The   strict   construction   that   a  citizen   does not   become   liable   to   tax   unless   he   comes within the specific words of a statute is a different proposition. That a person cannot be taxed on the principle of estoppel does not admit   of   much   argument.   Article   265   of   the Constitution lays down that no tax shall be levied except when authorised by law.

“10. The case has been dealt with throughout on the basis that if S. 153 (3) (ii) of the Act applies, and the bar of limitation thereby removed, it is immaterial that the assessments have been made under S. 147 (a) of the Act. The question, therefore, is whether S. 153 (3) (ii) can be invoked. It is not contended on behalf   of   the   assessees   that   they   are   not covered by the expression "any person" in S. 153 (3) (ii) of the Act. The only contention is that there is no "finding" or "direction" within the meaning of S. 153 (3) (ii) of the Act   in   the   order   of   the   Appellant   Assistant Commissioner   in   consequence   of   which   or   to give effect to which the impugned assessments have been made.

Assistant

Commissioner

had necessarily   to   inquire   into   a   matter   which covered   the   subject   matter   of   both   the appeals.

reassessments

and recomputation   which   may,   subject   to   the provisions   of   sub­sections   (3)   and   (5),   be completed— (i)   where   the   assessment,   reassessment   or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or  section 264  or in an order of any court in a proceeding otherwise than by way of appeal   or   reference   under   this   Act,   on   or before the expiry of twelve months from the end   of   the   month   in   which   such   order   is received   or   passed   by   the   Principal Commissioner or Commissioner, as the case may be; or (ii)   where,   in   the   case   of   a   firm,   an assessment is made on a partner of the firm in consequence of an assessment made on the firm under  section 147, on or before the expiry of twelve   months   from   the   end   of   the   month   in which the assessment order in the case of the firm is passed.”

in clear terms  lifts the bar of limitation   for   reopening   of   assessments   to which   certain   periods   of   limitation   are prescribed under s. 153(1)  and (2) of the Act. Sri   Ramabhadran   also   does   not   dispute   this position   also.   But,   he   contends   that   the words   "or   in   an   order   of   any   court   in   a proceeding otherwise than by way of appeal or reference under this Act" should be given a restricted   meaning   and   should   be   read   as referable to proceedings of the very assessee for the very assessment period either before a High Court or the Supreme Court that can deal   with   an   assessment   under   the Constitution and not to every order of every court   in   other   legal   proceedings   like   the land acquisition proceedings. Maxwell   on   the   Interpretation   of   Statutes (eleventh   edition)   states   the   very   first principle   of   construction   of   statutes   in these words : "A   statute   is   the   will   of   the   legislature, and   the   fundamental   rule   of   interpretation, to which all others are subordinate, is that a   statute   is   to   be   expounded   'according   to the   intent   of   them   that   made   it'.   If   the words   of   the   statute   are   in   themselves precise and unambiguous, no more is necessary than to expound these words in their natural and ordinary  sense,  the words themselves  in such case best declaring the intention of the legislature." Bearing   this   very   first   principle,   it   is necessary   to   ascertain   the   true   scope   and ambit of s. 153(3)(ii) of the Act. The language of ss. 150 and 153(3)(ii) of the Act, which   are   not   also   similar,   govern   two entirely   different   situations.   The   two provisions   do   not   govern   one   and   the   same situation. While s. 150 of the Act, as explained by me in Consolidated Coffee Limited's case , is intended to give effect to the orders made by   the   superior   authorities   and   superior courts without any period of limitation, section 153(3)  of   the   Act   has   not   been   enacted   to achieve that very purpose. In this view, the very construction placed on s. 150  of the Act cannot legitimately be placed on s. 153(3) of the Act. The   first   part   of s. 153(3)(ii)  deals   with   a finding   or   direction   contained   in   an   order made under ss. 250, 254, 260, 262, 263 and 264 of the Act. When there is an order  made under any of these sections then and then only the first part of clause (ii) of sub­s. (3) of s. 153  operates.   That   there   is   no   order   made under any of these sections to invoke s. 153(3) of the Act, is not in dispute also. But,   in   the   second   part   of   clause   (ii)   of sub­s. (3) of s. 153 of the Act, the words used are "an order of any court in a proceeding otherwise than by way of appeal or reference under   this   Act".   "An   order   of   any   court" means an order of any and every court in the country.   The   hierarchy   and   status   of   the court   in   the   country   is   not   decisive.   All that this provision provides is that it must be a court and there must be an order of a court. The nature of the court and the nature of   the   order   made   by   the   court   have   no relevance. If there is an order of a court, whatever   be   its   status,   then   the   bar   of limitation

is automatically

lifted. Acceptance   of   any   other   construction,   and more   so   the   construction   suggested   by   Sri Ramabhadran   on   these   words,   would   really

result   in   legislation   in   the   guise   of interpretation, which is impermissible. Section 153(3)

is not a charging section but is only   a   machinery   provision.   It   is   well settled   that   machinery   provisions   should   be construed liberally. Applying this principle, as also the first principle  of construction of statutes, namely, that the statute has to be expounded according to the intent of them who made it, it is not possible to accede to the construction

suggested

by Sri Ramabhadran. In New Jehangir Vakil Mills' case [1979] 117 ITR 849, the Gujarat High Court, examining a similar question, has expressed thus (p. 857) : "It   is   clear   that   once   the   amount   of compensation   is   finally   determined   in judicial proceedings, effect to that finding will have to be given with reference to the year in which possession was taken and since that   is   so,   by   virtue   of s. 153(3)(ii),   the question   of   limitation   would   not   arise   for consideration. That is the prima facie view which appears to us at the present stage." Sri

Ramabhadran

contends

that this enunciation   made   by   their   Lordships   of   the Gujarat   High   Court,   without   any   discussion and reasons,  was not necessary for deciding the case that arose before this court. Even assuming that Sri Ramabhadran is right in his submission,   in   that   event   also,   the   above

conclusion accords with the view expressed by me. With respect, I am in complete agreement with the view expressed by their Lordships in New Jehangir Vakil Mills' case . On the above discussion, it follows that the impugned notices have to be upheld as validly issued  under  section 147(b)  and s. 153(3)(ii)  of the Act.”

classes

of assessments, reassessments and recomputations which may be completed   any   time...   (ii)   where   the assessment, reassessment or recomputation is made   on   the   assessee   or   any   person   in consequence   of   or   to   give   effect   to   any finding   or   direction   contained   in   an order,.... or in an order of any court in a proceeding otherwise than by way of appeal or reference   under   this   Act.   It   is   clear   that once   the   amount   of   compensation   is   finally determined in judicial proceedings, effect to that   finding   will   have   to   be   given   with reference to the year in which possession was taken and since that is so, by virtue of  s. 153(3)(ii), the  question   of limitation  would not   arise   for   consideration.   That   is   the prima facie view which appears to us at the present   stage.   In   view   of   this   prima   facie view, it is not necessary that any direction should be given so as to save or prevent the bar of limitation from operating against the income­tax   authorities   as   apprehended   by them.   Under   these   circumstances,   the directions which were sought for availing of alternative remedy are not necessary at all. Under   these   circumstances,   the   Tribunal   was right   in   refusing   to   give   directions   as   it did.   The   question   in   Reference   No.   124   of 1978   must,   therefore,   be   answered   in   the affirmative,   that   is,   in   favour   of   the assessee and against the revenue.”

(J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) Pradhyuman/Alok