1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Judgment Reserved on: 12/02/2020 Judgment Delivered on : 19/02/2020 Writ Appeal No. 103 of 2020 {Arising out of Order dated 05.12.2019 in Writ Petition (T) No. 135 of 2019 by learned Single Judge} Suresh Kumar Agarwal S/o Late Shri Shankar Lal Agrawal Aged About 56 Years Civil Contractor, Jindal Fuels, Main Road, Post Lormi, District - Mungeli, Chhattisgarh 495115 Appellant Versus 1. Dy. / Assistant Commissioner of Income Tax Circle -2(1), Bilaspur 2. Pr. Commissioner Of Income Tax Bilaspur 3. Chairman, Central Board Of Direct Taxes, North Block, Central Secretariat, New Delhi 110001 Respondents For Appellant/Assessee : Shri S.Vasudevan, Shri Romir S. Goyal and Shri Shashank Sharma, Advocates. For Respondents/Revenue : Ms. Naushina Afrin Ali and Shri Amit Chaudhari, Advocates. Hon'ble Shri P.R. Ramachandra Menon, Chief Justice Hon'ble Shri Parth Prateem Sahu, Judge C.A.V. Judgment Per P.R. Ramachandra Menon, Chief Justice 1. Challenge raised against re-assessment notice issued in terms of Section 148(2) of Income Tax Act, 1961 (for short, 'the Act') and manner of disposal of specific objection raised against same with reference to Section 147 of Act came to be repelled by learned Single Judge, leading to dismissal of writ petition, which is put to challenge in this appeal. 2. Appellant/Petitioner is engaged in business of civil construction and operation of petrol pumps who submitted his return of income for assessment year 2012-2013 on 30.09.2012 declaring income of Rs. 70,95,420/-. same was taken up for scrutiny assessment 2 and it was finalised in terms of Section 143(3) of Act making some additions/deletions, in respect of which there was no grievance. proceedings were however sought to be re-opened by issuing notice under Section 148(2) read with Section 147 of Act and later, order was passed on 22.12.2018 treating unsecured loan of Rs. 3.73 crores from M/s. Dreamland Impex Pvt. Ltd. as unexplained cash credit under Section 68 in hands of Petitioner. This was subjected to challenge by filing statutory appeal and it is stated that same is pending before appellate authority. 3. While so, fresh notice for re-assessment was issued on 29.03.2019 pointing out that Assessing Officer (for short 'the AO') had reason to believe that some portion of income had still escaped assessment. Petitioner sought for reasons which is stated as supplied on 16.04.2019. On getting reasons, objections were filed by Petitioner on 25.07.2019 which came to be considered and rejected as per order passed by AO on 09.08.2019. This made Petitioner to challenge notice dated 29.03.2019 and order passed on 09.08.2019 (repelling objections) by filing writ petition before this Court. relief sought for were opposed from part of Respondents/Revenue. After hearing both sides, learned Single Judge, referring to relevant provisions of law and also various rulings rendered by Apex Court held that requirements in statutory provision had been satisfied with regard to issuance of re-assessment notice and it was not liable to be interdicted. Accordingly, writ petition was dismissed, however, observing in paragraph 28 that no opinion was being expressed with regard to merits of case, which was still pending, to be adjudicated before AO and that right to challenge finding was still open to Petitioner. Correctness of said finding and reasoning is sought to be challenged in this appeal. 3 4. We heard Shri S. Vasudevan, learned counsel appearing for Appellant/Assessee and Ms. Naushina Afrin Ali, learned Standing Counsel representing Respondent/Revenue, at length. 5. learned counsel for Appellant submits that there is finding rendered by learned Single Judge to effect that re- assessment notice issued by AO is valid, adding that learned Single Judge has not correctly and completely assessed ingredients to have satisfied before issuance of notice, particularly in terms of Section 147 of Act. It is pointed out that this is second re-assessment, after suffering scrutiny assessment under Section 143(3) and re-assessment effected thereafter on 22.12.2018. present re-assessment sought to be pursued as per notice dated 29.03.2019. only ground mentioned by AO is that he has 'reason to believe' that sum of Rs. 1.53 Crores (stated as shown by Petitioner in return and also disclosed in books of accounts) has escaped assessment. It is pointed out that said amount was not deposited in Bank as one time entry, but it is deposit involving several transactions over period of time. amounts deposited on various dates are sought to be substantiated with reference to materials produced, adding that such deposits were made by Petitioner in regular course of business and corresponding withdrawals also may be there and hence, it cannot be considered as income escaped from any assessment. 6. learned counsel further points out that provision i.e. Section 147 of Act envisages re-assessment in respect of three different stages. first one is upto period of four years where there is free hand for Respondent. But once it is beyond four years and within six years, alleged escape of income should be due to non-disclosure and such other instances as mentioned therein. Once it goes beyond six years, it becomes extraordinary circumstance with reference to foreign assets etc. 4 picture becomes more clear from first proviso to aforesaid section, from which it is revealed that there has to be failure on part of Petitioner/Assessee with regard to full disclosure of facts. This aspect as to failure on part of Assessee is also referred to by learned Single Judge. Even though, learned Single Judge has referred to 'reason to believe' for re-opening assessment as given under Section 147 of Act, scope of 'proviso' has been ignored and hence finding does not reconcile with observations made earlier. It is also stated by learned counsel that entire deposits made over period of time were cash deposits in bank account of Petitioner in course of business and same have been duly accounted in books of accounts. question has been correctly framed by learned Single Judge in paragraph 16 of judgment, to effect whether transaction of cash in savings bank account of Petitioner was new information or was tangible material which could be brought within ambit of income which has escaped assessment so as to attract provisions of Section 147 of Act. Specific reference is made to observations made by learned Single Judge in paragraphs 17, 18 and 19 to contend that though question/contention raised by Petitioner has been correctly noted and mentioned in paragraph 16, this particular aspect i.e. whether deposit of Rs. 1.53 Crores over period of time in Savings Bank Account was new information or tangible material to be considered as reason to believe for effecting re-assessment in terms of Section 147 of Act is omitted to be dealt with. 7. It is pointed out that learned Single Judge has observed in paragraph 17 of judgment that, nowhere Section 147 of Act (either in main section or under proviso) or under 'Explanation' given, is there any bar for Department to initiate re-assessment, if documents/records have already been subjected to scrutiny at time of 5 assessment. According to learned counsel, bar is created under first proviso to Section 147 of Act clearly mentioning circumstances under which it is possible to be re-opened and hence question whether those circumstances are satisfied, have not been separately considered, analyzed or appreciated. learned Single Judge has simply proceeded under impression that only requirement to effect re-assessment in terms of Section 147 of Act is that AO should have 'reasons to believe' that income concerned has escaped assessment. This has to be read and analysed with reference to time when such step is sought to be pursued i.e. when it is beyond four years and within six years, as involved in instant case. If it is coming within said slot, specific requirements with reference to non-disclosure of full details has to be established insofar as particulars with regard to deposit of Rs. 1.53 Crores in bank account over period of time has already been disclosed. Since it is supported by books of accounts, it is never new material to have acted upon by AO for causing any re-assessment under Section 147 of Act. When learned Single Judge proceeded to consider challenge after framing questions in paragraph 16, unfortunately, suppression part has been given 'go bye', though there is observation in paragraph 21 to effect that all that this Court can see, verify or scrutinize is as to whether reasons assigned are not vague, indefinite or without any basis etc. 8. It is pointed out with reference to materials produced that deposits in bank came over period of time and all those particulars were furnished before AO, which never amounts to any new material and hence, it was never fit case for second re-assessment. What is being done by AO is only roving enquiry, which is forbidden under statute. learned counsel submits that, according to learned Single Judge, sufficiency of reason need not be looked into; but it has to be considered whether it was vague, indefinite or without any basis and whether there was 6 any failure on part of Petitioner; without which proviso will not be attracted. If proviso is not attracted, no proceeding can be there under Section 147 of Act. 9. In support of above contentions, learned counsel for Appellant/Assessee seeks to place reliance on Division Bench judgment of Delhi High Court in Revolution Forver Marketing (P.) Ltd. v. Income Tax Officer {(2019) 104 Taxmann.com 61 (Delhi); paragraphs 3, 6 to 8} and Commissioner of Income Tax-Central I v. Indo Arab Air Services {(2015) 64 Taxmann.com 257 (Delhi); paragraphs 20 to 25} holding that reason for re-assessment was vague and unjustified, in turn leading to quashing of notice issued for re-assessment. It is also pointed out that reliance sought to be placed by learned Single Judge (in paragraph 26 of judgment) on verdict rendered by Division Bench in Writ Appeal No. 336 of 2019 upholding judgment passed by learned Single Judge in WP(T) No. 234 of 2018 and connected cases, is not applicable to case in hand. 10. Ms. Naushina Afrin Ali, learned Standing Counsel for Respondent/Revenue submits that appeal itself is not maintainable. It is pointed out that pursuant to notices which are under challenge in writ petition, re-assessment proceedings were finalised by AO and that Appellant has already moved appellate authority challenging re- assessment order. Since matter is pending in appeal, no interference is called for by this Court with reference to notice issued prior to re- assessment. 11. learned Standing Counsel for Revenue submits that applicability of proviso to Section 147 of Act has been explained by Apex Court in G.K.N. Driveshafts (India) Ltd. v. Income Tax Officer & Others; {2002 Supp(4) SCR 359}. It is pointed out that scrutiny 7 assessment was finalised on basis of materials furnished by assessee; but thereafter, it came to notice of AO that there were various transactions with shell companies resulting in escapement of income from tax which led to notice for re-assessment. 'reason to believe' of AO is sufficient and adequacy of reason is not matter which is to be considered by this Court. Reliance is sought to be placed on verdict passed by Apex Court in M/s. Phool Chand Bajrang Lal & Another v. Income Tax Officer & Another; {(1993) 4 SCC 77, paragraphs 24, 25 and 26} where also similar plea was raised from part of Assessee. In paragraph 25, it has been specifically observed by Apex Court that AO can start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to facts previously disclosed comes into his possession which tends to expose untruthfulness of these facts; under which circumstance it will not be mere change of opinion or drawing of different inference from same facts as were earlier available, but acting on fresh information. Reliance is also sought to be placed on verdict passed by Apex Court on Raymond Woolen Mills Ltd. v. Income Tax Officer, Centre Circle XI, Range Bombay & Others; {(2008) 14 SCC 218, paragraph 3} clearly holding that sufficiency or correctness of material is not thing to be considered at stage of issuance of notice for re- assessment under Section 147 of Act. It is pointed out that sufficient opportunity was granted to Appellant/Assessee to explain transactions also by supplying questionnaire, but Appellant-Assessee could not explain transactions to satisfaction of AO. 12. learned Standing Counsel for Revenue sought to place reliance on Division Bench verdict of Patna High Court in Alkem Laboratories Ltd. v. Principal Commissioner of Income Tax; (2019) 410 ITR 205, where it was held that, in absence of any concluded facts being 8 made available, it would not be proper to interfere at notice stage and accordingly, writ application was dismissed with liberty to avail statutory remedy, if so advised. This verdict is stated as affirmed by Supreme Court while dismissing Special Leave Petition bearing No. 24140 of 2018 as per order dated 16.11.2018. Decision rendered by Bombay High Court in Indian Hume Pipe Company Ltd. v. Assistant Commissioner of Income Tax; {(2012) 348 ITR 439} is also relied on from part of Respondents, with specific reference to observations in paragraphs 9 to 11 as to conditions precedent spelt out in provisio to Section 147 of Act and that full and true disclosure, which statute contemplates, must be judged in context of 'Explanation (1)' to Section 147 of Act. Similarly, reference is made to decisions rendered by Division Bench of Gujarat High Court in Peass Industrial Engineers Pvt. Ltd. v. Deputy Commissioner of Income Tax; {(2016) 289 CurTR 139}, Pushpak Bullion Pvt. Ltd. v. Deputy Commissioner of Income Tax; {(2017) 250 Taxman 201} and Aradhna Estate Pvt. Ltd. v. Deputy Commissioner of Income Tax; {(2018) 404 ITR 105}; all of which were in respect of challenge raised against notice for re- assessment. Interference was declined in all cases. 13. According to learned counsel for Appellant/Petitioner, it was Petitioner who had given information with regard to deposits in Bank as all these transactions were duly accounted and shown in return and hence, it was not new material. How does this information as to deposit (accounted money) leads to 'escaped income' is not matter discussed by learned Single Judge, adding that proceedings were being pursued only on basis of suspicion which cannot take place of 'reason to believe'. AO has not stated anything as to what is not disclosed. ruling rendered by Delhi High Court, reported in Bharti Infratel Limited v. Deputy Commissioner of Income Tax & Others; {(2019) 411 ITR 403 9 (Delhi)} is sought to be pressed in, contending that Explanation (1) to Section 147 of Act is having only limited operation. 14. scope of said Explanation is sought to be asserted by learned counsel for Revenue with reference to specific observation made by Division Bench of Bombay High Court in paragraphs 9, 10 and 11 of Indian Hume Pipe Company Ltd. (supra). learned counsel submits that though, some materials were submitted by Appellant-Assessee, it did not completely reveal deposit of Rs. 1.53 Crores; despite several opportunities granted. Different cash flow statements were being submitted on different occasions by Appellant- Assessee and this aspect has been specifically discussed by AO while passing assessment order, which is already subject to challenge before appellate forum. 15. After hearing both sides and taking note of consistent stand being taken by this Court that interference at notice stage is possible only in exceptional cases, this Court is of view that it is quite open for Appellant-Assessee to raise all challenges, both legal and factual, by availing statutory remedy. As pointed out already, notice/proceedings under challenge in writ petition have culminated in re-assessment order passed by AO; which admittedly has been challenged by filing statutory appeal and is pending consideration. This being position, this Court is of firm view that, it is not fit case to call for interference at this stage. 16. However, there is contention for learned counsel for Petitioner that though actual grievance of Petitioner has been correctly taken note of in paragraph 16 of judgment passed by learned Single Judge, there is some observation in following paragraphs as to scope of proceedings and mandate of statutory requirements. According to learned counsel, some of such observations 10 are quite detrimental to rights and interest of Appellant, and though appeal has already been preferred against assessment order, it may not be possible for appellate authority to consider and give independent finding with regard to scope of provisions in view of observations already made by learned Single Judge. This will make appellate remedy illusive. 17. It has been made clear in 'paragraph 28' of judgment passed by learned Single Judge that no opinion was being expressed on merits. apprehension expressed by Appellant, though not correct or sustainable in view of clear observation in view of paragraph 28 of judgment, to rule out any possibility of finding to contrary, we make it clear that observations made by learned Single Judge in judgment under challenge will stand only confined to consideration of question whether interference was to be made by this Court at notice stage or not. In other words, observations made by learned Single Judge as to scope of relevant provisions of law will not be bar for appellate authority to consider merit of appeal including question of law and question of fact. It is open for Appellant/Assessee to agitate all such aspects, both factual and legal, before appellate authority and if it is raised, it shall be considered untrammelled by observations made by learned Single Judge in judgment under challenge. 18. With above observations, we hold that appeal is not liable to be entertained. It is dismissed accordingly, without prejudice to right of Appellant to pursue his statutory remedy before appellate authority, in terms of relevant provisions of law. Sd/- Sd/- (P.R. Ramachandra Menon) (Parth Prateem Sahu) CHIEF JUSTICE JUDGE Amit Suresh Kumar Agarwal v. Dy. / Assistant Commissioner of Income-tax Circle -2(1), Bilaspur / Pr. Commissioner of Income-tax, Bilaspur / Chairman, Central Board of Direct Taxes, New Delhi