BUNTY KHANNA vs. INCOME TAX OFFICER AND OTHERS

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CWP/9506/2022HC Punjab & HaryanaPHHC01045612202205 May 2023Author: MS. JUSTICE RITU BAHRI,MRS. JUSTICE MANISHA BATRA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the petition. The court found no merit in the petitioner's plea to quash the impugned order and notice. The reasoning was primarily based on the respondents' submission that the petitioner had an alternative and efficacious remedy available under the Income Tax Act, 1961. The court relied on the Supreme Court's judgment in Commissioner of Income Tax and others vs. Chhabil Das Agarwal (2014) 1 SCC 603, which emphasizes that the Income Tax Act provides a complete machinery for assessment and reassessment, and assessees are generally expected to exhaust these remedies before approaching the High Court under Article 226 of the Constitution. The court noted that the respondents had filed a reply detailing the petitioner's alleged use of the surrendered PAN for significant financial transactions and non-declaration of bank accounts, suggesting undisclosed income. Given the availability of the statutory remedy and the Supreme Court's precedent, the High Court declined to interfere at this stage.

What were the facts?

The petitioner, Bunty Khanna, is challenging an order dated 01.04.2022 passed under Section 148A(d) and a notice dated 01.04.2022 under Section 148 of the Income Tax Act. The petitioner claims to be a regular assessee who was issued two PANs: ABJPK3615M and AFKPK8017L. He filed an application on 26.03.2014 to surrender the first PAN. Despite this, he received a notice on 21.03.2022 for re-assessment proceedings for AY 2015-16. He replied, clarifying the PAN surrender, but the respondent proceeded with the assessment on the surrendered PAN. The respondents, in their reply, state that the petitioner was using both PANs during FY 2014-2015 and maintained a bank account (No. 26190500000034) with Bank of Baroda attached to PAN ABJPK3615M, with transactions totaling Rs. 1,31,62,300/-. They allege this PAN was used for unexplained cash deposits and the account was not declared. The escaped income is stated to be over Rs. 50 Lakhs.

What were the issues?

1. Whether the High Court should entertain a writ petition challenging reassessment proceedings when an alternative remedy is available under the Income Tax Act, 1961, as per the ruling in Commissioner of Income Tax and others vs. Chhabil Das Agarwal (2014) 1 SCC 603? Assessee's contention: The petitioner argues that the respondents have not processed his application for surrender of PAN dated 26.03.2014 and proceeded to issue notices and orders under Sections 148A and 148 of the Income Tax Act on a surrendered PAN, despite his clarifications. He seeks to quash these orders. Revenue's contention: The respondents contend that the petitioner has approached the court prematurely as the proceedings are not yet complete. They assert that the petitioner was using the PAN ABJPK3615M during FY 2014-2015, maintaining a bank account with significant transactions that were not declared, indicating unexplained cash and undisclosed income. They also highlight that Section 149 of the Income Tax Act, as modified by the Finance Act, 2021, allows for reopening of cases within three years or up to ten years under specific conditions. They rely on the Supreme Court's decision in Chhabil Das Agarwal's case, stating that the Income Tax Act provides a complete machinery for assessment/reassessment and the High Court's jurisdiction under Article 226 should not be invoked.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 149

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

CWP No.9506 of 2022 (O&M)

Date of decision: 05.05.2023 Bunty Khanna .....Petitioner Versus Income Tax Officer and others

.....Respondents CORAM:HON'BLE MS. JUSTICE RITU BAHRI HON'BLE MRS. JUSTICE MANISHA BATRA Present: Mr. Nikhil Goyal, Advocate, for the petitioner. Ms. Gauri Neo Rampal, Senior Standing Counsel, for the respondents.. *** Ritu Bahri, J. CM-12740-CWP-2022 Reply, filed on behalf of respondent No.2, is taken on record. Misc. application stands allowed accordingly.

Petitioner is seeking a writ in the nature of certiorari quashing the order dated 01.04.2022 (Annexure P-7) passed under Section 148A (d) of the Income Tax Act and notice dated 01.04.2022 (Annexure P-8) under Section 148 of the Income Tax Act on the ground that the respondents have not processed the application for surrender of PAN filed by the petitioner on 26.03.2014 (Annexure P-2). As per petitioner, he is a regular income tax assessee and was AJAY PRASHER 2023.05.11 11:05 integrity of this document -2- allotted PAN ABJPK3615M by the Income Tax Department. However, due to some correction in PAN data undertaken by the petitioner, two PANs were issued. The second PAN was AFKPK8017L. The petitioner, thereafter, started filing his return of income on the PAN AKFPK8017L. After coming to know that petitioner was holding two PAN cards, he voluntarily filed an application dated 26.03.2014 (Annexure P-2) for surrender of PAN ABJPK3615M before respondent No.

1.

Keeping in view the above fact, petitioner received a letter dated 30.01.2016 (Annexure P-3) stating that return with respect to PAN ABJPK3615M had not been filed. Thereafter, the petitioner made a request on Centralised Public Grievance Redress and Monitoring System (CPGRAMS) before respondent No.3 on 14.08.2016 (Annexure P-4). The petitioner was under bonafide belief that application for surrender of PAN had been processed by respondent Nos.1 and 3. On 21.03.2022, the petitioner was issued a notice (Annexure P-5) under Section 148A (b) of the Income Tax Act to initiate re-assessment proceedings for the assessment year 2015-16. To the said notice, petitioner filed his reply (Annexure P-6) clarifying the fact that the aforesaid PAN had already been surrendered by him. Despite the clarification given by the petitioner vide his reply (Annexure P-6), respondent No.1 proceeded to conduct the assessment on the surrendered PAN by passing an order under Section 148A (d) of the Act (Annexure P-7). Thereafter, a notice dated 01.04.2022 (Annexure P-8) under Section 148 of the Act was also issued to the petitioner. Hence, the present petition. Upon notice, reply dated 02.08.2022 on behalf of respondent No.2, has been filed, wherein it has been stated that the petitioner has approached this Court at a pre-mature stage, as the proceedings initiated are yet to be AJAY PRASHER 2023.05.11 11:05 integrity of this document -3- completed by the adjudicating authority. On merits, it is stated that the petitioner was holding two PANs i.e. AKFPK8017L and ABJPK3615M during the financial year 2014-2015 and he had filed his income tax return under the PAN AKFPK8017L. Although he is claiming to have intimated the department for surrender of PAN ABJPK3615M vide letter dated 26.03.2014, but the fact of the matter is that he was using this PAN during the financial year 2014-2015 with the Bank of Baroda and was maintaining the bank account No.26190500000034, attached with PAN ABJPK3615M. As per information available with the department, the assessee had made transactions of Rs.1,31,62,300/- in this bank account. The second pan was being intentionally used by the assessee for depositing unexplained cash generated by him. He had not declared the given bank account in his books. In this backdrop, case of the petitioner was re-opened on the basis of the information available on database of the department under PAN ABJPK3615M and the re-assessment is to be completed on the same PAN of the assessee. Copies of the information available on the Insight Portal and undisclosed bank account are attached as Annexures R-1 and R-2. It is further stated that petitioner is maintaining three bank accounts and details of the third account has not been reported by the assessee. The details of three bank accounts are given as under:- Sr. No. Bank Address Account No. IFSC Code Type

1.

Oriental Bank of Commerce Sector 21 07442191021359 ORBC0100744 Saving 2 State Bank of Patiala 55141414195 STBP0000885 Saving 3 Bank

of Baroda Sector 44 26190100002160 BARBAGRCHA Saving (Prima ry) Details of the saving bank account in Bank of Baroda, Sector 44, AJAY PRASHER 2023.05.11 11:05 integrity of this document -4- in which transaction of Rs.1,31,62,300/- was done, had not been reported, which requires to be re-examined. It is believed that the cash deposited in this account is not from business proceeds, but it is the unexplained cash of the assessee from his undisclosed income. The escaped income is more than Rs.50 Lakhs. Section 149 of the Income Tax Act is modified by Finance Act, 2021 and now any case can be reopened within three years from the end of relevant assessment year as per clause (a) of Section 149(1) of the Act, if the Assessing Officer has information, which suggests that income chargeable to tax has escaped assessment as prescribed in Explanation 1 to Section 148 and upto 10 years as provided in Clause (b) of Section 149 (1). The petitioner has alternative remedy under the Act as held by Hon’ble the Supreme Court in complete machinery for assessment/reassessment of tax. The assessee is not permitted to abandon that machinery and invoke jurisdiction of High Court under Article 226. Keeping in view the reply filed by respondent No.2 and the ratio of the judgment passed in Chhabil Das Agarwal’s case, no ground for quashing of the impugned order is made out. Resultantly, finding no merit, present petition is dismissed. (RITU BAHRI)

JUDGE 05.05.2023

(MANISHA BATRA) ajp JUDGE

Whether speaking/reasoned: Yes/No Whether reportable : Yes/No AJAY PRASHER 2023.05.11 11:05 integrity of this document

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