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2023 Supreme(P&H) 3396
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
RITU BAHRI, MANISHA BATRA, JJ.
Shashank Garg – Petitioner
Versus
Income Tax Officer, Ward I – Respondent
CWP-7875 of 2023
Decided On : 03-05-2023
Ms. Radhika Suri, Sr. Advocate with Mr. Abhinav Narang, Advocate and Mr. Siddhant Suri, Advocate; For the Petitioner
Headnote:(A) Income Tax Act, 1961 - Sections 148 and 148A - Quashing of notices - Petitioner sought to quash notices/orders on the basis that foundational allegations were missing in the show cause notice, which were vital for the validity of the actions taken - Court relied on previous judgments where similar issues were adjudicated and found that if the basic allegations are absent, actions taken cannot stand - The judgment reiterates the importance of containing the foundational allegation in notices under Section 148A of the Act. (Paras 5-9)
Facts of the case:
The petitioner challenged notices issued for alleged liabilities towards a specific transaction that purportedly were not referenced in the show cause notice. The petitioner maintained they were not given adequate opportunity to respond to the allegations made.
Findings of Court:
The court found that the essential allegations regarding the transaction were not present in the initial notice, which invalidated the subsequent proceedings.
Issues: The main issues included whether the foundational allegations were adequately specified in the show cause notice and if the impugned actions could be justified without them.
Ratio Decidendi: The court concluded that without foundational allegations in the notices, the jurisdiction to proceed was lacking, hence the actions taken were quashed. The court affirmed that compliance with the procedural requisites is essential for the validity of the notices issued under Section 148A.
Result: Petition allowed; impugned notices/orders set aside.
| Table of Content |
|---|
| 1. petition to quash impugned notices. (Para 1) |
| 2. argument about missing foundational allegations. (Para 4) |
| 3. referencing similar cases to support claims. (Para 5 , 6) |
| 4. court observes respondent's response discrepancies. (Para 7 , 8) |
| 5. court's final order quashing notices. (Para 9) |
JUDGMENT
Ms. Ritu Bahri, J. (Oral)
The present petition is for issuance of writ in the nature of certiorari to quash the impugned notice dated 24.03.2023 issued under Section 148A (d) (P-1), order dated 31.03.2023 passed under Section 148A (d) (P-3) and impugned notice dated 31.03.2023 issued under Section 148 (P-4).
2. Issue notice of motion.
3. On asking of the Court, Ms. Gauri Neo Rampal, Sr. Standing counsel, accepts notice on behalf of the respondent.
4. Learned senior counsel for the petitioner is seeking quashing of the impugned notices/order on the ground that allegation of "liability of Rs.34,91,91,634/- towards a single party i.e M/s Dholagiri Enterprises" was not incorporated in the show cause notice dated 24.03.2023 (P-1) despite the fact that the same was well within the knowledge of respondent No. 24.03.2023. Thus, the respondent had not observed any escaped income on this allegation. Further in the order dated 31.03.2023, no income has been alleged to have been escaped on the allegation "inadmissible claim of expense value of Rs.34,91,91,634". Further in the order dated 31.03.2023, there is no reference of the reply given by the petitioner on 26.03.2023 (P-2).
5. Reference has been made to judgment of Delhi High Court in a case of Catchy Prop-Build Pvt. Ltd v. Assistant Commissioner of Income Tax and ors., passed in W.P No. (C) 13734-2022, decided on 17.10.2022 (P-5) whereby the petitioner was seeking quashing of show cause notice dated 16.03.2022 and 31.03.2022 on the ground that the same were passed in violation of the provisions of Section 148 A (b) of the Act as it merely states that the transaction entered into by the petitioner and does not contain any allegation of escapement of income. The writ petition was allowed and impugned notices were set aside, on the ground that if the foundational allegation is missing in the notice issued under Section 148 A (b) of the Act, the same cannot be incorporated by issuing a supplementary challan. However, liberty was granted to the department to take steps in accordance with law.
6. Similarly in a case of Excel Commodity and Derivative Pvt. Ltd v. Union of India and others, passed in APOT/132/2022, decided on 29.08.2022 (P-6), Hon'ble Calcutta High Court was examining a case of a appellant/assessee who was issued notice under Section 148 A (b) of the Act on the allegation that the appellant has done fictitious derivative transactions with M/s Blueview Tradecome Pvt. Ltd. The assessee submitted the reply to the said notice enclosing all the relevant documents in support of the claim to justify that they have not indulged in fictitious transaction. The writ petition was allowed and it was observed that the assessing officer has submitted the explanation to the notice along with documents in support their claim The Assessing Officer has given up the said allegation which formed the basis of the notice and proceeded on a fresh ground for alleging that the transaction with some other company was an accommodation entry. The impugned order was set aside as it was passed without giving any opportunity to reopen the matter on a different issue.
7. Learned counsel for the respondent has filed reply dated 02.05.2023 of ITO Ward-I. Bhiwani in the Court today and the same is taken on record. As per the reply, the verification details uploaded on the insight portal by the DDIT (Inv), Rohtak was also provided to the assessee along with show cause notice. The assesse sought an adjournment on 19.03.2023 for 15 days. The assessee gave its reply on 26.03.2023 in which he did not deny about the said transaction of Rs. 34,91,91,634. In para No. 4 of the reply, it has been stated that the transact
