MANJU SHARMA W/O DR. SAMIN KUMAR SHARMA vs. INCOME TAX OFFICER

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CW/9650/2023HC RajasthanRJHC02047810202314 November 2024Bench: AVNEESH JHINGAN,UMA SHANKER VYAS6 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the first ground regarding unsigned notices was not pressed as the petitioner's reply indicated they were digitally signed. Regarding the second issue, the Tribunal noted that the escaped assessment was prima facie stated to be Rs. 1,28,98,518/-, which is more than fifty lakhs, thus the contention that the notice was time-barred could not be accepted at this stage. On the third issue, the Tribunal found that the notices were issued based on material collected during a search on the ARC group, which provided accommodation entries of bogus unsecured loans. The AO had reasons to believe income had escaped assessment, and the sufficiency of these reasons could not be examined at this stage. The Tribunal distinguished the cited Delhi High Court cases, stating that in the present case, information was supplied, an opportunity was granted, and the order was passed after considering the reply. The Tribunal concluded that interference in writ jurisdiction was not warranted as the petitioner had an effective opportunity to raise all pleas during proceedings under Section 148 and subsequent appeals. The petition was dismissed.

What were the facts?

The petitioner, Manju Sharma, filed an income tax return for AY 2019-20 showing a gross total income of Rs. 14,05,181/-. The Income Tax Officer (ITO) issued notices dated 31.03.2023 and 28.04.2023 under Section 148-A of the Income Tax Act, 1961, alleging that despite total receipts of Rs. 1,19,98,518/-, income had escaped assessment. The petitioner responded, stating the return was filed and that an unsecured loan mentioned was repaid, not borrowed in AY 2019-20. The ITO rejected the petitioner's objections via an order dated 28.04.2023. The petitioner filed a writ petition challenging these notices and the order.

What were the issues?

1. Whether the notices issued under Section 148-A(b) of the Income Tax Act, 1961, are void-ab-initio due to being unsigned? (Question of law) 2. Whether the notice dated 28.04.2023, issued after three years, is invalid because the escaped income was less than fifty lakhs, as per Section 148-A of the Act? (Question of mixed law and fact) 3. Whether the proceedings under Section 148-A constitute a fishing and roving enquiry? (Question of law) Assessee's contentions: The notices are unsigned and void-ab-initio. The second notice is time-barred as escaped income is less than fifty lakhs. Proceedings under Section 148-A are for fishing and roving enquiries. Reliance was placed on Usha Rani Girdhar vs. Income Tax Officer (2023) and Catchy Prop-Build Private Limited (2022). Revenue's contentions: The writ petition is not maintainable as the petitioner has alternative remedies of appeal. The department received specific information regarding transactions and accommodation entries. The procedure under Section 148-A was followed, with reasons and material supplied, and objections considered before passing the impugned order.

Which sections of the Income-tax Act were involved?

Section 148-A,Section 148-A(b),Section 148-A(d),Section 143(1),Section 148

AI-generated summary — verify with the full judgment below

[2024:RJ-JP:46956-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 9650/2023 Manju Sharma W/o Dr. Samin Kumar Sharma, Aged About 65 Years, R/o Flat No. 101, First Floor, Plot No. 5, Palm Block Rediant Casa, Near Jawahar Circle, Jaipur. ----Petitioner Versus Income Tax Officer, Wards 5(2), Jaipur, Income Tax Office, Ncr Building, Statue Circle, Jaipur. ----Respondent For Petitioner(s) : Mr. Gunjan Pathak with Mr. Kanishk Singhal, Ms. Ishita Rawat & Mr. Aditya Bohra For Respondent(s) : Mr. Sandeep Pathak with Ms. Jaya P. Pathak HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE UMA SHANKER VYAS Order RESERVED ON:- 08/11/2024 PRONOUNCED ON:-

14/11/2024 AVNEESH JHINGAN, (J):- 1. This petition is filed seeking quashing of notices dated 31.03.2023 and 28.04.2023 issued under Section 148-A of Income Tax Act, 1961 (for short ‘the Act’) for Assessment Year (for brevity ‘AY’) for 2019-20 and order dated 28.04.2023 passed under Section 148-A(d) of the Act. 2. The brief facts are that for AY 2019-20, petitioner filed income tax returns showing a gross total income of Rs.14,05,181/-. The return was processed under Section 143(1) of the Act. Notice dated 31.03.2023 under Section

[2024:RJ-JP:46956-DB] (2 of 6) [CW-9650/2023] 148-A(b) of the Act was issued that inspite of having total receipts of Rs.1,19,98,518/- the income tax return was not filed, the receipts are unexplained and has escaped assessment. The petitioner responded to the notice on 13.04.2023 stating that return was filed on 28.08.2019. Thereafter notice was issued on 20.04.2023 that as per information collected during search conducted on ARC group, two Chartered Accountants and Entry Operators, the petitioner had taken accommodation entries during the relevant year. Petitioner in reply dated 26.04.2023 stated that unsecured loan was not borrowed in the AY 2019-20 rather was repaid. The objections filed by the petitioner were rejected vide order dated 28.04.2023. Hence, the present petition. 3. Learned counsel for the petitioner submits that the notices issued under Section 148A(b) of the Act are unsigned and void-ab-initio. The contention is that the notice dated 28.04.2023 could not have been issued after three years as income escaped was less than fifty lakhs. Reliance is placed on the decision of Delhi High Court in Usha Rani Girdhar versus Income Tax Officer reported in (2023) 334 (Delhi) 596 and Catchy Prop-Build Private Limited (2022) 448 ITR 671 (Delhi). Submission is that fishing and roving enquiries cannot be made in proceedings under Section 148 of the Act.

[2024:RJ-JP:46956-DB] (3 of 6) [CW-9650/2023] 4. As per contra, writ petition is not maintainable. The petitioner has remedy of raising the pleas in proceedings under section 148 and thereafter can avail remedy of appeal. Submission is that the department received specific informations:- (i) petitioner had made transaction to the tune of Rs.1,19,98,518/- in the relevant AY 2019-20 and (ii) had received accommodation entry of rupees nine lakhs of fictitious loan from entry operator. The submission is that on E-filing Portal of the income tax return of the assessee was not available and enquiry could not be conducted with regard to the information received. The procedure under Section 148-A was followed, the reasons along with the relevant material were supplied to the petitioner and after considering the reply filed impugned order was passed. 5. To check the arbitrary exercise of power by the department in reopening the assessments, the procedure to be followed for initiation of proceedings under Section 148 was stipulated under Section 148A of the Act. The return filed by the petitioner was not available on E-filing portal. The department had information of receipts of Rs.1,19,98,518/- by the petitioner during the AY 2019-20 and that petitioner had taken an entry of Rs.9,00,000/- from the entry operator. The material collected during the search conducted on ARC group, two Chartered Accountants and the Entry Operators revealed that ARC group was indulging in providing

[2024:RJ-JP:46956-DB] (4 of 6) [CW-9650/2023] accommodation entries of bogus unsecured loans. The interest charged on loans was repaid back in cash. The group was charging 10% to 15% commission for granting accommodation entries. 6. It is relevant to mention here that in reply filed by the petitioner, the factum of having borrowed an unsecured loan has not been denied. The stand taken is that the loan was not taken during the assessment year 2019-20 but was repaid. 7. The first ground of challenge that the notices being unsigned is not pressed in view of the reply filed that the notices were digitally signed. 8. There cannot be a quarrel with the proposition that the fishy enquiry cannot be made in reassessment proceedings. In the present case, the notices have been issued on the basis of the material collected during search on ARC group. The AO on the basis of the material available had reasons to believe that the income has escaped assessment. The sufficiency of the reasons cannot be gone into at this stage. 9. The reliance of the counsel for the petitioner on the decision of the Delhi High Court is of no avail. In case of Catchy Prop-Build Private Ltd. (supra), the notice issued under Section 148-A was vague and the counsel for the department sought liberty for supplementary notice. In absence of foundation allegation in the initial notice, the prayer for incorporating the issue by supplementary notice

[2024:RJ-JP:46956-DB] (5 of 6) [CW-9650/2023] was rejected. In case of Usha Rani (supra) the assessing authority inspite of realizing that notice was issued on wrong facts, the order under Section 148A(d) was passed. The purpose of issuing notice under Section 148A for giving the assessee a reasonable opportunity to meet the allegations was defeated. 10. Whereas, in the present case, the informations with regard to the availing of bogus accommodation entries by the assessee was with department. The reason and material relied upon was supplied to the petitioner, an opportunity was granted to meet the allegations and thereafter order under Section 148A(d) was passed. 11. The contention that the second notice dated 20.04.2023 being beyond three years is time barred as escaped income is less than fifty lakh, prima facie cannot be accepted at this stage. Suffice to say that as per the notices, there was escaped assessment on income of Rs.1,28,98,518/-. The addition that ultimately would be made cannot be gone into at this stage. 12. It is only in exceptional circumstances that the interference in a writ petition is made in cases where the statute provides remedy. Reference is made to decision of Supreme Court in Commissioner versus Chhabilal Aggarwal reported in 2014 (1) SCC 603.

[2024:RJ-JP:46956-DB] (6 of 6) [CW-9650/2023] 13. The petitioner shall get an effective opportunity to raise all the pleas during the proceedings under Section 148 and if still aggrieved, can avail remedy of appeal. No exceptional case is made out for interference in writ jurisdiction at this stage of passing of order under Section 148 A(d) of the Act. 14. The petition is dismissed. 15. It is clarified that the observation in this order are for limited purpose of deciding the writ petition and shall not be construed as comment on merits of the case. (UMA SHANKER VYAS),J (AVNEESH JHINGAN),J Whether Reportable: Yes Brijesh/163

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