Chhattisgarh High Court Judgments — 2023

The High Court held that the Income Tax Appellate Tribunal (ITAT) was justified in disallowing the deduction under Section 54B of the Income Tax Act, 1961. The Court reasoned that the benefit of Section 54B is available to the 'assessee' as defined under Section 2(7) of the Act. The Court emphasized that in the absence of any ambiguity, the scope of the definition of 'assessee' cannot be enlarged to include the wife of the assessee. Therefore, the exemption clause must be construed strictly. The Court relied on the Supreme Court's decision in Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and Others, which reiterated that exemption clauses in taxing statutes must be interpreted strictly, and a person claiming exemption must establish their entitlement. The Court concluded that since the land was not purchased in the assessee's own name, the deduction under Section 54B could not be allowed. The question of law was answered in favour of the Revenue. The appeal was dismissed.

The High Court disposed of the writ petitions. The revenue, through its counsel, informed the Court that an application had been filed before the Income Tax Settlement Commission (ITSC) to recall its earlier order dated 15.01.2019. The revenue also stated that they had withdrawn the notices issued to the petitioner. The Court noted that the withdrawal memo dated 06.11.2023, issued by the Principal Commissioner of Income Tax, clearly demonstrated the department's decision not to proceed further with the impugned notices. Consequently, as the department had decided to withdraw the notices and not pursue the reassessment proceedings, there was nothing left to adjudicate in the writ petitions. The Court found that the withdrawal of notices rendered the petitions infructuous.

The High Court disposed of the writ petitions. The revenue, through its counsel, informed the Court that an application had been filed before the Income Tax Settlement Commission (ITSC) to recall its earlier order dated 15.01.2019. The revenue also stated that they had withdrawn the notices issued to the petitioner. The Court noted that the withdrawal memo dated 06.11.2023, issued by the Principal Commissioner of Income Tax, clearly demonstrated the department's decision not to proceed further with the impugned notices. Consequently, as the department had decided to withdraw the notices and not pursue the reassessment proceedings, there was nothing left to adjudicate in the writ petitions. The Court found that the withdrawal of notices rendered the petitions infructuous.

The High Court disposed of the writ petitions. The revenue, through its counsel, informed the Court that an application had been filed before the Income Tax Settlement Commission (ITSC) to recall its earlier order dated 15.01.2019. The revenue also stated that they had withdrawn the notices issued to the petitioner. The Court noted that the withdrawal memo dated 06.11.2023, issued by the Principal Commissioner of Income Tax, clearly demonstrated the department's decision not to proceed further with the impugned notices. Consequently, as the department had decided to withdraw the notices and not pursue the reassessment proceedings, there was nothing left to adjudicate in the writ petitions. The Court found that the withdrawal of notices rendered the petitions infructuous.

The High Court allowed the application for restoration of Writ Petition No. 206 of 2023. The Court took into consideration the reasons assigned in the application, which stated that the process fee could not be paid within three days due to inadvertence. Consequently, the writ petition was restored to its original number. However, this restoration was made subject to the condition that the applicant pays a cost of Rs. 2,000/- to the High Court Legal Aid Committee. The Court did not delve into the merits of the original writ petition, as the decision was solely on the restoration application.

The High Court held that the authorities committed an error of law in imposing purchase tax without complying with the provisions of Section 28 of the Sales Tax Act, 1994. The Court noted that Section 28 clearly envisages that for reassessment of escaped turnover, there must be a prior assessment, a reasonable opportunity of hearing, and an inquiry. In this case, the petitioner approached for restoration of an eligibility certificate, and during that process, purchase tax was imposed without a prior assessment, notice, or opportunity of hearing. The Court found that the imposition of purchase tax was done in a proceeding initiated for restoration of the eligibility certificate, not as a reassessment under Section 28. Therefore, the orders passed by the Assistant Commissioner, Additional Commissioner, and the Tribunal were set aside. The matters were remitted back to the Assistant Commissioner to pass fresh orders after affording due opportunity of hearing to the petitioner, strictly in accordance with Section 28 of the Act of 1994. The ratio decidendi is that imposition of tax under Section 28 requires adherence to procedural safeguards, including prior assessment, notice, and hearing.

The High Court held that the authorities committed an error of law in imposing purchase tax without complying with the provisions of Section 28 of the Act of 1994. Section 28 clearly envisages that before imposing tax on escaped assessment, the Commissioner must provide the dealer with a reasonable opportunity of being heard and conduct necessary inquiries. In this case, the court found that no assessment was made prior to imposing the tax, no notice was issued, and no opportunity of hearing was afforded to the petitioner. The imposition of purchase tax occurred during proceedings initiated for the restoration of an eligibility certificate. Consequently, the orders passed by the Assistant Commissioner, Additional Commissioner, and the Tribunal were set aside. The matters were remitted back to the Assistant Commissioner to pass fresh orders after providing the petitioner with due opportunity of hearing, strictly in accordance with Section 28 of the Act of 1994.

The High Court held that the authorities committed an error of law in imposing purchase tax without complying with the provisions of Section 28 of the Sales Tax Act, 1994. The Court noted that Section 28 clearly envisages that for reassessment of escaped turnover, there must be a prior assessment, a reasonable opportunity of hearing, and an inquiry. In this case, the petitioner approached for restoration of an eligibility certificate, and during that process, purchase tax was imposed without a prior assessment, notice, or opportunity of hearing. The Court found that the imposition of purchase tax was done in a proceeding initiated for restoration of the eligibility certificate, not as a reassessment under Section 28. Therefore, the orders passed by the Assistant Commissioner, Additional Commissioner, and the Tribunal were set aside. The matters were remitted back to the Assistant Commissioner to pass fresh orders after affording due opportunity of hearing to the petitioner, strictly in accordance with Section 28 of the Act of 1994. The ratio decidendi is that imposition of tax under Section 28 requires adherence to procedural safeguards, including prior assessment, notice, and hearing.

The High Court of Chhattisgarh, Bilaspur, disposed of the writ petition by directing Respondent No. 2 (NFAC) to consider and decide the petitioner's pending appeal on its merits. The Court acknowledged the submissions from both sides regarding the delay. The reasoning for the decision was based on the facts and circumstances presented, emphasizing the need for timely disposal of pending appeals. The operative direction was for the NFAC to decide the appeal within an outer limit of 60 days from the date of receiving a copy of the order. No specific issue was left undecided; the court's focus was on expediting the appeal process.

The High Court disposed of the writ petition by directing respondent No. 2, the National Faceless Appeal Centre (NAFAC), Delhi, to consider and decide the petitioner's pending appeal on its merits in accordance with law. The Court mandated that this decision should be made as far as possible within an outer limit of 60 days from the date of receipt of a copy of the order. The Court did not delve into the merits of the appeal itself, nor did it make any findings on the validity of the assessment order or the grounds of appeal. The operative direction was solely to expedite the decision-making process by the appellate authority.

The High Court noted that the proceedings under Section 148A of the IT Act were initiated against the petitioner based on a CBI raid at the premises of Shri Sharan Bihari Agrawal. It was observed that the original proceedings initiated against Shri Sharan Bihari Agrawal had been dropped by the department, as evidenced by an order dated April 27, 2023. Without commenting on the merits of the case, the Court directed the petitioner to upload the order dated April 27, 2023, to the faceless portal. The authorities were then directed to consider this order and pass an appropriate order within four weeks from the date of receipt of a copy of the Court's order. The writ petition was disposed of with these observations, and the stay granted earlier was vacated. The Court did not decide the merits of the 'reasons to believe' or the sustainability of the proceedings beyond directing consideration of the dropped original inquiry.

The High Court dismissed the writ petition. It observed that Section 148A requires the AO to conduct an inquiry and provide an opportunity of being heard before issuing a notice under Section 148. The limitation for issuing such notice is governed by Section 149. In this case, the AO found bogus purchases amounting to Rs. 89,86,164/- for AY 2016-17, supported by witness statements admitting to issuing bogus bills. The Court distinguished the present case from Somnath Dealtrade Private Limited, noting that proceedings were initiated based on specific information and witness statements. It also differentiated from Fena Pvt. Ltd. by observing that the AO had considered the petitioner's participation and witness statements before passing the order. Citing Gian Castings Private Limited and Anshul Jain, the Court held that writ courts should not interfere at a premature stage when proceedings are ongoing and there is no jurisdictional error. The Court also referred to its own Division Bench decision in Barbrik Projects Ltd. Vs. Union of India, which held that bogus purchases can form the basis for issuing a notice under Section 148 and dismissed the assessee's writ petition. The Court concluded that the petitioner had sufficient opportunity to present its case and take all available defenses, and therefore, no interference was warranted with the order under Section 148A(d) and the notice under Section 148.

The High Court granted the petitioners' request to withdraw the writ petitions. The Court allowed the petitioners the liberty to raise the plea that the show cause notice issued by the Assessment Officer was bad-in-law and without jurisdiction before the Commissioner of Income Tax (Appeals) in their pending appeals. The Court noted that there was no objection from the respondents to this request. Consequently, the High Court dismissed the petitions as withdrawn, with the specified liberty. The Court also directed the Commissioner of Income Tax (Appeals) to endeavor to conclude the proceedings of the pending appeals within six months from the date of receiving a copy of the order.

The High Court observed that the respondents had neither taken action on the petitioner's applications for notification under Section 10(46) of the Income Tax Act, 1961, nor communicated any reasons for not considering them. The court noted that the petitioner's claim for notification had to be examined in light of applicable rules, circulars, and notifications. Accordingly, the competent respondent authority was directed to consider the applications for being notified under Section 10(46) of the Act strictly in accordance with the provisions of the said Act within a further period of two months from the date of receipt of the order. The writ petition was disposed of with these observations and directions. No specific finding was made on whether the petitioner ultimately qualified for the notification, as the matter was remanded for consideration.

The High Court held that the appeals do not involve any substantial question of law and dismissed both appeals. The Tribunal's finding that the PCIT travelled beyond its statutory mandate was upheld. The Court noted the Tribunal's reasoning that the PCIT's observations regarding the lender company being a shell company and reliance on an unsupplied statement violated natural justice. The Tribunal correctly found that Section 68 could not be invoked for past credits. Regarding Section 43CA, the Tribunal's view that the PCIT's direction was justified only to the extent the variation between stamp duty value and actual consideration exceeded 10% was also upheld. The Court found no error in the Tribunal's conclusion that the PCIT's order was defective and did not warrant interference. The operative direction was to dismiss the appeals.

The High Court held that the order passed under Section 148A(d) of the Income Tax Act, 1961, and the notice issued under Section 148 of the Act were to be set aside. The reasoning was that the Assessing Officer had not taken into consideration the reply filed by the petitioner along with the valuation report issued by the registered valuer while passing the order under Section 148A(d). The Court directed the Assessing Officer to consider the reply and the valuation report strictly in accordance with law and thereafter pass an order afresh. The Court also noted that the valuation report could be sent to the Departmental Valuation Officer. The ratio decidendi is that an order passed under Section 148A(d) must reflect due consideration of all material placed before the AO by the assessee, including valuation reports, before proceeding to issue a notice under Section 148.

The Court held that the documents have been supplied to the petitioner in pursuance of the order passed in WPT No.119 of 2023. Subsequently, a notice under Section 148A(b) was issued, a reply was filed, an order under Section 148A(d) was passed, and a notice under Section 148 was issued. The matter is still pending before the authority, and the petitioner has sufficient opportunity to present all available defenses. Therefore, the Court found no good ground to interfere with the order passed under Section 148A(d) and the notice issued under Section 148. The Court noted that the judgments cited by the petitioner, particularly Sita Ram Gautam, which held that a notice under Section 148 of the amended Act cannot be issued if the escaped income is less than Rs. 50 lakhs, were not of help in this context. Conversely, the judgments cited by the respondents, including those affirmed by the Supreme Court, held that the Writ Court should not interfere at a premature stage when proceedings are yet to be concluded by the statutory authority, provided there is no procedural fault. The Court also referred to a decision by a Division Bench of the Chhattisgarh High Court in Barbrik Projects Ltd. which held that bogus purchases can be a basis for issuing a notice under Section 148 and dismissed the writ petition. Consequently, the present petition was dismissed.

The High Court allowed the writ petition. The Court found that the petitioner's specific ground that they were not served with the information and material relied upon by the Revenue along with the notice under Section 148A(b) was not opposed by the respondent-department's counsel. The Court referred to the CBDT circular dated 01.08.2022, which mandates enclosing copies of all relevant information and supporting documents, and the Supreme Court's judgment in Union of India vs. Ashish Agarwal. The Supreme Court's judgment, in paragraph 28.1, directed that the assessing officer shall, within thirty days, provide the respective assessees with the information and material relied upon by the Revenue. Since this procedure was not followed, the Court held that the order passed under Section 148A(d) and the consequent notice under Section 148 were bad in law. The matter was remitted back to the Assessing Officer for passing orders afresh in accordance with law, after supplying all relevant materials and information as per the CBDT guidelines and the Supreme Court's observations.

The High Court allowed the writ petition. The Court found that the petitioner's specific ground that they were not served with the information and material relied upon by the Revenue along with the notice under Section 148A(b) was not disputed by the respondent-department's counsel. The Court referred to the CBDT circular dated 01.08.2022, which mandates enclosing copies of all relevant information and supporting documents, and the Supreme Court's judgment in Ashish Agarwal (supra). The Supreme Court in Ashish Agarwal had directed that the Assessing Officer shall provide the assessees with the information and material relied upon by the Revenue within thirty days, allowing them to reply within two weeks thereafter. Since this crucial procedural step was not followed, the Court held that the order passed under Section 148A(d) and the consequential notice under Section 148 were bad in law. The Court quashed the impugned order and notice and remitted the matter back to the Assessing Officer (Respondent No. 2) to pass orders afresh on the notice under Section 148A(b) after supplying all relevant materials and information, in accordance with the CBDT guidelines and the Supreme Court's observations.

The High Court allowed the writ petition. It held that there was a clear violation of the provisions of Section 148A of the Income Tax Act, 1961, and the directions issued by the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra). The Court found that the non-supply of information and material relied upon by the revenue along with the notice under Section 148A(b) was also a violation of the principles of natural justice. Consequently, the order under Section 148A(d) and the notice under Section 148 of the Act of 1961 were quashed. The matter was remitted back to the Assessing Officer (Respondent No. 1) to pass orders afresh on the notice under Section 148A(b) after supplying the requisite information and material to the petitioner. No specific issue was left undecided.

The High Court held that the assessment order dated March 11, 2023, was set aside and the matter was remitted back to Respondent-4 for passing an order afresh. The Court found that the petitioner had requested a personal hearing in his reply dated February 11, 2023, which was considered by Respondent-4 before passing the assessment order. However, the mandatory provision under Section 144B(6)(vii) and (viii) of the Act, which requires granting a personal hearing if requested and technologically feasible, was not complied with. The Court acknowledged the availability of an alternative remedy but noted that writ jurisdiction can be exercised in cases of violation of principles of natural justice, which includes the denial of a personal hearing. The reasoning was that the failure to grant the requested personal hearing constituted a violation of the principles of natural justice and a non-compliance with the mandatory provisions of the Act. The ratio decidendi is that a failure to grant a personal hearing, when requested and mandated by Section 144B(6)(vii) and (viii), vitiates the assessment order and warrants a remand.

The High Court held that the order dated April 1, 2023, passed under Section 148A(d) of the Act, concerning transactions from financial year 2015-16, was based on a notice dated March 22, 2023, to which only 7 days were granted for a reply. The Court found this period to be prima facie unreasonably short, and the assessee could not be blamed for not filing a reply within such a limited timeframe. Consequently, the Court concluded that there was a violation of the principles of natural justice. The Court quashed the order dated April 1, 2023, passed under Section 148A(d) and the notice dated April 1, 2023, issued under Section 148 of the Act. The respondents were directed to provide the petitioner/assessee with a proper opportunity of hearing and thereafter decide the matter afresh in accordance with the law. The writ petition was allowed.

The High Court allowed the writ petition, quashing the notices dated 18.07.2022 issued under Section 148A(d) and Section 148 of the Income Tax Act, 1961. The Court found that the factual matrix of the present case squarely fit the facts decided by the Delhi High Court in similar matters. The reasoning was based on the principle that the Assessing Officer must provide specific material and information to the assessee in the notice issued under Section 148A(b) to enable a meaningful response. The Court noted that the information sought by the petitioner was made available only after the order under Section 148A(d) was passed, which prevented the petitioner from justifying their conduct or providing a reasonable explanation. The matter was remitted back to the department with a direction to provide the necessary information and material documents as per Rules 149(2) & 149(1)(b) referred to in the notice under Section 148A(b) dated 20.05.2022. Subsequently, a fresh order under Section 148A(d) was to be passed after considering the petitioner's contentions. This decision was made in light of the Supreme Court's judgment in Union of India & others v. Ashish Agrawal.