CARMEL MERCHANTS PVT LTD vs. UNION OF INDIA AND ORS

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WPO/1957/2022HC CalcuttaWBCHCO002751202220 April 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN3 pages
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What did the High Court hold?

The Calcutta High Court held that the impugned notice under Section 148 of the Income Tax Act, 1961, and all subsequent proceedings were quashed. The Court found that the assessing officer had admittedly not issued a notice under Section 148A before issuing the notice under Section 148, which is a mandatory requirement under the amended provisions for cases falling under the new regime. The Court relied on its previous decisions in similar cases. However, the quashing of the notice and proceedings was without prejudice to the rights of the assessing officer to issue a fresh notice in accordance with the law in the future. The Court also imposed a cost of Rs. 5000/- on the petitioner for the delay in filing the writ petition without explanation.

What were the facts?

The petitioner, Carmel Merchants Pvt Ltd, challenged a notice issued under Section 148 of the Income Tax Act, 1961. The petitioner argued that the notice was issued after March 31, 2021, and that the assessing officer failed to comply with the mandatory requirement of issuing a notice under Section 148A of the Act before issuing the Section 148 notice, as stipulated by the newly amended provisions. The petitioner also relied on previous judgments of the Calcutta High Court in similar matters. The revenue was represented by the Union of India and others. The petitioner also filed a supplementary affidavit indicating that a final assessment order had not yet been passed.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, is invalid for non-compliance with the mandatory requirement of issuing a notice under Section 148A of the Act prior to its issuance, especially when the notice was issued after March 31, 2021. Assessee's Contentions: The petitioner contended that the notice under Section 148 was issued in violation of Section 148A, which mandates a prior inquiry and opportunity to be heard before issuing such a notice. This violation renders the notice and subsequent proceedings void. The petitioner relied on the decisions in Bagaria Properties and Investment Private Limited & Anr. vs. Union of India & Ors. and Monoj Jain vs. Union of India. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 147

AI-generated summary — verify with the full judgment below

OD – 13 ORDER SHEET WPO/1957/2022 IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURISDICTION ORIGINAL SIDE CARMEL MERCHANTS PVT LTD VS UNION OF INDIA AND ORS. BEFORE: The Hon'ble JUSTICE MD. NIZAMUDDIN Date : 20th April, 2022. Appearance: Mr. Hemant Tiwari, Adv. …For the Petitioner Mr. Prithu Dudhoria, Adv. …For the U.O.I. The Court : In this matter, petitioner has filed supplementary affidavit with supporting document to show that final assessment order has not been passed in this matter, which may be kept with the records. Heard learned advocates appearing for the parties. In this matter, petitioner has challenged the impugned notice under Section 148 of the Income Tax Act, 1961 which was issued after 31st March, 2021 with supporting documents on the ground that this case clearly falls under the newly amended act relating to proceedings under Section 147 of the Act and under which there is a mandatory obligation on the part of the assessing officer to issue notice under Section 148A of the Act before issuing any notice under Section 148 of the Act and which has admittedly not done by the assessing officer

2 and the impugned notice under Section 148 of the Act has been issued violation of Section 148A of the Act. Furthermore this case is directly covered by the orders of this Court in the case of Bagaria Properties and Investment Private Limited & Anr. vs. Union of India & Ors. reported in (2022) 134 taxman.com 196 (Calcutta) and also in the case of Monoj Jain vs. Union of India reported in (2022) 134 taxman.com 173 (Calcutta). Considering these facts I hold the impugned notice under Section 148 of the Act and all subsequent proceedings are quashed. However, quashing of the impugned notice and subsequent proceedings will not debar the assessing officer concerned to issue any fresh notice in future in accordance with law. With the above observations, this Writ Petition being WPO No.1957/2022 is disposed of. This writ petition is being entertained subject to payment of cost of Rs. 5000/- to the High Court Legal Services Committee since the impugned notices under Section 148 of the Income Tax Act, 1961, have been issued both on 22nd April, 2021 as appear from records and this writ petition has been filed in April, 2022, that is, almost after eleven months from receipt of the impugned notices, without any explanation for such delay in filing this writ petition. Such cost has to be paid by the petitioner to the High Court Legal Services Committee within ten days from date and such cost will be utilised for the benefit and welfare of the children staying with their parents in the

3 correctional home in West Bengal. Receipt of payment is to be produced by the petitioner before this Court. List this matter as “To be Mentioned” on 2nd May, 2022 for compliance. Urgent certified photocopy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities. (MD. NIZAMUDDIN, J.) TR/

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