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2022 Supreme(Bom) 123
IN THE HIGH COURT OF BOMBAY AT GOA
M.S. SONAK, R.N. LADDHA, JJ.
Shri Dinar Tarcar – Appellant
Versus
Assistant Commissioner of Income Tax and Others – Respondent
Writ Petition Nos.500 of 2014 & 72 of 2015
Decided on : 04-04-2022
For the Appellant :Mr. Devidas Pangam with Mr. Nikhil Vaze, Mr. Amogh Arlekar and Mr. Ajay Borkar, Advocates
For the Respondent: Ms. Susan Linhares, adv
The impugned notices seeking to reopen the assessment were set aside as they were based on an order that did not contain a direction as contemplated by Section 150 of the IT Act and the finding affecting the petitioners was recorded without granting them any opportunity of being heard, contravening principles of natural justice and fair play and Explanation 3 to Section 153 of the IT Act.
Headnote:
Income Tax Act - Reopening of Assessment - Section 148, Section 150 - The court set aside the impugned notices issued under Section 148 of the Income Tax Act seeking to reopen the assessment for the assessment year 2010-2011. The impugned notices were based on an order dated 16.01.2013 made by CIT (Appeals), which did not contain a direction as contemplated by Section 150 of the IT Act. The finding affecting the petitioners was recorded without granting them any opportunity of being heard, contravening principles of natural justice and fair play and Explanation 3 to Section 153 of the IT Act.
Fact of the Case:
The petitioners challenged notices under Section 148 of the Income Tax Act seeking to reopen the completed assessment for the assessment year 2010-2011. The impugned notices were based on an order dated 16.01.2013 made by CIT (Appeals) without granting the petitioners any opportunity of being heard.
Finding of the Court:
The court set aside the impugned notices as they were based on an order that did not contain a direction as contemplated by Section 150 of the IT Act and the finding affecting the petitioners was recorded without granting them any opportunity of being heard.
Issues: The issues involved the validity of the impugned notices issued under Section 148 of the Income Tax Act and the applicability of Section 150 of the IT Act based on an order made by CIT (Appeals) without granting the petitioners any opportunity of being heard.
Ratio Decidendi: The impugned notices were set aside as they were based on an order that did not contain a direction as contemplated by Section 150 of the IT Act and the finding affecting the petitioners was recorded without granting them any opportunity of being heard, contravening principles of natural justice and fair play and Explanation 3 to Section 153 of the IT Act.
Final Decision: The Rule was made absolute in both petitions, and the impugned notices were set aside. There was no order for costs.
JUDGMENT :
M.S. Sonak, J.
1. Heard learned Counsel for the parties.
2. The rule was issued in both these petitions on 23.04.2015 and interim relief was granted in terms of prayer clause 'd'. The order made in Writ Petition No.500/2014, which is identical to the order made in connected Writ Petition No.72/2015, reads as follows :
“Heard Shri Pangam, learned Counsel appearing for the Petitioner and Ms. Desai, learned Counsel appearing for the Respondents.
2. Rule.
3. Ms. Desai, learned Counsel, waives service on behalf of the Respondents.
4. The Petition challenges the notice dated 25.03.2014 issued under Section 148 of the Income Tax Act seeking to reopen the assessment for Assessment Year 2010-11. The reasons in support of the impugned notice do not indicate any directions from CIT (Appeals) to issue the re-opening notice. However, the Order dated 23.07.2014 disposing of the objections relies upon the directions of the CIT (Appeals) to make Section 150 of the Income Tax Act applicable to reject the objections. Thus, prima facie, the reasons in support not referring to the directions of the CIT (Appeals), cannot support the impugned notice. Therefore, interim relief in terms of prayer (d).”
3. Though Ms. Linhares, the learned Counsel for the respondents, tried to urge that the issues involved in both these petitions may not be the same, after extensively hearing the learned Counsel for the parties, we are satisfied that there is no substantial difference between the two matters. Therefore, we propose to dispose of both these petitions by this common judgment and order, no doubt, bearing in mind the points of distinction urged by Ms. Linhares. Writ Petition No.500/2014 will, however, be treated as the lead petition.
4. The petitioners' challenge notices under Section 148 of the Income Tax Act, 1961 (IT Act) dated 25.03.2014 and 10.03.2014 which seek to reopen the completed assessment for the assessment year 2010-2011 on the alleged ground that the income chargeable to tax for the said assessment year has escaped assessment within the meaning of Section 147 of the IT Act. The petitioner in Writ Petition No.72/2015 is the wife of the petitioner in Writ Petition No.500/2014. Both the petitioners are entitled to the benefit of the provisions of Section 5A of the IT Act concerning the apportionment of income between spouses governed by the Portuguese Civil Code about which, there is no dispute.
5. On 30.07.2010, the petitioner filed income tax returns for the assessment year 2010-2011. The same was processed under Section 143(1) and notices under Sections 143(2) and 142(1) dated 22.06.2011 were served on the petitioners. The assessment was completed as evidenced by the assessment order dated 26.12.2011 made by the Assessing Officer (AO).
6. On 27.12.2011, the AO made another assessment order concerning the assessee company - Dinar Tarcar Resources (India) Private Ltd. (DTRPL) of which both the petitioners are Directors/shareholders. In this assessment order, an amount of Rs.23,76,49,580/- that was advanced to the assessee company by M/s. Minescape Minerals Pvt. Ltd. (MMPL) was treated as deemed dividend under Section 2(22)(e) to the extent of Rs.17,19,30,000/-.
7. Aggrieved by the assessment order dated 27.12.2011, DTRPL appealed to CIT (Appeals) on 24.01.2012. The CIT (Appeals) vide order dated 16.01.2013, allowed this appeal and held that deemed dividends could not have been brought to tax in the hands of DTRPL but that the same could have been brought to tax in the hands of the shareholders of DTRPL, that is, the petitioners in these two petitions. The CIT (Appeals) left it open to the AO to make such an assessment of deemed dividends in the hands of the two petitioners. Admittedly, neither of the petitioners were notified nor granted any opportunity of hearing in the appeal before the CIT (Appeals).
8. Based upon the appeal order dated 16.01.2013, the AO, on 22.07.2013 forwarded proposals to the Commissioner of Income Tax urging the exercise
