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2003 Supreme(Bom) 1327
IN THE HIGH COURT OF BOMBAY
(R. M. S. Khandeparkar and J. P. Devadhar, JJ.)
AJANTA PHARMA LTD., MUMBAI -Petitioner.
vs.
ASSISTANT COMMISSIONER OF INCOME TAX RANGE 9(1) and others Respondents.
Advocates appeared
For petitioners: J. D. Mistri with Sanjiv M. Shah and G. G. Agarwal
For respondents: R. V. Desai, Senior Counsel with P. S. Jetley instructed by T. C. Kaushik (In W. P. No. 1776 of 2003)
For respondents : R. V. Desai, Senior Counsel with Mrs. S. V. Bharucha instructed by T. C. Kaushik (In W. P. Nos. 1705 and 1818 of 2003)
The court held that the notices were ex-facie bad in law and clearly in the absence of powers vested in it under section 148 of the said Act, and hence cannot be sustained.
Headnote:
Income Tax Act - Challenge to notices under section 148 - Summary of Acts and Sections: Income Tax Act, 1961, section 148 - The court discussed the legality and validity of the notices issued under section 148 of the Income Tax Act, 1961, and the accompanying reasons recorded for the same seeking to reassess the income for the Assessment Years 1998-99, 1999-2000, and 2000-01. The court referred to the decision of the Apex Court in GKN Driveshafts (India) Ltd. vs. Income-Tax Officer, and others and discussed the proper course of action for the noticee when a notice under section 148 is issued. The court also referred to various other decisions and observed that the reasons for reopening are required to be recorded by the assessing authority before issuing any notice under section 148. The court held that the notices were ex-facie bad in law and clearly in the absence of powers vested in it under section 148 of the said Act, and hence cannot be sustained. The impugned notices were quashed and set aside.
Fact of the Case:
The petitioners sought to challenge the action on the part of the respondent No. 1 in relation to the issuance of notices dated 28th January, 2003 under section 148 of the Income Tax Act, 1961 and the accompanying reasons recorded for the same seeking to reassess the income for the Assessment Years 1998-99, 1999-2000, and 2000-01 by reopening the original assessment orders.
Finding of the Court:
The court found that the notices were ex-facie bad in law and clearly in the absence of powers vested in it under section 148 of the said Act, and hence cannot be sustained. The impugned notices were quashed and set aside.
Issues: The legality and validity of the notices and the reasons appended thereto were challenged primarily on the ground that the action on the part of the respondent No. I in issuance of the said notice is ex-facie illegal and without jurisdiction.
Ratio Decidendi: The court discussed the proper course of action for the noticee when a notice under section 148 is issued, as clarified by the Apex Court in GKN Driveshafts (India) Ltd. vs. Income-Tax Officer, and others. The court also referred to various other decisions and observed that the reasons for reopening are required to be recorded by the assessing authority before issuing any notice under section 148.
Final Decision: The impugned notices were quashed and set aside.
R. M. S. KHANDEPARKAR, J. :- Heard. Perused the records.
2. Since common questions of law and facts arise in all these Petitions, they were heard together and are being disposed of by this common judgment.
3. Rule. By consent, the rule is made returnable forthwith. The respondents waive service in all the aforesaid Writ Petitions.
4. By these present petitions, the petitioners seek to challenge the action on the part of the respondent No. 1 in relation to issuance of notices dated 28th January, 2003 under section 148 of the Income Tax Act, 1961 (hereinafter called as "the said Act") and the accompanying reasons recorded for the same seeking to reassess the income for the Assessment Years 1998-99, 1999-2000 and 2000-01 by reopening the original assessment orders dated 27th December, 2000, 8th March, 2002 and 30th April, 2002 respectively. The legality and validity of the said notices and the reasons appended thereto are sought to be challenged primarily on the ground that the action on the part of the respondent No. I in issuance of the said notice is ex-facie illegal and without jurisdiction, and the same is ex-facie revealed from the reasons appended to the said notice. The notice is also challenged on various other grounds.
5. At the outset, the learned Advocate appearing for the respondents has raised preliminary objection regarding non-maintainability of the petitions on the ground that the same are premature inasmuch as that the petitioners have efficacious alternative remedy in the form of reply to the said notices and even in relation to the point pertaining to the lack of jurisdiction or absence of power to issue the notices in a given set of facts can be raised in such reply, and the order passed thereon can be subjected either to appeal or even for intervention by this Court in writ jurisdiction, and in that regard, heavy reliance is placed in the decision of the Apex Court in GKN Driveshafts (India) Ltd. vs. Income-Tax Officer, and others reported in 259 ITR 19.
6. The decision of the Apex Court in GKNs case (supra) was in an appeal arising from the decision of Delhi High Court in G.K.N. Driveshafts (India) Ltd. vs. Income-tax Officer, (2002) 257 ITR 702. That was a petition challenging the notices issued to GKN by Income Tax Authorities under section 148 of the said Act. The Delhi High Court, observing that the petitioner was not justified in invoking the extra-ordinary jurisdiction of the Court at that stage, and therefore the petition being premature, dismissed the same. Plain reading of the decision of Delhi High Court would therefore disclose that the petition was dismissed merely observing that the exercise of extra-ordinary jurisdiction was not called for at the stage when the petitioners had approached the High Court merely on receipt of the notices under sections 148 and 143(2) of the said Act. The decision does not disclose any other reason for dismissing the petition.
7. In an appeal against the said decision, the Apex Court while dismissing the same observed thus :-
"We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the notice is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years."
8. Before making the above observations, the Apex Court took note of the following factors :-
(i) that the High Court had taken the view that
