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TMI Blog2016 (12) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... f the IT Act. (4) By five separate letters dated 7 March, 2014 the office of the Deputy Commissioner of Income Tax, Circle 3, Calcutta communicated to the petitioner company the reasons for issuing notices under Section 148 of the IT Act. (5) The petitioners challenged the said communications dated 7 March, 2014 by filing WP No. 1138 of 2014 in this Court. The said writ petition was disposed of by an order dated 18 December, 2014, the operative portion whereof is as follows:- "More particulars are required. If at all there is a network through which the assessee is operating, the main circuits have to be identified. In those circumstances, the communications dated 7 March, 2014 being 'P-8' collectively, are set aside. The respondents are directed to issue fresh communications containing details to substantiate the allegations of the department by 27 February, 2015. If they are not issued, the Secs. 147, 148 proceedings in respect of the above assessment years will automatically stand dropped. If the fresh reasons are supplied, the writ petitioner will have the right to reply to them within four weeks after communication of the reasons. In that event, the Secs. 147, 148 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the purported reasons for issuing the Section 148 notices. Such reports culminated in the letters dated 7 March, 2014. However, the letters dated 7 March, 2014 were set aside by this court on the ground that the reasons mentioned therein were insufficient. Hence, the Income Tax Inspector's report cannot be the fresh reasons that were required to be supplied by the Department. This has also been accepted by the Department by not assailing the order dated 18 December, 2014. (9) Learned Counsel submitted that it is also the contention of the respondents that after issuance of a notice under Section 148 of the IT Act, fresh reasons cannot be recorded by them. Recording of reasons must precede issuance of a Section 148 notice. In spite of the same, the respondents accepted the order of this Court requiring them to give fresh reasons. Now the respondents are trying to save the situation by interpreting this Court's order in a manner which cannot be sustained. Learned Counsel emphasised that the basis of initiation of proceedings under Section 148, namely, reasons contained in the letters dated 7 March, 2014 were found to be bad and hence have been set aside and for want of power or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessment orders dated 31 March, 2015 be set aside and the petitioner company be granted liberty to file its written objection to the purported reasons supplied under cover of the letter dated 15 January, 2015 and the proceedings could take their ordinary course in accordance with law thereafter. Contention of the respondents:- (13) Appearing for the Department, Mr. Saraf, Learned Counsel submitted that notices for re-assessment under Section 148 of the IT Act for the assessment years 2007-08 to 2011-12 were issued after a survey had been conducted at the business premises of the petitioner company on 30 September, 2013. Reasons recorded for issuance of such notices were supplied by letters dated 7 March, 2015. By the order dated 18 December, 2014 passed in WP No. 1138 of 2014 this court had directed the Department to issue fresh communications containing details to substantiate the allegations of the Department. By letter dated 15 January, 2015 the Department provided the fresh reasons along with certified copy of the enquiry report containing details of the investigation. As per this Court's order, the petitioner company was required to file reply to the reasons within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the abovesaid five assessment years." (16) Learned Counsel submitted that the IT Act provides for a complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities and the assessee should not be permitted to abandon that machinery and invoke the jurisdiction of the High Court under Art. 226 of the Constitution of India when he has an adequate alternative remedy open to him by way of an appeal to the Commissioner of Income Tax (Appeals). In this connection he relied on a decision in the case of Commissioner of Income Tax-vs.-Chhabil Dass Agarwal, (2013) 357 ITR 357. (17) Learned Counsel then relied on a decision of the Hon'ble Apex Court in the case of Phool Chand Bajrang Lal-vs.-Income Tax Officer, (1993) 203 ITR 456 in support of his submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as to whether the amount so credited is given the colour of a loan or a sum representing the sale proceeds or even receipt of share application money. (19) On the basis of the aforesaid submission, Mr Saraf, submitted that the writ petition should be dismissed and the petitioners should be relegated to the alternative statutory remedy available under the IT Act. Court's View: (20) I am unable to accept the petitioner's contention that this Court's order dated 18 December, 2014 has not been followed by the Department and that therefore the Section 148 proceedings stand dropped. By the said order, this Court had found that the communications dated 7 March, 2014 were inadequate and not sufficiently informative and, hence, had set aside such communications with a direction on the Department to issue fresh communications containing details to substantiate the allegations against the assessee. The Department duly issued fresh communication dated 15 January, 2015 and along with it supplied certified copy of the enquiry report containing details of the investigation conducted by the Department at the business premises of the petitioner company. Such report makes it clear as to why the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. It is of utmost importance that any proceeding which is likely to affect the civil rights of a party is conducted strictly in accordance with the principles of natural justice. Audi alteram partem does not enshrine a principle of mere formality. It embodies a very valuable right of a citizen i.e. not to be condemned unheard. Hence, to the extent possible, courts insist on the principles of natural justice being observed in the matter of conducting proceedings which culminate in orders likely to affect the rights of the party concerned. (23) In view of the aforesaid, and for the ends of justice, I am inclined to give an opportunity to the petitioner company to file its objection to the reasons recorded by the assessing officer for issuing the notices under Sec. 148 of the IT Act so that the assessing officer may conduct the assessment proceeding afresh from that stage. Solely on that ground and without going into the merits of the assessment orders dated 31 March, 2015, the said assessment orders are set aside. The petitioners are permitted to file objection to the Department's communication dated 15 January, 2015 within three weeks from date. In the event they do so, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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