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AMICUS AI
Citation Codes
Neutral Citations
2010 DHC 290-DB
Equivalent Citations
citation codes
Case Number
Advocates
  • : Mr Ashok Arora, Petitioner in Person.
  • : Ms Suruchi Aggarwal
Judges
  • Badar Durrez Ahmed
  • Siddharth Mridul, JJ.
Acts
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Cites
Cited by
Citation Codes
Neutral Citations
2010 DHC 290-DB
Equivalent Citations
citation codes
Case Number
Advocates
  • : Mr Ashok Arora, Petitioner in Person.
  • : Ms Suruchi Aggarwal
Judges
  • Badar Durrez Ahmed
  • Siddharth Mridul, JJ.
Acts
See more information ...
Smart Summary

Judgment Summary: Badar Durrez Ahmed, J. (with Siddharth Mridul, J.) — January 19, 2010

Factual and Procedural Background

The petitioner challenged an assessment order dated 30 December 2009 for the assessment year 2002-03 by way of this writ petition seeking its quashing.

A notice under Section 148 of the Income Tax Act, 1961 was issued on 27 February 2009. The notice was sent by speed post and via a notice server; the notice server hand-delivered it on 16 March 2009 to the petitioner's chamber at Tis Hazari Courts, but the recipient recorded was a person named Sandhya Mittal, whom the petitioner denied knowing. The petitioner therefore contended he had not received the original notice.

The petitioner inspected the Assessing Officer’s file on 23 November 2009. On that date the petitioner received the reasons for reopening, a notice under Section 142(1) (and an endorsement mistakenly referring to Section 143(3) which counsel said should be 143(2)), and a letter dated 23 October 2009 asking the petitioner, inter alia, to file a return in response to the Section 148 notice and provide supporting documents by 4 November 2009.

The petitioner sent a detailed reply/objections dated 2 December 2009 (running to 35 pages). The Assessing Officer passed a speaking order on 4 December 2009 disposing of those objections.

The petitioner filed W.P.(C) No. 13977/2009 (around 16 December 2009) seeking, among other relief, quashing of the order dated 4 December 2009 and the entire proceedings under Sections 147/148. On 22 December 2009 a Division Bench directed the respondent to serve a copy of the notice dated 27 February 2009 on the petitioner within two days and disposed of that writ petition in those terms.

Pursuant to the Division Bench order, the respondent served a copy of the 27 February 2009 notice on the petitioner. The Assessing Officer then framed the assessment order on 30 December 2009. The petitioner challenged that assessment order in the present writ petition.

Legal Issues Presented

  1. Whether the assessment order dated 30 December 2009 (for A.Y. 2002-03) should be quashed.
  2. Whether the notice under Section 148 of the Income Tax Act dated 27 February 2009 was validly served on the petitioner (the petitioner alleged non-receipt and that it was handed to an unknown person named "Sandhya Mittal").
  3. Whether the petitioner was denied reasonable opportunity to respond prior to passing of the assessment order (including whether the Court's direction on 22 December 2009 to serve a copy of the notice required further opportunity to be granted before assessment was completed).
  4. Whether matters already considered by the Division Bench in W.P.(C) No. 13977/2009 could be re-agitated in this writ petition.

Arguments of the Parties

Petitioner’s Arguments

  • The petitioner asserted he never received the original notice dated 27 February 2009; the notice server's endorsement shows delivery to "Sandhya Mittal", a person the petitioner claimed not to know.
  • The petitioner contended the chamber number in Tis Hazari Courts was wrongly mentioned and that he was therefore not properly served.
  • After the Division Bench directed service of a copy of the 27 February 2009 notice, the petitioner argued he should have been given a fresh or further opportunity to respond to that notice before the assessment order was passed.

Respondent’s Arguments

  • The respondent asserted the Section 148 notice dated 27 February 2009 had been issued and served by speed post and by hand through a notice server; a photocopy of the Speed Post Booking List was produced.
  • The Assessing Officer maintained that the notice server hand-delivered the notice at the petitioner's chamber; any discrepancy in chamber number was corrected subsequently when the AO became aware of the correct chamber number.
  • The respondent's counsel clarified that the mention of Section 143(3) in the endorsement was an inadvertent error and should read Section 143(2).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
GKN Driveshafts (India) Ltd. v. Income Tax Officer and Others : 259 ITR 19 (Supreme Court) The procedure where a notice under Section 148 is issued: the noticee should file a return and may seek reasons; the Assessing Officer must furnish reasons within a reasonable time; the noticee may file objections to the issuance and the Assessing Officer must dispose of them by passing a speaking order. The court relied on this authority to observe that in the present case reasons had been disclosed, the petitioner filed objections which were dealt with by a speaking order dated 4 December 2009, and therefore the procedural sequence envisaged in GKN was followed. The petitioner nonetheless failed to file a return, leading to assessment under Section 144.

Court's Reasoning and Analysis

The court proceeded by reference to the chronological record and the prior Division Bench order of 22 December 2009. Its analysis consisted of the following steps:

  1. Clarification of what the Division Bench ordered: the court emphasized that the Division Bench had directed the respondent to serve a "copy" of the notice dated 27 February 2009 on the petitioner within two days; it did not direct issuance of a fresh Section 148 notice. The copy was duly served in compliance with that order.
  2. Examination of opportunities afforded to the petitioner: the court noted that on 23 November 2009 the petitioner inspected the Assessing Officer's file and received the reasons for reopening, the notices (including Section 142(1) and Section 143(2) erroneously recorded as 143(3) in the endorsement), and the letter of 23 October 2009 which specifically required filing a return in response to the Section 148 notice. The petitioner filed extensive objections on 2 December 2009 (35 pages), and the Assessing Officer passed a speaking order on 4 December 2009 disposing of those objections. On this basis the court concluded the petitioner had been given ample opportunity to be heard.
  3. Application of the GKN principle: citing GKN Driveshafts (India) Ltd., the court reiterated that upon issuance of a Section 148 notice the proper course includes filing a return or seeking reasons and that the Assessing Officer must furnish reasons and pass a speaking order on objections. The court found that the procedural steps required by GKN had been taken in the present case—reasons were disclosed, objections were filed and a speaking order was passed.
  4. Consequence of non-filing of return: the court observed that the petitioner did not file any return as required by law. As a result, the assessment order dated 30 December 2009 was made under Section 144 of the Income Tax Act.
  5. Preclusion of re-litigation of matters already adjudicated: the court held that the petitioner was attempting to re-agitate issues that had already been considered by the Division Bench in W.P.(C) No. 13977/2009 and rejected by the Division Bench’s order dated 22 December 2009. The court stated that re-agitating those matters in the present petition was not permissible.
  6. Remedy available to the petitioner for the assessment order: the court observed that grievances against the assessment order itself are within the petitioner’s remedy by way of appeal.

Holding and Implications

Holding: The court dismissed the writ petition and held that it had no merit. More specifically, the court found that the Division Bench's direction to serve a copy of the 27 February 2009 notice had been complied with, that the petitioner had been afforded adequate opportunity to inspect the file and to file objections (which were considered in a speaking order), and that the assessment order dated 30 December 2009 — rendered under Section 144 because no return had been filed — could not be quashed on the grounds already considered by the Division Bench.

Implications:

  • The immediate practical consequence is that the writ petition seeking quashing of the assessment order dated 30 December 2009 was dismissed and the assessment stands subject to the statutory appellate remedies available to the petitioner.
  • The court did not set out any broader novel legal proposition beyond applying the established procedure described in the cited Supreme Court authority (GKN), and the opinion does not indicate that any new precedent was laid down. The petitioner may pursue relief against the assessment order by way of appeal as noted by the court.
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    Ashok Arora Petitioner v. Commissioner Of Income Tax

    BADAR DURREZ AHMED, J (ORAL)

    1. This writ petition has been filed seeking the quashing of the assessment order dated 30th December, 2009.

    2. The events leading to the passing of the assessment order dated 30 December, 2009 in respect of the assessment year 2002-03 are as follows. A notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the said Act) was issued on 27 February, 2009. The said notice was sent by speed post as well as through a notice server. The said notice under Section 148 was hand delivered by the notice server on 16 March, 2009 at the chamber address of the petitioner at Tis Hazari Courts. However, said notice which was hand delivered on 16 March, 2009 is said to have been received by one Sandhya Mittal, whom the petitioner claims not to know. It is on this basis that the petitioner took the stand that the notice under Section 148 was not received by the petitioner.

    3. Be that as it may, it is an admitted position that the petitioner went to inspect the files available with the concerned Assessing Officer on 23rd November, 2009. On that date, the reasons for reopening of the case along with the notice under Section 142(1) as also the letter dated 23 October, 2009 were handed over to the petitioner by the Assessing Officer. The original file was shown to us by the learned counsel for the Revenue. There is an endorsement in the said file maintained by the Assessing Officer which reads as under:-

    “Reasons for reopening of the case are recd. along with notice u/s 142(1), 143(3), letter dt. 23.10.2009”

    4. The said endorsement is signed by the petitioner and the date 23 November, 2009 is written in the petitioner's handwriting. The learned counsel for the respondent states that the mention of Section 143(3) in the said endorsement is an inadvertent error and it should be read as 143(2).

    5. The letter dated 23 October, 2009 which was received by the petitioner on 23 November, 2009 as per the aforesaid endorsement was as under:-

    “OFFICE OF THE INCOME TAX OFFICER, WARD 37(3),

    ROOM NO. 408, N-BLOCK, VIKAS BHAWAN, I.P

    ESTATE, NEW DELHI

    F. No. ITO/Ward/37(3)/08-09.Dated 23/10/2009

    To,

    Sh. Ashok Arora

    76, Sukhdham Apptts,

    Plot No. 1, Sector-9, Rohini

    New Delhi-110085.

    Sir,

    Sub: Assessment proceedings u/s 143(3) in your case for the A.Y 2007-08- reg.—

    In order to complete the assessment proceedings in your case for said year, you are requested to please furnish the following details/information/confirmations and documents etc. Personal attendance not required.

    1. Return in response to notice u/s 148 dated 27.02.2009

    2. Note (with brief history) on the nature of business/profession carried on by you during the financial year 2001-02.

    3. Details of bank accounts with statements for the period from 01.04.2001 to 31.03.2002

    4. Copy of Income & Expenditure statement for the years ending on 31.3.01 and 31.3.02

    5. Details of all movable/immovable assets purchased/sold during the year.

    6. Details of loans/gifts received and given during the year.

    7. Ledger accounts of Expenses claimed in Income & Exp and to produce books of accounts for verification.

    Please furnish the above details/information before the undersigned either personally or through authorized representative on 04/11/2009 at 11.00 AM.

    Yours faithfully,

    Sd/-

    (Virender Singh Yadav)

    Income Tax Officer

    Ward 37(3), New Delhi

    6. A plain reading of the letter clearly indicates that the petitioner was required to file a return in response to the notice under Section 148 dated 27 February, 2009 amongst other documents. Of course, even if we accept the contention of the petitioner that he had not received the said letter prior to 23 November, 2009 and, as such, the date mentioned in the letter of 4 November, 2009 had gone by, it is clear that the petitioner was made aware of what he was required to do.

    7. After receipt of the said reasons for reopening of the case, copies of the said notices and a copy of the said letter dated 23 October, 2009, the petitioner sent a letter dated 2nd December, 2009 to the Assessing Officer, carrying the following subject:-

    “Reply to the notice of the assessment proceeding initiated under section 147/148 of the Income Tax Act for the assessment year 2002-03.”

    8. The said reply dated 2 December, 2009 was an exhaustive one, running into 35 pages.

    9. Thereafter on 4 December, 2009 the Assessing Officer, after going through the reply/objections received from the petitioner in respect of the reasons for reopening of the case, passed a speaking order.

    10. The petitioner being aggrieved by the said proceedings and, particularly, the speaking order dated 4 December, 2009, filed a writ petition being W.P(C) No. 13977/2009 on or about 16 December, 2009 wherein he inter alia sought quashing of the order dated 4 December, 2009 as well as the entire proceedings under Section 147/148 of the said Act. A Division Bench of this Court heard the said writ petition on 22 December, 2009 and passed the following order:-

    “22.12.2009

    Present: Petitioner in-person.

    Ms. Suruchi Aggarwal for the respondent.

    W.P(C) No. 13977/2009 and CM No. 15976/20009

    Against the petitioner herein, re-assessment proceedings are sought to be initiated by issuing notice under Section 148 of the Income Tax Act, 1961 (for short, the ‘Act’). According to the respondent, notice dated 27.2.2009 was issued by the department to the petitioner. Case of the petitioner is that he was never served with any such notice and, in fact, only on 23.11.2009 when he received telephonic call from the Assessing Officer that he came to know about the aforesaid proceedings. It is not disputed by the petitioner that the petitioner was served with reasons for reopening the assessment. The petitioner even submitted his objections thereto and order dated 4.12.2009 has already been passed on those objections.

    The only grievance made in this petition, as stated above, is that notice under Section 148 of the Act, which is a mandatory requirement for initiation of the proceedings, has not been served upon the petitioner. Though the respondent maintains that such a notice was served and learned counsel for the respondent has produced photo copy of the Speed Post Booking List issued by the Post Office, the petitioner is denying the receipt. The case of the respondent also is that this notice was served to the petitioner in his chamber. However, submission of the petitioner is that it was given to some ‘Sandhya Mittal’ and the petitioner does not know any such person. He further submits that the chamber number o the petitioner in Tis Hazari courts was wrongly mentioned, which has been changed subsequently after the AO came to know the correct chamber number of the petitioner.

    Without going into all this controversy, we direct the respondent to serve the petitioner a copy of notice dated 27.2.2009 under Section 148 of the Act within two days.

    The writ petition is disposed of in these terms.

    A.K SIKRI, J.

    J.R MIDHA, J.

    December 22, 2009”

    11. As was required by the said order dated 22 December, 2009, the learned counsel for the respondent served a copy of the notice dated 27 February, 2009 which was issued under Section 148 of the said Act. On 30 December, 2009 the Assessing Officer framed the assessment order. The present writ petition has been filed inter alia seeking quashing of the said assessment order dated 30 December, 2009.

    12. We have heard the petitioner who has appeared in person as well as the learned counsel for the respondent. We are of the view that the petitioner is trying to re-agitate matters and issues which were already considered and adjudicated upon by this Court in W.P(C) No. 13977/2009 by virtue of its order dated 22 December, 2009. The said course of action is not permissible. The petitioner submitted that the Court had directed issuance of notice under Section 148 and, therefore, he should have been given further opportunity to respond to the same and that the assessment order was passed in a hurry without affording him a reasonable opportunity. First of all, the petitioner is wrong in assuming that what was handed over by the learned counsel for the respondent was a fresh notice under Section 148. The Court had only directed the respondent to serve a “copy” of the notice dated 27 February, 2009 issued under Section 148, upon the petitioner within two days. That had been done. This did not mean that a fresh notice under Section 148 had been issued by the Assessing Officer to the petitioner. Only a copy of the notice which had already been issued to the petitioner had been ‘once again’ served upon the petitioner.

    13. Secondly, insofar as the plea of opportunity of hearing is concerned, we note that the petitioner had ample opportunities. This is clear from the fact that he inspected the file on 23 November, 2009 when he was provided the reasons for reopening of the case as well as copies of notices under Section 142(1) and 143(2) [wrongly mentioned as 143(3) in the said endorsement]. The letter of 23 October, 2009 was also available with him which inter alia required him to file the return. The petitioner also responded to the reasons for reopening of the case under Section 147/148 by filing a detailed reply/objections dated 2 December, 2009. We have already mentioned that the said objections ran into 35 pages. Therefore, it cannot be said that the petitioner was denied any opportunity.

    14. The Supreme Court in the case of GKN Driveshafts (India) Ltd. v. Income Tax Officer and Others: 259 ITR 19 clarified that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee 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 and on receipt of reasons, the noticee is entitled to file objections to the issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order.

    15. In the present case, we find that the reasons had been disclosed and furnished to the petitioner who had also filed his reply/objections which had been considered and disposed of by a speaking order dated 4 December, 2009. However, we note, the petitioner did not file any return despite the specific requirement under the law. Because the petitioner did not file a return, the assessment order dated 30 December, 2009 has been made under Section 144 of the said Act.

    16. In any event, all the proceedings prior to the passing of the assessment order were the subject matter of the said writ petition [W.P(C) 13977/2009]. The Division Bench hearing that matter did not find favour with the arguments of the petitioner and did not quash the proceedings under Section 147/148. The matter has proceeded further and has culminated in the assessment order dated 30 December, 2009. The petitioner cannot re-agitate all those issues which were already before the Division Bench which had passed order dated 22 December, 2009. Insofar as the petitioner's grievance with the assessment order is concerned, he has a remedy by way of appeal.

    17. This writ petition has no merit. The same is dismissed.

    BADAR DURREZ AHMED, J

    SIDDHARTH MRIDUL, J

    dn

    JANUARY 19, 2010

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    Ashok Arora Petitioner v. Commissioner Of Income Tax
    (Jan 19, 2010)