Patna High Court
Shree Shakambhari Udyog Partnership … vs Commissioner Of Income Tax on 25 April, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad, Shailendra Singh
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.7244 of 2022
======================================================
Shree Shakambhari Udyog Partnership Firm having its Office at Prakash
Market Chowk, Patna City, Patna through its Partner Rajesh Bagla (Male
Aged about 54 Years Son of Ram Gopal Bagla, resident of Flat No. 501,
Durga Apartment, Mirchai Gali Chowk, Near Bank of Baroda, Patna City,
Patna-800008.
... ... Petitioner
Versus
1. Commissioner of Income Tax having its Office at Central Revenue Building,
Patna.
2. Dy. Commissioner/Asst. Commissioner Central Circle 1, Patna.
... ... Respondents
======================================================
with
Civil Writ Jurisdiction Case No. 16693 of 2022
======================================================
Shree Shakambhari Udyog partnership firm having its office at Prakash
Market Chowk, Patna City, Patna through its Partner Rajesh Bagla (Male)
aged about 54 years, son of Ram Gopal Bagla, resident of Flat No. 501, Durga
Apartment, Mirchai Gali Chowk, near Bank of Baroda, Patna City, Patna-
800008.
... ... Petitioner
Versus
1. Commissioner of Income Tax having its office at Central Revenue Building,
Patna.
2. Dy. Commissioner/Asst. Commissioner Central Circle 1, Patna.
... ... Respondents
======================================================
with
Civil Writ Jurisdiction Case No. 16697 of 2022
======================================================
Shree Shakambhari Udyog partnership firm having its Office at Prakash
Market Chowk, Patna City, Patna through its Partner Rajesh Bagla (Male)
aged about 54 years son of Ram Gopal Bagla, resident of Flat No. 501, Durga
Apartment, Mirchai Gali Chowk, Near Bank of Baroda, Patna City, Patna -
800008.
... ... Petitioner
Versus
1. Commissioner of Income Tax having its office at Central Revenue Building,
Patna.
2. Dy. Commissioner/Asst. Commissioner of Income Tax Central Circle 1,
Patna.
... ... Respondents
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
2/26
======================================================
with
Civil Writ Jurisdiction Case No. 17742 of 2022
======================================================
Shree Shakambhari Udyog partnership firm having its office at Prakash
Market Chowk, Patna City, Patna through its Partner Rajesh Bagla (Male)
aged about 54 years son of Ram Gopal Bagla, resident of Flat No. 501, Durga
Apartment, Mirchai Gali Chowk, Near Bank of Baroda, Patna City, Patna-
800008.
... ... Petitioner
Versus
1. Commissioner of Income Tax having its office at Central Revenue Building,
Patna.
2. Dy. Commissioner/ Asst. Commissioner Central Circle 1, Patna.
... ... Respondents
======================================================
Appearance :
(In Civil Writ Jurisdiction Case No. 7244 of 2022)
For the Petitioner/s : Mr. D.V.Pathy, Sr. Advocate
Mr. Sadashiv Tiwari, Advocate
Mr. Hiresh Karan, Advocate
Ms. Shivani Dewalla, Advocate
Ms. Prachi Pallavi, Advocate
For the Respondent/s : Ms. Archana Sinha @ Archana Shahi, Sr. Adv.
(In Civil Writ Jurisdiction Case No. 16693 of 2022)
For the Petitioner/s : Mr. D.V.Pathy, Sr. Advocate
Mr. Sadashiv Tiwari, Advocate
Mr. Hiresh Karan, Advocate
Ms. Shivani Dewalla, Advocate
Ms. Prachi Pallavi, Advocate
For the Respondent/s : Ms. Archana Sinha @ Archana Shahi, Sr. Adv.
(In Civil Writ Jurisdiction Case No. 16697 of 2022)
For the Petitioner/s : Mr. D.V.Pathy, Sr. Advocate
Mr. Sadashiv Tiwari, Advocate
Mr. Hiresh Karan, Advocate
Ms. Shivani Dewalla, Advocate
Ms. Prachi Pallavi, Advocate
For the Respondent/s : Ms. Archana Sinha @ Archana Shahi, Sr. Adv.
(In Civil Writ Jurisdiction Case No. 17742 of 2022)
For the Petitioner/s : Mr. D.V.Pathy, Sr. Advocate
Mr. Sadashiv Tiwari, Advocate
Mr. Hiresh Karan, Advocate
Ms. Shivani Dewalla, Advocate
Ms. Prachi Pallavi, Advocate
For the Respondent/s : Ms. Archana Sinha @ Archana Shahi, Sr. Adv.
======================================================
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
3/26
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE SHAILENDRA SINGH
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 25-04-2025
Heard Mr. D.V. Pathy, learned Senior Counsel for the
petitioner and Ms. Archana Sinha, learned Senior Counsel for the
respondents.
2. These four writ applications have been taken up for
consideration together on the request of learned counsel for the
parties and are being disposed of by this common judgment.
CWJC No. 16697 of 2023
3. This writ application has been preferred seeking the
following reliefs:-
"i) the notice dated 31.03.2021 (as contained in
Annexure - 2) issued by the respondent no. 2 under
Section 148 of the Income Tax Act, 1961 for the
Assessment Year 2017-18 be quashed.
ii) the order dated 31.03.2022 (as contained in
Annexure - 15 series) passed by the respondent no. 2
under Section 148 of the Income Tax Act, 1961 for
the Assessment Year 2017 - 18 ex parte to the best of
his judgement without allowing an opportunity to
cross examine the witness; manually passing the
order without mention of Document Identification
Number (DIN) to be mandatorily mentioned in the
assessment order in terms of the Circular No.
19/2019 dated 14.08.2022 issued by the Central
Board of Direct Taxes; without digitally signing the
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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order in terms of e assessment procedure notified by
Central Board of Direct Taxes under Notification No.
61/2019 dated 12.09.2022 and also without uploading
the order on the web portal of the Income Tax
Department be quashed.
iii) the notice of demand dated 31.03.2022 (as
contained in Annexure - 15 series) issued by the
respondent no. 2 for the Assessment Year 2017 - 18
be quashed.
iv) for granting any other relief (s) to which the
petitioner is otherwise found entitled to."
CWJC No. 7244 of 2022
4. In this writ application, the petitioner has prayed for
an identical relief, however, for the sake of convenience the reliefs
prayed in this writ application are being reproduced hereunder for
a ready reference:-
"i) the notice dated 31.03.2021 (as contained in
Annexure - 2) issued by the respondent no. 2 under
Section 148 of the Income Tax Act, 1961 for the
Assessment Year 2016-17 be quashed.
ii) the order dated 22.03.2022 (as contained in
Annexure - 10 series) passed by the respondent no. 2
under Section 148 of the Income Tax Act, 1961 for
the Assessment Year 2016 - 17 ex parte to the best of
his judgment without grant of a copy of the
complaint, materials on the basis of which the
assessment was sought to be reopened and also
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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without allowing an opportunity to cross examine the
witness be quashed.
iii) the notice of demand (as contained in
Annexure - 10 series) issued by the respondent no. 2
for the Assessment Year 2016 - 17 be quashed.
(iv) for granting any other relief(s) to which the
petitioner is otherwise found entitled to."
CWJC No. 16693 of 2022 & CWJC No. 17742 of 2022
5. This two writ applications have been preferred for
setting aside the order(s) passed by respondent no. 2 imposing
penalty under Section 270A/271(1)(c) of the Income Tax Act,
1961 for the assessment year 2016-17 and the assessment year
2017-18 respectively. In these two writ applications, the grievance
of the petitioner is that the impugned order dated 29.09.2022 has
been passed by respondent no. 2 without consideration of the
detailed written submission and also without recording reasons
solely on the basis of an ex parte order of assessment passed in
derogation of binding Circular No. 19/2019 dated 14.08.2019 and
the Notification No. 61/2019 dated 12.09.2019.
6. It is the common contention of learned counsel for the
parties that the fate of these two writ applications would depend
upon the outcome of the first two writ applications i.e. CWJC No.
16697 of 2022 and CWJC No. 7244 of 2022. For the purpose of
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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reference hereunder, we will take the records of the lead case being
CWJC No. 16697 of 2022.
Submissions on behalf of the Petitioners
7. Mr. D.V. Pathy, learned Senior Counsel submits that
in the present case the Assessing Officer has acted in complete
defiance of the Notification No. 61 of 2019 issued by the Central
Board of Direct Taxes (in short 'CBDT') on 12th September, 2019,
a copy of which has been enclosed as Annexure '16' to the writ
application. It is pointed out that the CBDT has notified Income
Tax E-Assessment Scheme, 2019. It has been issued in exercise of
powers conferred under sub-Section (3A) of Section 143 of the
Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961')
by the Central Government, therefore, it is a statutory scheme.
Paragraph '2' of the scheme contains the definitions of the various
words. Clause (xi) under paragraph '2' defines "digital signature".
It has the same meaning as assigned to it in clause (p) of sub-
Section (1) of Section 2 of the Information Technology Act, 2000
(hereinafter referred to as 'the Act of 2000').
8. Paragraph '3' of the scheme lays down the scope of
the scheme and paragraph '9' of the scheme talks of
authentication of electronic record. According to this provision, for
purpose of this scheme an electronic record shall be authenticated
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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by the originator by affixing his digital signature in accordance
with the provisions of sub-Section (2) of Section 3 of the Act of
2000. Proviso to paragraph '9' says that in case of the originator,
being the assessee or any other person, such authentication may
also be done by electronic signature or by electronic authentication
technique in accordance with the provision of sub-Section (2) of
Section 3A of the said Act. It is pointed out that the E-proceeding
scheme makes it mandatory that every notice or order or any other
electronic communication under the scheme was to be delivered to
the addressee.
9. Learned Senior Counsel has further brought to the
notice of this Court the Circular No. 19 of 2019 (Annexure '17').
Paragraph '2' thereof has been relied upon to submit that in order
to prevent manual issuance of any notice, order, summons, letter
and any correspondences without maintaining a proper audit trail
of such communication it has been decided that no
communication shall be issued by any Income Tax authority
relating to assessments, appeals, orders, statutory or otherwise,
exemptions, enquiry, investigation, verification of information,
penalty, prosecution, rectification, approval etc. to the assessee or
any other person, on or after the 1st day of October, 2019 unless a
computer-generated Document Identification Number (DIN) has
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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been allotted and is duly quoted in the body of the such
communication. It is submitted that under paragraph '3' of the
Circular No. 19/2019, some exceptional circumstances have been
laid down by way of exception and only in such cases, the
communication may be issued manually but only after recording
reasons in writing in the file and prior written approval of the
Chief Commissioner/Director General of Income Tax.
10. In the aforementioned background of Annexure '16'
and Annexure '17' to the writ application, learned Senior Counsel
for the petitioner has submitted that in this case, respondent no. 2
issued a notice under Section 148 of the Act of 1961 for the
assessment year 2017-18. The said notice has been signed
manually. The petitioner filed a return under Section 148 of the
Act of 1961 on 09.01.2022. The respondent no. 2 issued another
notice dated 08.03.2022 under Section 143(2) read with Section
147 of the Act of 1961 for the assessment year 2017-18 and issued
letter dated 11.03.2022 for the assessment year 2017-18.
Respondent no. 2 further issued a show cause notice dated
20.03.2022
and all these correspondences have been made
manually. Learned Senior Counsel has drawn our attention
towards the assessment order (Annexure ’15’) and the notice of
demand under Section 156 of the Act of 1961 attached therewith to
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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show that these documents have been signed by hand and not
digitally. It is submitted that in view of the scheme and the circular
referred hereinabove, these documents are to be held invalid.
11. Learned Senior Counsel has further submitted that it
would appear from the statements made in the counter affidavit
that there were three partners of the petitioner firm, namely, Smt.
Kumud Bagla, Mr. Pradeep Bagla and Mr. Rajesh Bagla. Smt.
Kumud Bagla sent a complaint on 22.02.2021 to the Department.
As per the said complaint, the petitioner had understated its actual
business receipt in order to defraud the revenue during the
financial year 2015-16 and 2016-17.
12. It is submitted that the petitioner had filed its
original receipt of income for the assessment year 2017-18 on
28.08.2018 against the due date of 30.10.2017 as prescribed under
Section 139(1) of the Act of 2000. In the said return, total income
of Rs.1,46,91,120/- was admitted. The return was processed under
Section 143(1). It is his submission that the petitioner had, on
receipt of the notice under Section 142(1) of the Act of 1961
submitted a written submission stating therein that on receipt of
the notice, the petitioner has filed its return online and thereafter
prayed for supply of reasons recorded in writing which form the
basis of issuance of notice under Section 148 of the Act of 1961.
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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The petitioner was provided show cause of the
information/complaint received from one of the partners. It was his
contention that he has maintained proper books of accounts as
mandated under the Act of 1961. Referring to the complaint, he
submitted that the complainant has indulged in making false and
baseless allegations. She had approached the Hon’ble High Court
for appointment of a sole Arbitrator and when Hon’ble Mr. Justice
Ramesh Kumar Dutta (retired) was appointed as a sole Arbitrator,
he has noted the conduct of the complainant in one of his order
dated 22.11.2019. The petitioner claimed that he was unable to
comprehend the basis of the complaint made. It was contended
that the complaint was malicious and it does not bring on record
any corroborative material to prove the transactions having been
carried out by the petitioner.
13. Learned Senior Counsel for the petitioner submits
that the complaint contained a hand written volume of certain
transactions and unless the complainant is allowed to be cross-
examined on the point of her allegations, it would not have been
appropriate for the Assessing Authority to rely upon the complaint
while passing the assessment order. Learned Senior Counsel has
relied upon the judgment of the Hon’ble Supreme Court in the
case of Andaman Timber Industries versus Commissioner of
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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Central Excise, Kolkata-II reported in (2016) 15 SCC 785,
(paragraph ‘6’) wherein it has been held that not allowing the
assessee to cross-examine the witnesses by the Adjudicating
Authority though the statements of those witnesses were made the
basis of the impugned order is a serious flaw which makes the
order a nullity inasmuch as it amounted to violation of the
principles of natural justice.
14. Learned Senior Counsel, therefore, submits that the
impugned order of assessment has been passed by respondent no.
2 in violation of the principles of natural justice, therefore, it will
come within the meaning of jurisdictional error, hence, liable to be
interfered with by this Court under Article 226 of the Constitution
of India.
Submissions on behalf of the Department
15. On the other hand, Ms. Archana Sinha, learned
Senior Counsel for the Department has opposed the writ
application firstly on the ground that the petitioner has got an
alternative equally efficacious remedy of appeal but instead of
availing his remedy in accordance with law, he has moved this
Court invoking its extraordinary writ jurisdiction under Article 226
of the Constitution of India. Learned Senior Counsel submits that
recently in Godrej Sara Lee Ltd. versus Excise and Taxation
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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Officer-cum-Assessing Authority and Others reported in 2023
SCC OnLine SC 95, the Hon’ble Supreme Court has once again
dealt with the issue of alternative remedy and observed that High
Court should normally not entertain a writ petition.
16. Learned Senior Counsel has placed before this Court
the communication dated 31.03.2022 which is enclosed with the
assessment order (Annexure ’15’, page 108) of the writ
application. It is pointed out that because of some technical glitch,
earlier while uploading the order of assessment and notice of
demand (Annexure ’15’), the document could not be digitally
signed and no DIN was provided but after noticing this
discrepancy, on the same day, the Assessing Officer issued this
communication in which DIN and letter number have been duly
mentioned. This communication is digitally signed and is in
accordance with the scheme and circular of the Department.
17. Learned Senior Counsel further submits with
reference to the screenshot of the portal of the Income Tax
Department present at page 109 of the writ application that it
provides for a choice to be marked (tick) by the assessee, if he
wants to avail an opportunity of personal hearing. In this case, the
petitioner had not marked (tick) on the portal of the Department
seeking personal hearing, therefore, it cannot be allowed to be
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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argued by the petitioner that the Department had not given him an
opportunity to cross-examine the complainant.
18. It has been further argued that in this case, the
Assessing Officer has not recorded statements of the complainant,
therefore, it would not be correct to say that the petitioner was
required to be given an opportunity to cross-examine the
complainant.
19. Referring to paragraph ‘6’ of the judgment of the
Hon’ble Supreme Court in the case of Andaman Timber
Industries (supra), learned Senior Counsel submits that in the said
case, the order of the Commissioner was found based upon the
statements given by the two witnesses and even when the assessee
disputed the correctness of the statements and wanted to cross-
examine, the Adjudicating Authority did not grant this opportunity
to the assessee. In the said case, the impugned order passed by the
Adjudicating Authority specifically mentioned that such an
opportunity was sought by the assessee. It is, therefore, submitted
that the present case is completely distinct and different from that
of Andaman Timber Industries (supra). In such circumstance, it
cannot be said that the impugned order of assessment has been
passed in violation of principles of natural justice.
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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Consideration
20. We have heard learned Senior Counsel for the parties
and have perused the records. So far as the submissions with
regard to the non-signing of the notices and orders digitally by
respondent no. 2 is concerned, we find no merit in the submissions
of learned Senior Counsel for the petitioner. On record, we have
found that the communication dated 31.03.2022 forms part of
Annexure ’15’ to the writ application. It has been digitally signed
and contains DIN.
21. In the opinion of this Court, the whole case of the
petitioner would depend upon the success of his submission that in
this case, the Department had not given him any opportunity to
cross-examine the complainant.
22. The Hon’ble Supreme Court in the case of Godrej
Sara Lee Ltd. (Supra) has held that the High Court should
normally not entertain a writ petition. Paragraph ‘4’ of the said
judgment reads as under:-
“4. …… It is axiomatic that the High Courts (bearing
in mind the facts of each particular case) have a
discretion whether to entertain a writ petition or not.
One of the self-imposed restrictions on the exercise
of power under article 226 that has evolved through
judicial precedents is that the High Courts should
normally not entertain a writ petition, where an
effective and efficacious alternative remedy is
available. At the same time, it must be remembered
that mere availability of an alternative remedy of
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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jurisdiction of the High Court under article 226 has
not pursued, would not oust the jurisdiction of the
High Court and render a writ petition “not
maintainable”. In a long line of decisions, this court
has made it clear that availability of an alternative
remedy does not operate as an absolute bar to the
“maintainability” of a writ petition and that the rule,
which requires a party to pursue the alternative
remedy provided by a statute, is a rule of policy,
convenience and discretion rather than a rule of law.
Though elementary, it needs to be restated that
“entertainability” and “maintainability” of a writ
petition are distinct concepts. The fine but real
distinction between the two ought not to be lost sight
of. The objection as to “maintainability” goes to the
root of the matter and if such objection were found to
be of substance, the courts would be rendered
incapable of even receiving the lis for adjudication.
On the other hand, the question of “entertainability”
is entirely within the realm of discretion of the High
Courts, writ remedy being discretionary. A writ
petition despite being maintainable may not be
entertained by a High Court for very many reasons or
relief could even be refused to the petitioner, despite
setting up a sound legal point, if grant of the claimed
relief would not further public interest. Hence,
dismissal of a writ petition by a High Court on the
ground that the petitioner has not availed the
alternative remedy without, however, examining
whether an exceptional case has been made out for
such entertainment would not be proper.”
23. So far as the contention of learned Senior Counsel
based on the Circular (Annexure ’17’) is concerned, the Circular
no doubt states in paragraph ‘4’ that “Any communication which is
not in conformity with Para-2 and Para-3 above, shall be treated as
invalid and shall be deemed to have never been issued.”
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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24. Paragraph ‘2’ makes it mandatory that no
communication shall be issued by any authority relating to
assessment/appeals/orders/statutory or otherwise, exemptions,
inquiry or investigation, verification of information, penalty,
prosecution, rectification, approval etc. to the assessee or any other
person, on or after the first day of October 2019 unless a computer
generated Document Identification Number (DIN) has been
allotted and is duly quoted in the body of such communication.
However, paragraph ‘3’ of the Circular No. 19 of 2019 dated 14 th
August, 2019 carries out certain exceptional circumstances such
as-
(i) when there are technical difficulties in
generating/allotting/quoting the DIN and issuance of
communication electronically; or
(ii) when communication regarding enquiry, verification
etc. is required to be issued by an income-tax authority,
who is outside the office, for discharging his official
duties; or
(iii) when due to delay in PAN migration, PAN is lying
with non-jurisdictional Assessing Officer; or
(iv) when PAN of assessee is not available and where a
proceeding under the Act (other than verification under
section 131 or section 133 of the Act) is sought to be
initiated; or
(v) When the functionality to issue communication is not
available in the system;”
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
17/26In the aforementioned exceptional circumstances, the
communication may be issued manually but only after recording
reasons in writing in the file and with prior written approval of the
Chief Commissioner/Director General of Income Tax. Paragraph
‘5’ of the Circular states as under:-
“5. The communication issued manually in the
three situations specified in para 3- (i), (ii) or (iii)
above shall have to be regularised within 15
working days of its issuance, by-
i. uploading the manual communication on the
System;
ii. compulsorily generating the DIN on the
System;
iii. communicating the DIN so generated to the
assessee/any other person as per electronically
generated pro-forma available on the System.”
25. In the light of the aforementioned circular, it has
been contended in the counter affidavit of the Department that the
case of the petitioner for the assessment year 2017-18 was
reopened on 31.03.2021 after recording of reasons for doing so as
per law. The prior sanction of the competent authority was taken
for the initiation of the assessment proceeding. Accordingly, the
notice was issued under Section 148 of the Income Tax Act.
26. It is the further stand of the Department that the
assessment order for assessment year 2017-18 and computation
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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sheet for the assessment year 2017-18 had common DIN and date
31.03.2022 which is digitally signed by the Assessing Officer. It is
evident from the Circular No. 19 of 2019 that under certain
exceptional circumstances communication may be issued without
a computer generated DIN but the same is curable within fifteen
working days of its issuance.
27. In the present case, the assessment order (Annexure
’15’) was initially issued by the Assessing Officer without
generating a DIN without documents attached to the assessment
order and the notice were also issued in the hand-writing signature
of the Assessing Officer but subsequently, the Assessing Officer
has cured the defect and the Assessing Officer issued a digitally
signed letter dated 31.03.2022 with computer generated DIN and
letter number. There is no contention of the petitioner that the
online service of orders-letter present at page number 108 of the
writ application (CWJC No. 16697 of 2022) has not been served
upon the petitioner. It is, therefore, evident that on the same date,
the defect was cured, therefore, all issues raised in this regard by
the petitioner would liable to fail.
28. The second contention of learned Senior Counsel is
that the revenue proceeding justified in relying upon the complaint
and the statement of the complainant without giving an
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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opportunity to the petitioner to cross-examine the complainant. It
is submitted that in the present case, the complaint which is
undated and unsigned has been made basis of the re-assessment
proceeding.
29. This Court has gone through the assessment order. It
contains the reason for re-opening of the assessment year 2017-18
relevant to financial year 2016-17. It is based on information
passed on to the office and after analysis of the said information.
The reason for reopening of the assessment was made known to
the petitioner and the petitioner has been made available a copy of
the complaint-information. The petitioner was served with a show
cause notice to explain as to why the amount of Rs.5,59,47,257/-
should not be treated as escaped amount and why the mentioned
amount should not be added back in his income. The petitioner
received the show cause notice and submitted his reply through
online/e-mail along with ledgers which have been perused and
examined by the Assessing Officer. The Assessing Officer has
recorded that in spite of supply of reason of proceedings and other
relevant documents to the assessee as well as sufficient
opportunity, the assessee has failed to prove and substantiate that
how the undisclosed sales amount of sattu, maida, atta, besan,
daliya and suji and other by-products of Rs.5,59,47,257/- have
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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been accounted in the books of account for the assessment year
2017-18. In the operating part of its order, the Assessing Officer
has inter alia recorded as under:-
“Sale for the AY 2017-18 as per assessee is: Rs.
174269125
Actual Sale as per information received and as per
calculation: Rs. 433923267.33 Difference in sale as
per information received over sale as per assessee’s
return for the AY 2017-18-259654142.33
Since despite being given multiple opportunities,
assessee failed to explain the differences, difference
amount of Rs: 25,96,54,142/- is being treated as
unaccounted sales of above items.
Gross Profit Ratio as per Audit Report for the AY
2017-18 is 18.395%
Income escaped for the AY 2017-18 = 18.395% of
259654142.33 i.e Rs. 47763379.48
Further, it was calculated that income from sale of by
product Rs.7526423/-. Assessee was asked to explain
along with documentation evidences that how the
figures of sales which is under the proceedings u/s
147 were included in the books of accounts for the
relevant year, hence income of Rs 75,26,423). as
sales from by products is being added in its income
for the relevant year.
Further, it was calculated that Income from sale of
Gunny bags is Rs 6,03,455/
which assessee has failed to explain/submit and
substantiate despite being given multiple
opportunities. Therefore income of Rs 6,03,455/ is
being added in his income Laxuy, income from sale
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
21/26or cartoonx on the piano packaging materials in
which plastics rolls was calculated no. Rs 4500 x 13
Rs. 84000 as basis, which assess did not explain.
Therefore Rs. 54000 is being added in his income.
5. Hence, as per the above discussion, total
unexplained business income of the assessee is
Rs.47763379.48 +Rs.7526423 +Rs.603455 +
Rs.54000 = Rs.5,59,47, 257/-.”
30. Neither from the assessment order nor from the
averments made in the writ application, it would appear that in
this case, the Assessing Officer has examined the complainant
in course of the proceeding. The petitioner has placed on
record its written submissions. In paragraph ‘8’ and ‘9’ of the
written submission, the petitioner has mentioned the contents
of the complaint and the fact that the complainant had also
filed handwritten volumes of certain transactions. In his
written submissions, the petitioner admits that the complaint
contains a handwritten volume of certain transactions. He has
made a submission that unless, the complaint along with
handwritten volumes are shown to have a rational connection
with the business carried out by the petitioner, the same
cannot form a basis of re-assessment. He has sought to cross-
examine the complainant and relied upon the judgment of the
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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Hon’ble Supreme Court in the case of Andaman Timber
Industries (supra).
31. It is evident from his submissions that the
petitioner was provided with xerox copies of the
information/complaint and the voluminous documents
showing some transactions and admits that the complaint
contained the quantum of sales and also profit, it appears to
this Court that the information and documents of transactions
furnished by the complainant, who happened to be one of the
partners of the petitioner-firm, is the basis of the issuance of
notice and the reason to believe for the re-assessment
proceeding. So far as the assessment order is concerned, the
Assessing Officer has examined the information with
reference to the documents of transactions which came from
the complainant and this has been done only after giving an
opportunity of hearing to the petitioner.
32. In the case of Andaman Timber Industries
(supra), the adjudicating authority under the Central Excise
Act carried out an investigation after noticing huge
discrepancy in the price of goods shown by the assessee in its
declaration under Section 173C of the Central Excise Rules.
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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In course of investigation, statements of two buyers were
recorded and on that basis, show-cause notice dated
03.05.1995 was served upon the assessee. Based on that
statement of the two buyers, a show-cause notice was served
upon the assessee stating as to why the price at which the
goods were sold to these customers from the depots may not
be the basis for determining the value for the purpose of
excise duty. This was being contested by Andaman Timber
Industries challenging the correctness of the statements of the
two witnesses, they demanded right to cross-examine the
witnesses but the request was refused. In the aforementioned
background of facts when the matter travelled to the Hon’ble
Supreme Court, the Hon’ble Supreme Court were of the view
as under:-
“According to us, not allowing the assessee to
cross-examine the witnesses by the Adjudicating
Authority though the statements of those witnesses
were made the basis of the impugned order is a
serious flaw which makes the order nullity
inasmuch as it amounted to violation of principles
of natural justice because of which the assessee
was adversely affected. It is to be borne in mind
that the order of the Commissioner was based upon
the statements given by the aforesaid two
witnesses….”
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
24/26
33. This Court is of the considered opinion that the
case of the petitioner would stand on a different footing from
that of Andaman Timber Industries (supra). In the present
case, not only the copy of complaint but even the documents
showing transactions of the firm were made available to the
petitioner. The impugned order is not based on any
examination of the complainant. In fact, there is no recording
of the statement of the complainant or any other witness. The
impugned order of assessment is based upon the materials
which came to the notice of the Assessing Officer. After
analysing the same, when the Assessing Officer was of the
view that despite supply of reason of proceedings and other
relevant documents to the assessee as well as sufficient
opportunity, the assessee has failed to prove and substantiate
that how undisclosed sales amount have been accounted in the
books of accounts for the assessment year 2017-18, he has
passed the impugned order.
34. In the case of Bharat Petroleum Corporation
vs. N.R. Vairamani and Anr. reported in (2004) 8 SCC 579,
the Hon’ble Supreme Court has put a word of caution when
the Court opined that the judgment of the Court should not be
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
25/26
cited like a Euclid’s theorem as a slight change in the facts of
the case would make a sea difference in the opinion of the
Court. We extract that part of the observation of the Hon’ble
Supreme Court in paragraph ‘9’ of its judgment hereunder:-
9. Courts should not place reliance on decisions
without discussing as to how the factual situation
fits in with the fact situation of the decision on
which reliance is placed. Observations of courts are
neither to be read as Euclid’s theorems nor as
provisions of a statute and that too taken out of
their context. These observations must be read in
the context in which they appear to have been
stated. Judgments of courts are not to be construed
as statutes. To interpret words, phrases and
provisions of a statute, it may become necessary for
judges to embark into lengthy discussions but the
discussion is meant to explain and not to define.
Judges interpret statutes, they do not interpret
judgments. They interpret words of statutes; their
words are not to be interpreted as statutes. In
London Graving Dock Co. Ltd. v. Horton2 (AC at p.
761) Lord MacDermott observed : (All ER p. 14 C-
D)
“The matter cannot, of course, be settled merely by
treating the ipsissima verba of Willes, J., as though
they were part of an Act of Parliament and applying
the rules of interpretation appropriate thereto. This
is not to detract from the great weight to be given to
the language actually used by that most
distinguished judge,…”
2. 1951 AC 737 : (1951) 2 All ER 1 (HL)
Patna High Court CWJC No.7244 of 2022 dt.25-04-2025
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35. It is not for this Court sitting in its writ
jurisdiction to analyse the kind of information and the
documents which were in possession of the Assessing Officer
while passing the impugned order of assessment.
36. In result, we find no jurisdictional error in the
impugned order. These writ applications are dismissed but
with liberty to the petitioner to seek its statutory remedy in
appeal, if so advised, before the competent/authority
appropriate forum.
37. If any such remedy is applied for within a period
of four weeks from today, the same will be considered by the
Appellate Authority keeping in view that the petitioner was
pursuing its remedy before this Court in the present writ
application under some legal advice.
(Rajeev Ranjan Prasad, J)
(Shailendra Singh, J)
SUSHMA2/-
AFR/NAFR AFR CAV DATE 19.02.2025 Uploading Date 25.04.2025 Transmission Date 25.04.2025
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