Madhya Pradesh High Court Judgments — 2022

The High Court dismissed the writ petitions. The Court noted that the petitioner had initially challenged the show-cause notice under Section 148, but during the pendency of the petitions, the final assessment orders were passed. The petitioner had not amended the writ petitions to challenge these assessment orders, and therefore, they could not be examined in the present petitions. The Court acknowledged that the assessment orders are appealable and that there is a mandatory pre-deposit condition which cannot be waived. While the petitioner challenged the jurisdiction, the Court held that examining the merits of whether there was material before the Assessing Officer to initiate proceedings under Section 148 would require delving into the merits of the case, which is not permissible under Article 226 of the Constitution. The appellate authority is competent to decide such issues. Furthermore, the impugned show-cause notice under Section 148 no longer survived as the final assessment order had been passed. The dismissal of the petitions was without prejudice to the appellate authority's right to decide the appeal on its merits, as the High Court had not expressed any opinion on the merits.

The High Court dismissed the writ petitions. The Court noted that the petitioner had initially challenged the show-cause notice under Section 148, but during the pendency of the petitions, the final assessment orders were passed. The petitioner had not amended the writ petitions to challenge these assessment orders, and therefore, they could not be examined in the present petitions. The Court acknowledged that the assessment orders are appealable and that there is a mandatory pre-deposit condition which cannot be waived. While the petitioner challenged the jurisdiction, the Court held that examining the merits of whether there was material before the Assessing Officer to initiate proceedings under Section 148 would require delving into the merits of the case, which is not permissible under Article 226 of the Constitution. The appellate authority is competent to decide such issues. Furthermore, the impugned show-cause notice under Section 148 no longer survived as the final assessment order had been passed. The dismissal of the petitions was without prejudice to the appellate authority's right to decide the appeal on its merits, as the High Court had not expressed any opinion on the merits.

The High Court dismissed the writ petitions. The Court noted that the petitioner had initially challenged the show-cause notice under Section 148, but during the pendency of the petitions, the final assessment orders were passed. The petitioner had not amended the writ petitions to challenge these assessment orders, and therefore, they could not be examined in the present petitions. The Court acknowledged that the assessment orders are appealable and that there is a mandatory pre-deposit condition which cannot be waived. While the petitioner challenged the jurisdiction, the Court held that examining the merits of whether there was material before the Assessing Officer to initiate proceedings under Section 148 would require delving into the merits of the case, which is not permissible under Article 226 of the Constitution. The appellate authority is competent to decide such issues. Furthermore, the impugned show-cause notice under Section 148 no longer survived as the final assessment order had been passed. The dismissal of the petitions was without prejudice to the appellate authority's right to decide the appeal on its merits, as the High Court had not expressed any opinion on the merits.

The High Court held that the cause of action having arisen at Vidisha, which lies within the territorial jurisdiction of the Gwalior Bench of the Court, the principal seat at Jabalpur is bereft of jurisdiction to entertain this matter. Consequently, the writ petition was dismissed. The petitioner was granted liberty to approach the Gwalior Bench of the Court. The Court did not decide on the merits of the notice issued under Section 148 of the Income Tax Act, 1961.

The High Court held that the impugned notice dated March 31, 2021 (served on April 16, 2021) is bad in the eyes of law. The reasoning was that after April 1, 2021, the effective date of the Finance Act, 2021, it is a mandatory requirement that prior to initiating reassessment proceedings, a notice under Section 148A of the Income Tax Act, 1961, must be issued to the assessee. The court relied on the admission by the respondent-revenue that the notice was in fact issued on April 16, 2021, despite being dated March 31, 2021. Consequently, the notice was quashed. The court also noted that other reliefs sought by the petitioner became redundant due to this finding. The respondents were left with the liberty to take recourse to the procedure laid down in the newly enacted Section 148A if required by law. The ratio decidendi is that a notice for reassessment served after the commencement of Section 148A must adhere to its procedural requirements, irrespective of the date mentioned on the notice if it was actually served later.

The High Court held that the reassessment proceedings under Section 148 were not issued based on a revenue audit objection. The notice under Section 148, dated 03.03.2014, was issued after four years from the end of the assessment year 2007-08. The notice itself did not state that it was issued based on a revenue audit objection. Therefore, the case did not fall under the exception 10(c) of Circular No.03/2018 dated 11.07.2018, which pertains to revenue audit objections. Consequently, the ITAT did not commit any error of law by dismissing the Miscellaneous Application (MA No. 28/Ind/2020) filed for recalling the consolidated order dated 22.08.2019, which was disposed of relying on Circular No. 03/2018. The High Court found no substantial question of law involved in the appeal and dismissed it. The operative direction was the dismissal of the appeal.

The High Court held that while there was a variance between the reasons stated in the show cause notice and the impugned order, this did not prejudice the petitioner. The Court found that the petitioner was aware of the underlying reason for the transfer, which was the consolidation of records of principal contractors and the petitioner (a sub-contractor) at Hyderabad to facilitate a search operation. This consolidation was deemed to be in the larger public interest of ensuring a proper and lawful search operation and striking at tax evasion. The Court concluded that the principle of audi alteram partem was complied with by implication, as the petitioner understood the substantive reason for the transfer. The Court also found that the correspondence between the Bhopal and Hyderabad Income Tax Authorities demonstrated their agreement regarding the transfer, satisfying Section 127(2)(a). Consequently, the Court was not impressed with any of the grounds raised by the petitioner and dismissed the writ petition.

The High Court held that the entire controversy revolved around the assessee's ability to explain the difference in stock between the statement submitted to the bank as of March 28, 2005, and the audit report as of March 31, 2005. The Court found that no evidence of sales and purchases during the period March 28-31, 2005, was produced by the assessee, a fact affirmed by the Tribunal. The Court noted that the practice of industrialists declaring larger than actual stock quantities to banks for higher loans is not recognized as fiscally disciplined and amounts to commercial immorality. The burden lies on the assessee to reconcile stock differences. Since the assessee failed to provide an explanation, the excess stock was deemed to be from undisclosed sources. The Court upheld the orders of the AO and the ITAT, considering the excess stock as income from undisclosed sources. The judgment cited by the assessee was distinguished on facts. The appeal was dismissed.

The High Court held that the petitioner's request for a personal hearing, as stated in their reply, was conditional. The petitioner objected to the show cause notice and proposed additions, requesting assessment on returned income, and then stated readiness for video conferencing through their consultant 'in case of any doubt'. This was interpreted as leaving it to the Assessing Authority's discretion to grant a hearing via video conferencing if they had doubts. The Court found that liberty of being heard was offered, and the petitioner did not make a specific, express demand for a personal hearing. Therefore, the non-grant of personal hearing did not amount to a breach of the principles of natural justice. The Court also noted that the petitioner had already availed the statutory remedy of appeal. Consequently, the petition was dismissed without making any findings on the merits of the case, with liberty granted to the petitioner to pursue their appeal.