M/S Sym Singhal Alloys PVT. LTD. And Anr. vs. Union Of INDIA And Ors.
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The petitioners, M/s Sym Singhal Alloys Private Limited & Anr., filed a writ petition challenging an assessment order dated March 20, 2024, passed under Section 147 read with Section 144B of the Income Tax Act, 1961, for the assessment year 2018-19. The petitioners contended that the assessment order was vitiated because crucial documents and materials, received from the DDIT (Investigation) and the GST department, which formed the basis of the assessment, were not provided to them. They argued that this prevented them from appreciating the inquiries and responding appropriately. The petitioners also noted that out of five alleged fake entities, only four were proceeded against by the GST department, while all five were treated as fake for the purpose of their purchases. The respondents (Union of India & Ors.) argued that the impugned order was appealable and the period for filing an appeal had expired. They submitted that the petitioner was duly notified under Section 148A(b) and that any missing information was subsequently provided via email on March 23, 2022. They also stated that the petitioner did not respond to the Section 148A(b) notice or seek documents during the Section 144B proceedings.
Held
The Court noted that the assessment order was preceded by proceedings under Section 148A of the Income Tax Act, 1961, including a notice under Section 148A(b) and an order under Section 148A(d). It was observed that the petitioner had not responded to the notice under Section 148A(b). The Court found that the disclosures made in the assessment order were already present in the Section 148A(b) notice and the Section 148A(d) order. However, acknowledging that the petitioner has an alternative remedy in the form of an appeal, the Court held that all the points raised by the petitioner, including the issue of document disclosure, could be agitated before the appellate authority. The Court directed that if the petitioner files an appeal and makes an application for condonation of delay and disclosure of documents, the appellate authority should consider it in accordance with the law. The Court explicitly stated that it had not gone into the merits of the case.
Key Issues
1. Whether the assessment order dated March 20, 2024, passed under Section 147 read with Section 144B of the Income Tax Act, 1961, is vitiated due to the non-disclosure of material and information relied upon by the assessing authority, thereby denying the petitioner an adequate opportunity to respond? Petitioner's Contention: The petitioners argued that the assessment order is unsustainable because they were not provided with the information and materials received from the DDIT (Investigation) and the GST department, which were used to pass the order. This lack of disclosure prevented them from understanding the basis of the assessment and formulating an appropriate response, thus vitiating the order. They also highlighted a discrepancy in how entities were treated by the GST department versus the assessment order. Revenue's Contention: The respondents contended that the writ petition should not be entertained as the impugned order is appealable and the statutory period for filing an appeal has expired. They asserted that the petitioner was duly notified under Section 148A(b) of the Act, and any information not initially provided was subsequently furnished via email on March 23, 2022. They further argued that the petitioner failed to respond to the Section 148A(b) notice and did not seek the documents during subsequent proceedings under Section 144B.
Sections Cited
Section 147, Section 144B, Section 148A
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Cause title — parties, addresses and appearances
vitiating the aforesaid order.
It is further submitted that out of 5 entities appearing at page 181 of the writ petition who are alleged as fake entities, the GST department had proceeded against only four of them. However, in the present case all the 5 entities have been treated to be fake entities and the entire purchase made by the petitioner from the aforesaid 5 entities had been added back to the petitioner’s income.
In the facts as noted above, it is submitted that the aforesaid order cannot be sustained since the petitioner had been denied the opportunity to appreciate the purport of the enquiries, and thereby could not appropriately respond to the same.
Mr. Rai, learned advocate appearing for the respondents at the very outset submits that the order impugned in the present writ petition is an appealable order. The said order had been passed on 20th March 2024 and the present writ petition had been filed on 23rd April 2024. As such, the ordinary period for maintaining an appeal under the provisions of the said Act, has also expired. In such circumstances, this Court ought not to entertain the present writ petition. 2
By drawing attention of this Court to the notice issued under Section 148A(b) of the said Act dated 21st March 2022 for the assessment year 2018-19 appearing at page 119 of the writ petition, it is submitted that the petitioner was duly notified with regard to the circumstances under which the said proceeding had been initiated. Unfortunately, the information based on which the said proceeding had been initiated, was not made available to the petitioner along with the said notice dated 21st March 2022. Such defect having come to light, the department by an email communication dated 23rd March 2022, i.e., within 2 days from the date of service of such notice caused the information to be made available to the petitioner. In support of his contention Mr. Rai has placed before this Court a print out of the original email communication dated 23rd March 2022 which had been forwarded to him, enclosing therewith all informations based on which such proceeding had been initiated.
The relevant documents as made over in Court today by Mr. Rai are retained with the record.
By drawing attention of this Court to the order under Section 148A(d) of the said Act, Mr. Rai submits that no new information has been disclosed in the assessment order. The aforesaid order under Section 148A(d) of the said Act would 3
demonstrate the circumstances leading to initiation of proceeding under the said provision. Not only the information received from the DDIT, Investigation U2(1), Kolkata was taken into consideration but also the GST department’s incident report was also taken into consideration, as is reflected in the said order. At no point of time the petitioner has challenged the same.
The petitioner also did not respond to the notice under Section 148A(b) of the said Act. In fact, when an intimation was given to the assessee in accordance with the procedure laid down under Section 144B of the said Act vide notice dated 30th January 2023, the petitioner did not seek for the aforesaid documents. As and by way of an afterthought that too after expiry of the period for preferring the appeal the present writ petition has been filed. According to Mr. Rai, the same is liable to be dismissed.
Heard the learned advocates appearing for the respective parties and considered the materials on record.
Admittedly, in this case, it is noticed that the order of assessment issued under Section 147 read with Section 144B of the said Act was preceded by a proceeding under Section 148A of the said Act and not only a notice under Section 148A(b) of the 4
said Act was issued but an order was passed under Section 148A(d) of the said Act. The petitioner, however, had not responded to the said notice under Section 148A(b) of the said Act. The disclosures made in the order of assessment were all disclosed in the notice under Section 148A(b) of the said Act and in the order under Section 148A(d) of the said Act.
Be that as it may, since the petitioner has an alternative remedy in the form of an appeal, I am of the view that all these points can be agitated by the petitioner before the appellate authority and if the petitioner files an appeal before the appellate authority and makes an application for disclosure of the documents and other information, it shall be open to the appellate authority to consider the same, subject to the appeal being registered upon condonation of delay, in accordance with law.
I make it clear that I have not gone into the merits of the case and it shall be open to the petitioner to raise all points before the appellate authority, if so advised.
With the above observations and directions, the writ petition being WPA 11627 of 2024 is disposed of. 5
All parties to act on the basis of the server copy of this order duly downloaded from this Court’s official website. (Raja Basu Chowdhury, J.) 6
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.