DESHI DARU KIRKOL VIKRI DUKAN THROUGH ITS PROPRIETOR vs. MINISTRY OF FINANCE THROUGH CENTRAL BOARD OF DIRECT TAXES AND OTHERS

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WP/10578/2023HC BombayHCBM03032860202320 March 2024Author: HON'BLE SHRI JUSTICE RAVINDRA V. GHUGE,HON'BLE SHRI JUSTICE R. M. JOSHI2 pages
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What did the High Court hold?

The High Court held that the issue raised by the Petitioner was no longer res integra. The Court found that the Revenue was unable to provide any material from the record to establish that the impugned notice under Section 148 was issued within three years of the relevant assessment year or that the amount of escaped assessment exceeded Rs. 50,00,000/-. Consequently, the Court concluded that the notice was issued in contravention of the provisions of Section 149(1)(b) of the Income Tax Act, 1961. The writ petition was allowed in terms of prayer clause 'C', which likely involved quashing the notice. The ratio decidendi is that a notice under Section 148 for escaped assessment, when issued beyond three years, must satisfy the conditions of Section 149(1)(b), including the threshold amount of escaped income, failing which it is liable to be quashed.

What were the facts?

The Petitioner, Deshi Daru Kirkol Vikri Dukan, through its Proprietor Vijay S/o Laxman Mahajan, filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961. The notice pertained to the assessment year 2017-2018. The core of the Petitioner's grievance was that the notice for reassessment was issued beyond three years from the end of the relevant assessment year, and the amount of alleged escaped assessment was less than Rs. 50,00,000/-. The Petitioner contended that, as per Section 149(1)(b) of the Act, such a notice could only be issued within ten years if the escaped income exceeded Rs. 50,00,000/-.

What were the issues?

1. Whether a notice under Section 148 of the Income Tax Act, 1961, for escaped assessment for Assessment Year 2017-2018, can be issued beyond three years from the end of the assessment year when the amount of escaped income is less than Rs. 50,00,000/-, contrary to the provisions of Section 149(1)(b) of the Act? The Petitioner argued that the notice under Section 148 was invalid because it was issued beyond the three-year period and the escaped income was below Rs. 50,00,000/-, which is a condition stipulated in Section 149(1)(b) for issuing such a notice beyond three years but within ten years. The Revenue, represented by Mr. A. M. Sharma, was unable to demonstrate from the record that the impugned notice was issued within three years or that the amount of escaped assessment was more than Rs. 50,00,000/-.

Which sections of the Income-tax Act were involved?

Section 148,Section 149(1)(b)

AI-generated summary — verify with the full judgment below

910-WP-10578-2023.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO. 10578 OF 2023 Deshi Daru Kirkol Vikri Dukan Through its Proprietor Vijay S/o Laxman Mahajan VERSUS Ministry of Finance Through And Others ... Mr. R. R. Chandak, Advocate for the Petitioner Mr. A. M. Sharma, Advocate for Respondents ... CORAM : RAVINDRA V. GHUGE & R. M. JOSHI, JJ DATE : MARCH 20, 2024 PER COURT :

1.

The substantive prayer put-forth by the Petitioner is in terms of clause ‘C’.

2.

The only issue raised in this Petition is as regards the escaped assessment of an amount, which is less than Rs.50,00,000/- (Fifty Lakh). As regards the issuance of a notice for reassessment or re-computation under Section 147 of the Income Tax Act, 1961, it is undisputed that the notice was issued under Section 148 of the Income Tax Act, 1961. 3. The Petitioner had filed the income tax returns for the Assessment Year 2017-2018. Hence, the 2024:BHC-AUG:6492-DB

910-WP-10578-2023.odt grievance of the Petitioner is that the notice under Section 148 cannot be issued in the light of Section 149(1)(b) of the Income Tax Act, 1961, with reference to the escaped assessment, if the notice is issued beyond three years of the Assessment Year and if the amount is less than Rs.50,00,000/- (Fifty Lakhs). A notice in such peculiar circumstances could be issued even within ten years, provided the escaped income is more than Rs.50,00,000/- (Fifty Lakhs).

4.

This issue is no longer res-integra. Despite the vehement submissions of the learned Advocate Shri. Sharma, for the Department, he is unable to indicate from the record that the impugned notice was issued within three years and that the amount of escaped assessment was more than Rs.50,00,000/-.

5.

Therefore, this Writ Petition is allowed in terms of prayer Clause ‘C’. (R. M. JOSHI, J) (RAVINDRA V. GHUGE, J) Malani

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