M/S DAULAT RAM TIRLOK CHAND vs. ASST. COMMISSIONER OF INCOME TAX

C.W. P. No. 18450 of 1991 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 18450 of 1991 (O&M) Date of decision: 7.1.2011 M/s Daulat Ram Tirlok Chand ..Petitioner v. Assistant Commissioner of Income Tax .. Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Akshay Bhan, Advocate for the petitioner. Mr. Yogesh Putney, Advocate for the respondent. ... Rajesh Bindal J. The petitioner has approached this court by filing the present petition seeking quashing of notices (Annexures P4 and P5) and the proceedings initiated in consequence thereof. Further prayer has been made for a direction to the respondent to refund the amount of tax already deposited by it at the time of filing of return. The facts, as stated in the petition, are that the petitioner-firm submitted his return of income for the assessment year 1988-89 on 30.8.1988 disclosing his taxable income at ` 59,985/-. On 6.8.1991, the respondent issued notice to the petitioner under Section 143(3) of the Income-tax Act, 1961 (for short, `the Act') for assessing the income, which allegedly escaped assessment. Reply to the notice was submitted. Thereafter, notice under Section 148 of the Act was issued to the petitioner on 16.9.1991 asking the petitioner to file the return. The same was replied to by the petitioner stating therein that no notice under Section 148 of the Act, as stated in notice dated 16.9.1991, was ever received by the petitioner in

C.W. P. No. 18450 of 1991 [2] March, 1990. No assessment on the basis of return initially filed by the petitioner can be framed at this stage, as the same got time barred on 31.3.1990 and in case no assessment had been framed originally, proceedings under Section 148 of the Act could not be initiated. The petitioner also asked for reasons, if any, recorded for issuance of notice under Section 148 of the Act, though return was also filed under protest. Challenge was made in the petition to the notice issued for re-assessment. It was also prayed that during the year in question, the petitioner had deposited ` 4,125/- as advance tax and no regular assessment having been framed assessing that amount of tax, the amount deserves to be refunded to him. Reply to the petition was filed by the department controverting the allegations raised by the petitioner in the petition. The prayer was for dismissal of the writ petition. The petitioner filed replication reiterating what was stated in the petition. Learned counsel for the petitioner submitted that after the filing of return for the assessment year in question on 30.8.1988, no assessment was framed. Section 153(1)(a)(iii) of the Act provides for limitation for framing the assessment, in terms of which no order of assessment could be made under Section 153 of the Act or under Section 144 of the Act at any time after the expiry of two years from the end of assessment year in which the income was first assessable. In the present case, the assessment year being 1988-89, the assessment at the most could be framed upto 31.3.1991. The notice, which was allegedly issued under Section 148 of the Act in March, 1990, was never served upon the petitioner. The fact that no assessment was framed is evident from a communication dated 26.11.1990 received by the petitioner from the Assistant Commissioner of Income-tax, Investigation Circle, Ambala, wherein it was stated that from the memory of the signatory of the communication and his staff members, assessment of the petitioner under Section 143(3) of the Act was never completed. If the assessment had not been completed, there was no question of issuance of notice under Sections 147/148 of the Act. Further, at the time of issuance of notice under Section 148 of the Act in March, 1990, as is sought to be claimed by the department, the assessment proceedings itself were pending.

C.W. P. No. 18450 of 1991 [3] As far as claim for refund of the amount of advance tax by the petitioner is concerned, the petitioner fairly stated that he does not wish to press for that relief. On the other hand, learned counsel for the revenue inter alia submitted that the petitioner in the present case has effective alternative remedy to approach the officer concerned by raising whatever objection he wishes to raise to the initiation of proceedings under Sections 147/148 of the Act. He further submitted that assessment of the petitioner in fact was framed during the period of limitation. Thereafter, search and seizure operation was carried out at the premises of the petitioner on 5.5.1989 and certain incriminating documents were found. The proceedings under Sections 147/148 of the Act were initiated in March, 1990 on the basis of the material found during the course of search. He further submitted that on account of fire in the Income-tax office at Ambala on 21.9.1990 and at Kurukshetra on 22.9.1990 during Anti-Mandal Commission agitation, lot of records were burnt which included some record of the petitioner. Learned counsel further submitted that the name of the petitioner appeared at Sr. No. 76 in the list submitted to the Commissioner of Income-tx, which contained the names of cases where notices under Section 148 of the Act were issued. From the list, it was evident that assessment proceedings against the petitioner under Sections 147/148 of the Act were pending, as the notice had been served upon him on 31.3.1990, though there was no written proof available as the record had been burnt in the fire. It was further submitted that jurisdiction of the assessee upto the date of search and seizure operation, i.e., 5.5.1989 was with Income-tax Officer, Kurukshetra. Enquiries from him revealed that in the demand and collection register for the assessment year 1988-89, the note of demand of ` 74/- created on 27.2.1989 was carried over at Sr. No. 236 of the AVS Demand and Collection register for the assessment year 1990-91. Thus, it is evident that his assessment for the year in question had already been completed. Summing up the submissions, learned counsel stated that in view of the peculiar facts and circumstances of the case when part of the record has been burnt in the fire, but still there is some material available with the department which established that assessment of the petitioner had been completed prior to the search and seizure operation carried out at his

C.W. P. No. 18450 of 1991 [4] premises and thereafter notice under Sections 147/148 of the Act was issued. As there was no case made out by the petitioner for quashing of the notice and consequential proceedings initiated thereupon, mere reliance upon a letter written by the Assistant Commissioner of Income-tax, Investigation Circle, Ambala, which is based upon his memory is neither here nor there. Heard learned counsel for the parties and perused the paper book. As far as the claim for refund of amount of advance tax deposited by the petitioner is concerned, the petitioner himself was fair enough to state that he does not press for the relief. Even otherwise, it is not admissible to him considering the judgment of Hon'ble the Supreme Court in Commissioner of Income Tax v. Shelly Products and another, (2003) 261 ITR 367 (SC). As far as prayer for setting aside of the notices issued to the petitioner under Sections 147/148 of the Act is concerned, in the factual matrix, as have been narrated above, in our opinion, considering the case in hand to be peculiar on account of the fact that part of the records was burnt in Anti-Mandal Commission agitation, but still the department claims that there is some supporting record available which establishes framing of the assessment; search and seizure operation and also issuance and service of notice under Sections 147/148 of the Act, in our opinion, the matter needs to be considered by the competent authority at the first instance, who will consider the objections regarding initiation of re-assessment proceedings and decide the same before proceeding further to frame the assessment. The writ petition is disposed of accordingly. ( Rajesh Bindal ) Judge (Adarsh Kumar Goel) Judge 7.1.2011 mk