Bombay High Court
Bhoomi Viral Shah vs Income Tax Officer Ward 2(1) Thane And … on 12 August, 2024
Author: G.S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-AS:33588-DB
917.WP10815_2024.DOCX
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 10815 OF 2024
Bhoomi Viral Shah ... Petitioner
Versus
Income-tax Officer, Ward 2(1), Thane & Ors. ...Respondents
Ms. Radha Halbe for the petitioner.
Mr. Akhileshwar Sharma for the respondents.
_______________________
CORAM: G. S. KULKARNI &
SOMASEKHAR SUNDARESAN, JJ.
Date : 12 August, 2024
_______________________
Oral Judgment (Per G.S. Kulkarni, J.)
1. Rule. Rule made returnable forthwith. Learned Counsel for the
Respondents waives service. By consent of the parties, heard finally.
2. This petition under Article 226 of the Constitution of India challenges
an order dated 26 May, 2023 passed under Section 147 read with Section
144 and Section 144B of the Income-tax Act (for short “the Act”). At the
outset, we may note the substantive prayers which reads thus:
(a) that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a
Writ in the nature of Certiorari or any other appropriate Writ, Order or
direction, calling for the records of the Petitioner’s case and after going intoPage 1 of 8
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the legality and propriety thereof, to quash and set aside the notice dated
07.04.2021 issued under section 148 (“Exhibit A”) which is now treated as
deemed show cause notice under section 148A(b) in pursuance of issue
letter dated 26.05.2022 (“Exhibit C”); the order dated 25.07.2022 passed
under section 148A(d) of the Act (“Exhibit D”); the notice dated
25.07.2022 issued under section 148 of the Act(“Exhibit El”); the
assessment order dated 26.05.2023 passed under section 147 r.w.s 144 read
with section 144B (“Exhibit F1”); the impugned Notice of Demand dated
26.05.2023 under section 156 (“Exhibit F2”); the Penalty Order dated
19.02.2024 under section 271(1)(b) (Exhibit “G1”); the Penalty Order
dated 20.02.2024 under section 271(1)(c) (Exhibit “G2”) and the Penalty
Order dated 20.02.2024 under section 271F (Exhibit “G3”).
(b) This Hon’ble Court be pleased to issue a Writ of Mandamus or a Writ
in the nature of Mandamus or any other appropriate Writ, Order or
direction, directing the Respondents, its servants, subordinates, agents and
successors in office to:
i) Quash the notice dated 07.04.2021 issued under section 148
(“Exhibit A”) which is now treated as deemed show cause notice
under section 148A(b) in pursuance of issue letter dated 26.05.2022
(“Exhibit C”); the order dated 25.07.2022 passed under section
148A(d) of the Act (“Exhibit D”); the notice dated 25.07.2022 issued
under section 148 of the Act(“Exhibit El”); the assessment order
dated 26.05.2023 passed under section 147 r.w.s 144 read with
section 144B (“Exhibit F1”); the impugned Notice of Demand dated
26.05.2023 under section 156 (“Exhibit F2”); the Penalty Order
dated 19.02.2024 under section 271(1)(b) (Exhibit “G1”); the
Penalty Order dated 20.02.2024 under section 271(1)(c) (Exhibit
“G2”) and the Penalty Order dated 20.02.2024 under section 271F
(Exhibit “G3”).
ii) to forthwith forbear from taking any steps whatsoever, including
issue further notices in furtherance of the assessment order dated
26.05.2023 passed under section 147 r.w.s 144 read with section
144B (“Exhibit F1”); the impugned Notice of Demand dated
26.05.2023 under section 156 (“Exhibit F2”); the Penalty Order
dated 19.02.2024 under section 271(1)(b) (Exhibit “G1”); the
Penalty Order dated 20.02.2024 under section 271(1)(c) (Exhibit
“G2”) and the Penalty Order dated 20.02.2024 under section 271F
(Exhibit “G3”).
(c) That this Hon’ble Court be pleased to issue a writ of prohibition or a
writ in the nature of prohibition or any other appropriate writ, order or
direction under Article 226 of the Constitution of India prohibiting
Respondents from taking any steps in furtherance of the assessment order
dated 26.05.2023 passed under section 147 r.w.s 144 read with section
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144B (“Exhibit F1”); the impugned Notice of Demand dated 26.05.2023
under section 156 (“Exhibit F2”); the Penalty Order dated 19.02.2024
under section 271(1)(b) (Exhibit “G1”); the Penalty Order dated
20.02.2024 under section 271(1)(c) (Exhibit “G2”) and the Penalty Order
dated 20.02.2024 under section 271F (Exhibit “G3″).”
3. The primary grievance of the petitioner is that the notice under section
148 of the Act is issued to the petitioner beyond the limitation as prescribed
under the provisions of Section 149 as would apply to the assessment year in
question, namely, assessment year 2013-14.
4. The learned counsel for the petitioner has drawn our attention to the
impugned notice dated 25 July, 2022 issued under section 148 of the Act for
the AY 2013-14 to submit that the limitation as prescribed under the
provisions of Section 149 and as applicable to the assessment year in
question would be as applicable under sub-section (1)(b), which would
contemplate the period of six years within which the notice under section
148 can be issued. The same reads thus:
“149. Time limit for notice. – (1) No notice under section 148 shall be
issued for the relevant assessment year, –
a) if four years have elapsed from the end of the relevant
assessment year, unless the case falls under clause (b) or clause (c);
b) if four years, but not more than six years, have elapsed from
the end of the relevant assessment year unless the income
chargeable to tax which has escaped assessment amounts to or is
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likely to amount to one lakh rupees or more for that year.”
5. The period of six years relevant to the assessment year 2013-14
expired on 31 March, 2020. Thus, the amendment as incorporated in
Section 149(1)(b) was not applicable for the re-opening/reassessment in
question, which was for the assessment year 2013-14. It appears that
overlooking such position, the Assessing officer, under the presumption that
the amendment to the said provision as incorporated by Finance Act, 2022
with effect from 1 April, 2022 had become applicable to the facts in hand,
i.e., A.Y. 2013-14, issued notice under section 148 dated 25 July, 2022 inter
alia considering the decision of Supreme Court in Union of India vs. Ashish
Agarwal 1.
6. Learned counsel for the petitioner has placed reliance on the decision
of a co-ordinate Bench of this Court in New India Assurance Company Ltd.
vs. Assistant Commissioner of Income Tax & Ors. 2 to contend that in similar
circumstances, the notice as issued to the petitioner in the said proceedings
was held to be bad and illegal and was quashed by this Court. Our attention
is invited to the relevant paragraphs of the said decision, which read thus:
“35. The Revenue’s contention that the reopening notice was to
1
Civil Appeal No. 3005 of 2022 dated 4 May, 2022
2
158 Taxmann.com 367 (Bom)
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relate back to an earlier date is entirely flawed and unacceptable.
Thus, the reassessment notices issued for AY 2013-14 are patently
barred by limitation as the six years limitation period under the Act
(as extended by Section 3 of TOLA) expired by 31st March 2021.
However, even on the Revenue’s demurrer and assuming that such
reopening notices could travel back in time and that the provisions of
TOLA protected such reopening notices (we do not agree), even then,
in so far as the notices issued for AY 2013-14 is concerned, would in
any case be barred by limitation. As stated earlier, under the erstwhile
Section 149, a notice under Section 148 could have been issued
within a period of six years from the end of the relevant assessment
year. The Notifications issued under TOLA, viz., Notification
No.20/2021, which is relied upon by the Revenue, only cover those
cases where 31st March, 2021 was the end date of the period during
which the time limit, specified in, or prescribed or notified under the
Income Tax Act falls for completion. The limitation under the
Income Tax Act, 1961(erstwhile Section 149) for reopening the
assessment for the AY 2013-14 expired on 31st March 2020. Hence,
Notification No.20/2021 did not apply to the facts of the present
case, viz., reopening notice for the AY 2013-14. Therefore, the
Revenue could not issue any notice under Section 148 beyond 31st
March 2021 and hence, even the relate back theory of the Revenue
could not safeguard the reassessment proceedings initiated after 1 st
April 2021 for AY 2013-14.”
7. Mr. Sharma has however argued that the petition ought not to be
entertained as the petitioner has approached this Court with a delay
inasmuch as in pursuance of the action taken by the Assessing Officer under
section 148, the assessment order was passed on 26 May, 2023 against the
petitioner and the present petition is filed on 23 July, 2024. He has
submitted that thus the petition being filed almost after a period of one year,
ought not to be entertained. It is submitted that the petitioner has also not
appropriately explained the delay in filing this petition, the petition hence
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needs to be dismissed on this count alone.
8. Responding to the contentions as urged on behalf of the Revenue,
learned counsel for the petitioner would submit that although there is a
remedy of an appeal against the assessment order dated 26 May, 2023,
however, the order being inherently illegal as also now there is a fresh cause
of action to the petitioner, as the order dated 19 February, 2024 under
section 271(1)(b) was served on the petitioner and thereafter the order under
Section 271(1)(c) dated 20 February, 2024 was issued against the petitioner,
the present petition needs to be entertained.
9. We have heard learned counsel for the parties and with their
assistance, we have also perused the record. It appears to us to be clear that
the notice dated 25 July, 2022 under section 148 of the Act was issued to the
petitioner for AY 2013-14 as noted above. As the provisions of Section 149
would apply, the limitation to issue notice under section 148 would expire if
four years but not more than six years have elapsed from the end of the
relevant assessment year, as per the provisions of Section 149(1)(b), as the
provision stood prior to the amendment as incorporated by the Finance Act,
2022 brought into effect from 1 April, 2022. In the present case,
admittedly, Section 148 notice was issued on 25 July, 2022, which is almost
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two years after the limitation period had expired on 31 March, 2020, which
was further extended upto 31 March, 2021 because of the notification issued
as a result of Covid-19 pandemic.
10. Being a jurisdictional issue, looked from any angle, the notice dated 25
July, 2022 under Section 148 of the Act could not have been issued for the
assessment year 2013-14. It is on such notice, the assessment order dated 26
May, 2023 has been passed. We may observe that this is clearly a case where
the Assessing Officer has proceeded without jurisdiction and possibly
applying the amended provisions of Section 149 as incorporated by the
Finance Act to the case in hand when he issued notice dated 25 July, 2022
overlooking the fact that in the present case as the law would stand, the
limitation had already expired and within the extended period of limitation
as noted by us herein. Thus, once the notice itself was inherently without
jurisdiction, the order passed on such notice although was passed without
granting hearing to the petitioner, would obviously be rendered illegal. An
order which is ab initio void cannot be saved in any circumstances or labeled
to be not illegal and void, merely because the petitioner belatedly
approached this Court and more so when such order was sought to be
effected/implemented in a recent notice issued to the petitioner under
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Section 271. Certainly the law would not permit enforcement of an
assessment order which does not satisfy the test of law. We, thus, do not
accept Mr. Sharma’s contention when he submits that the petition deserves
to be dismissed on the ground of delay and laches and/or the petitioner has
acquiesced in the impugned assessment order. Any acquiescence to an illegal
order can never bring about a situation where the illegality attributed to such
an order would stand extinguished and the order can be termed to be legal.
The law cannot be read in such manner. Thus, in the present case, an order
which is illegal and void ab initio is sought to be given effect to, which
cannot be permitted to be done.
11. In the light of the above discussion and applying the principles as laid
down by this Court in New India Assurance Co. Ltd. (supra), there is no
manner of doubt that the petition would be required to be allowed. It is
accordingly allowed in terms of prayer clause (a).
12. Rule is made absolute in the aforesaid terms.
(SOMASEKHAR SUNDARESAN, J.) (G. S. KULKARNI , J.)
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Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 22/08/2024 12:08:06