COUNTRY LIQUOR RETAIL SHOP THROUGH ITS PARTNER NITIN DATTATRAYA SONAR vs. MINISTRY OF FINANCE THROUGH CENTRAL BOARD OF DIRECT TAXES AND OTHERS

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WP/10897/2023HC BombayHCBM03034711202320 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, meaning it had been decided by previous judgments. The court found that the revenue's advocate was unable to provide any record to substantiate that the impugned notice was issued within three years of the assessment year or that the amount of escaped assessment was more than Rs. 50,00,000/-. Consequently, the court allowed the writ petition in terms of prayer clauses C, C-1, and C-2. The ratio decidendi is that a notice under Section 148 for escaped assessment, when issued beyond three years and for an amount less than Rs. 50,00,000/-, is invalid under Section 149(1)(b) of the Income Tax Act, 1961, unless the revenue can prove otherwise from the record. The operative direction was to allow the petition, implying the quashing of the notice.

What were the facts?

The petitioner, a partnership firm operating a country liquor retail shop, filed a writ petition before the Bombay High Court, Aurangabad Bench. The petition challenged a notice issued under Section 148 of the Income Tax Act, 1961, for escaped assessment for Assessment Year 2017-2018. The petitioner contended that the notice was invalid as it was issued beyond three years from the end of the relevant assessment year, and the amount of escaped assessment was less than Rs. 50,00,000/-. The revenue, represented by the Ministry of Finance and others, argued the case. The court noted that the issue of escaped assessment involved an amount less than 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, issued beyond three years from the end of the relevant assessment year, is valid when the amount of escaped assessment is less than Rs. 50,00,000/-, as per Section 149(1)(b) of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that the notice under Section 148 was invalid because it was issued beyond three years and the escaped income was below Rs. 50,00,000/-, which contravenes the conditions stipulated in Section 149(1)(b) of the Income Tax Act, 1961. They relied on the principle that such notices can only be issued within ten years if the escaped income exceeds Rs. 50,00,000/-, and within three years otherwise. Revenue's Contention: The revenue, through its advocate, was unable to demonstrate from the record that the impugned notice was issued within three years or that the amount of escaped assessment exceeded Rs. 50,00,000/-.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 149(1)(b)

AI-generated summary — verify with the full judgment below

911-WP-10897-2023.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO. 10897 OF 2023 Country Liquor Retail Shop a partnership firm Through its Proprietor Nitin S/o Dattatraya Sonar 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’, ‘C-1’ & ‘C-2’.

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:6493-DB

911-WP-10897-2023.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 Clauses ‘C’, ‘C-1’ & ‘C-2’. (R. M. JOSHI, J) (RAVINDRA V. GHUGE, J) Malani

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