Smt. Smriti kedia vs Union of India and Others

Soumitra Pal, J.—In the writ petition, the petitioner, who had all along filed IT returns in Kolkata, including return for the asst. yr. 1999-2000 and is assessed at Kolkata, has challenged the notice under s. 148 of the IT Act ("Act" for short) dt. 28th March, 2006 for the asst. yr. 1999-2000 (for short the "assessment year") issued by the ITO, Ward-29(3), New Delhi, the respondent No. 2 (for short "the said respondent") and the notices which, according to her, are consequential, principally on the ground that as there was no order of transfer of assessment records of the petitioner from Kolkata to New Delhi under s. 127 of the Act, the said respondent had no jurisdiction and authority to assume jurisdiction over the petitioner. Facts, as it appears from the petition, are that during the previous year relevant to the assessment year, the petitioner carried on activity of an investor in shares and earned long-term capital gains, speculation profit, dividend and interest income. During the said previous year, the income and gains were invested in repayment of loans and for purchase of a residential flat at New Delhi. On 13th Oct., 1999, the petitioner filed the IT return for the asst. yr. 1999-2000 before the ITO, Ward-18(4), Kolkata, who at the relevant point of time, had jurisdiction over her. The said ITO for the said assessment year did not issue notice either under s. 142(1) or under s. 143(2) of the Act. Since August, 2001, after effecting structural changes in the IT Department at Kolkata. the ITO, Ward-29(2), Kolkata, the respondent No. 3, has been having jurisdiction over the petitioner. The respondent No. 3 too neither issued any notice nor any assessment was done on the return for the said assessment year. Therefore, the said return is pending. During the pendency of the assessment of the return for the said assessment year, the petitioner received the impugned notice under s. 148 dt. 28th March, 2006 wherein it has been alleged that the said respondent had reasons to believe that the income of the petitioner chargeable to tax for the said assessment year had escaped assessment within the meaning of s. 147 of the Act. Therefore, the said respondent proposed to "assess" the same and directed the petitioner to file return for the said assessment year.

By a letter furnished on 31st March, 2006, before the said respondent at New Delhi, the petitioner acknowledged receipt of the impugned notice under s. 148 and intimated that she is assessed at Kolkata. Along with the said letter, a copy of the IT return for the asst. yr. 1999-2000 was enclosed. Thereafter, the petitioner received a letter dt. 13th Nov., 2006 from the respondent No. 3 at Kolkata intimating that she had failed to file the return in response to the notice issued under s. 148 and it was assumed that she wanted to make the Department to treat the original return filed by her as the return filed under s. 148. The petitioner was requested to file the written submission by 17th Nov., 2006 failing which, It was intimated, original return filed by her would be treated as the return filed under s. 148. In response, the petitioner by letter dt. 16th Nov., 2006 intimated the respondent No. 3 to treat the original return filed by her as the return filed under s. 148, a copy of which was submitted along with the said letter. Thereafter, the respondent No. 3 in connection with the assessment for the said assessment year issued a notice under s. 142 dt. 20th Nov., 2006, whereby the petitioner was directed to produce accounts and/or documents, a list of which was appended thereto. It appears from the list of documents that she was intimated that the return of Income in response to the notice under s. 148 was yet to be filed. Pursuant to the said notice under s. 142, the petitioner by a letter dt. 27th Nov., 2006 intimated the respondent No. 3 that as no order under the Act was passed by any of the authorities transferring her assessment records either from Kolkata to New Delhi or from New Delhi to Kolkata, the notice under s. 148 was without jurisdiction and Illegal and a request was made to drop the assessment proceedings. Thereafter, respondent No. 3 along with the letter dt. 7th Dec., 2006 furnished a copy of the recorded reasons dt. 28th March, 2006 issued by the said respondent and the notice under s: 143(2) dt. 7th March, 2006 directing the petitioner to attend hearing on 12th Dec, 2006 regarding return of income for the said assessment year submitted on 16th Nov., 2006.

According to the petitioner, since no order was passed under s. 127 of the Act transferring her assessment records either from Kolkata to New Delhi or from New Delhi to Kolkata, the impugned notice under s. 148 and all subsequent notices pursuant thereto are arbitrary, without jurisdiction and illegal. Moreover, since return was submitted on 13th Oct., 1999, in view of the second proviso to the s. 143(2), the notice under s. 143(2), assuming same is independent of s. 148, is time-barred. That apart, in view of s. 153(1), the notice under s. 143(2) is beyond the period of limitation.

The question is whether the impugned notice under s. 148 of the Act, issued by the ITO, Ward-29(3), the said respondent, was in accordance with law. If not, whether the subsequent notices can be construed to be independent of the proceedings under s. 148 of the Act.

It is evident that the Department in its affidavit in opposition has not denied the fact that all along the petitioner was assessed at Kolkata. That apart, there is nothing on record to show that pursuant to an order under s. 127 of the Act, the assessment records of the petitioner were transferred either from Kolkata to New Delhi or from New Delhi to Kolkata. Therefore, unless records were validly transferred from Kolkata to New Delhi, the said respondent had no jurisdiction to issue notice under s. 148 for the assessment year in question. Hence, the Impugned notice dt. 28th March, 2006 under s. 148 issued by the respondent No. 2 is arbitrary, without jurisdiction and illegal. So far as the other impugned notices are concerned, since it is evident from the notice dt. 13th Nov., 2006 issued by the respondent No. 3, that it was pursuant to the notice under s. 148, the same is also without jurisdiction and illegal. The notice under s. 142 of the Act dt. 20th Nov., 2006 issued by the respondent No. 3, is also without jurisdiction and illegal as evidently it was consequent to the notice under s. 148, it being obvious from the "requisitions" appended to the said notice that the petitioner was intimated that "in response to notice under s. 148, you have not yet filed your return of income". So far as the notice under s. 143(2) dt. 7th Dec, 2006 issued by the respondent No. 3 is concerned, since it was enclosed along with the notice dt. 7th Dec, 2006 with regard to the assessment proceedings under s. 147 initiated by the respondent No. 2 for the said assessment year, that too, is arbitrary and Illegal. Therefore, the notices dt. 13th Nov., 2006, 20th Nov., 2006, 7th Dec, 2006 and the other notice dt. 7th Dec, 2006, all issued by the respondent No. 3 are set aside and quashed. Hence, the writ petition is allowed. No order as to costs.