Utkal Trading Company Private Limited vs Central Board Of Direct Taxes

Utkal Trading Company Private Limited Kachery Road, Rourkela - 769 012 Sundargarh, Odisha Represented by its Director Sri Prabhat Kumar Tibrewal Aged about 61 years Son of Late Sambunath Tibrewal Residing at Plot No.:O-7, 7 and 8 Area Rourkela - 769 004 District: Sundargarh Odisha ... Petitioner

-VERSUS-

1. Central Board of Direct Taxes Represented by Chairman, North Block New Delhi - 110 002.

2. Joint Commissioner of Income Tax Aayakar Bhawan, Rourkela Range Udit Nagar, Rourkela Odisha - 769 012.

3. Income Tax Officer, Ward-3 Aayakar Bhawan, Rourkela Range Udit Nagar, Rourkela Odisha - 769 012. ... Opposite Parties.

W.P.(C) No.16357 of 2025 Page 1 of 76 Counsel appeared for the parties:

For the Petitioner : M/s. Chitrasen Parida, Debasish Hazra, Advocates

For the Opposite Parties : Mr. Avinash Kedia, Junior Standing Counsel, Income Tax Department

P R E S E N T:

HONOURABLE CHIEF JUSTICE MR. HARISH TANDON AND

HONOURABLE JUSTICE MR. MURAHARI SRI RAMAN

Date of Hearing : 01.07.2025 :: Date of Judgment : 01.07.2025

J UDGMENT

MURAHARI SRI RAMAN, J.--

Questioning legality, impropriety and arbitrariness of issue of Notice dated 29.04.2025 issued by the Income Tax Officer, Ward-3, Rourkela in exercise of power conferred under Section 148 (Annexure-1) consequent upon decision vide Order passed even date under Section 148A(3) of the Income Tax Act, 1961 (Annexure-

3), the petitioner approached this Court insisting to invoke extraordinary jurisdiction under the provisions of Articles 226 and 227 of the Constitution of India, with the following prayer(s):

W.P.(C) No.16357 of 2025 Page 2 of 76 "In view of the above facts and circumstances, it is most respectfully prayed that this Hon‟ble Court may graciously be pleased to:

a) Admit the writ application;

b) Issue a writ of certiorari or in the nature of certiorari

or any other appropriate writ, order or direction for quashing the notice dated 29.04.2025 issued under Section 148 and the Order dated 29.04.2025 passed under Section 148A(3) pursuant to notice dated 20.03.2025 issued under Section 148A(1) of the Income Tax Act, 1961, by the opposite party No.3 for the Assessment Year 2020-21 under Annexure-1 and 3 respectively;

c) And if the opposite parties fail to show cause or sufficient cause, then the rule may be made absolute;

d) And further your Lordships may please to pass such other order/orders as your Lordships may deemed fit and proper;

And for this act of kindness, the petitioner as in duty bound shall ever pray."

Facts as pleaded and submissions made by learned counsel for the petitioner:

2. The petitioner, a private limited company carrying on business in trading of sponge iron, billets and mild steel scraps, etc., is stated to have filed e-returns on 08.12.2020 pertaining to Assessment Year 2020-21 [Financial Year 2019-20] reflecting facts and figures in

W.P.(C) No.16357 of 2025 Page 3 of 76 tune with the books of account audited under Section 44AB of the Income Tax Act, 1961 (for short, "IT Act").

2.1. Alleging bogus purchases to the tune of Rs.34,99,247/-

being effected from M/s. Madhumita Steel Industries Pvt. Ltd. during the said Assessment Year the Income Tax Officer, Ward-3, Rourkela ("Assessing Officer", for convenience) issued Notice dated 12.03.2024 under Section 148A(b) in pursuance of which an Order dated 23.03.2024 was passed under Section 148A(1), which was subject matter of challenge before this Court in a writ petition being W.P.(C) No.8865 of 2024 (hereafter referred to as "first writ petition").

2.2. Said first writ petition was disposed of with the following observation vide Order dated 15.04.2024:

"6. Considering the contentions raised by learned counsel for the parties and without expressing any opinion on the merits of this case, since Mr. S.C. Mohanty, learned Senior Standing Counsel for the Revenue made a fair submission that opportunity of hearing has not been given to the petitioner, the order dated 23.03.2024 passed by the authority under Section 148A(d) of the Income Tax Act cannot be sustained in the eye of law and the issuance of consequential notice under Section 148 of the Income Tax Act under Annexure-2 also cannot be sustained in the eye of law. Thereby, the same are liable to be quashed and are hereby quashed. This Court remits the matter to the very same authority to hear afresh by giving opportunity of hearing to W.P.(C) No.16357 of 2025 Page 4 of 76 the petitioner and pass appropriate order in accordance with law.

7. With the above observation and direction, the writ petition stands disposed of."

2.3. In connection with such direction of this Court, the ITO issued Letter dated 09.04.2025 to the petitioner requesting to furnish reply/explanation and in compliance thereof, the assessee filed reply/explanation with respect to the allegations made on 28.04.2025. The Assessing Officer issued Notice dated 29.04.2025 under Section 148 (Annexure-1) upon consideration of written reply of the assessee and affording opportunity vide Order dated 29.04.2025 passed under Section 148A(3) (Annexure-3). Said Order has been issued by the ITO after having obtained prior approval of the Joint Commissioner of Income Tax, Rourkela Range, Rourkela as required under Section 148A(3).

2.4. The petitioner has come up before this Court by way of filing the present writ petition challenging the Notice under Section 148 as well as the Order under Section 148(3).

Hearing:

3. The matter is listed for possibility of entertainment of writ petition questioning the Notice under Section 148 of

W.P.(C) No.16357 of 2025 Page 5 of 76 the IT Act issued on being satisfied to initiate proceeding by Order under Section 148A(3).

3.1. As short point has been raised whether the ITO is competent to issue Notice under Section 148 inasmuch as the amount of escapement of income from assessment being quantified at less than Rs.50,00,000/- in view of interdiction contained in Section 149(1) of the IT Act, on consent, the counsel for respective parties final hearing is conducted today.

3.2. Heard Sri Chitrasen Parida, learned Advocate for the petitioner and Sri Avinash Kedia, learned Junior Standing Counsel for the opposite parties.

Arguments:

4. Sri Chitrasen Parida, learned Advocate appearing for the petitioner advanced following submissions:

(i) After expiry of three years and three months from the end of the relevant Assessment Year 2020-21, Notice dated 29.04.2025 being issued under Section 148, the same is hit by law for the income alleged to have escaped assessment has been quantified at Rs.34,99,247/- vide Order dated 29.04.2025 passed under Section 148A(3);

(ii) The reopening of assessment by issue of Notice under Section 148 of the IT Act is without

W.P.(C) No.16357 of 2025 Page 6 of 76 jurisdiction of ITO for the same is within the domain of authority under the National Faceless Assessment Centre (NFAC) in terms of Section 151A.

5. Sri Avinash Kedia, learned Junior Standing Counsel opposing such contentions submitted that initially the ITO had invoked power under Section 148A, as it existed at the relevant point of time, pursuant to which an Order was passed under Section 148A(d) and said Order got quashed by this Court in the first writ petition, with an order of remit to the Assessing Officer. Said section being substituted with effect from 01.09.2024 vide the Finance (No.2) Act, 2024, a Notice dated 29.04.2025 under Section 148 has been issued as a sequel to Order dated 29.04.2025 passed under Section 148A(3) in compliance of order of remit by this Court vide Order dated 15.04.2024 passed in W.P.(C) No.8865 of 2024. Therefore, there is no incongruity in issue of such notice. Expanding his argument further it is submitted that having accepted said order of this Court, the assessee participated in the proceeding in furtherance of Notice dated 20.03.2025 under Section 148A(1) issued in connection with order of this Court. It is fervently submitted that the petitioner-assessee cannot after such participation question the legality of proceeding under Section 148 of the IT Act.

W.P.(C) No.16357 of 2025 Page 7 of 76 Relevant statutory provisions:

6. To comprehend the issue, the relevant statutory provisions as it existed during the period of assessment (Assessment Year 2020-21) and after remand order passed by this Court may deserve to be taken note of.

6.1. Provisions of Section 148, Section 148A and Section 149 of the IT Act are reproduced hereunder:

Prior to amendment by virtue of Post amendment by virtue of the Finance (No.2) Act, 2024 the Finance (No.2) Act, 2024 with effect from 01.09.2024 with effect from 01.09.2024

148. Issue of notice where income has escaped 148.Issue of notice where assessment.-- income has escaped assessment.--

Before making the assessment, reassessment or re-computation under Section 147, and (1) Before making the subject to the provisions of Section 148A, the assessment, Assessing Officer shall serve on the assessee reassessment or a notice, along with a copy of the order recomputation under passed, if required, under clause (d) of Section 147, the Section 148A, requiring him to furnish within Assessing Officer shall, a period of three months from the end of the subject to the provisions month in which such notice is issued, or such of Section 148A, issue a further period as may be allowed by the notice to the assessee, Assessing Officer on the basis of an along with a copy of the application made in this regard by the order passed under sub- assessee, a return of his income or the income section (3) of Section of any other person in respect of which he is 148A, requiring him to assessable under this Act during the previous furnish, within such year corresponding to the relevant period as may be assessment year, in the prescribed form and specified in the notice, verified in the prescribed manner and setting not exceeding three forth such other particulars as may be months from the end of prescribed; and the provisions of this Act the month in which such shall, so far as may be, apply accordingly as notice is issued, a return if such return were a return required to be of his income or income furnished under Section 139: of any other person in respect of whom he is Provided that no notice under this section assessable under this

W.P.(C) No.16357 of 2025 Page 8 of 76 shall be issued unless there is information Act during the previous with the Assessing Officer which suggests year corresponding to the that the income chargeable to tax has relevant assessment escaped assessment in the case of the year. assessee for the relevant assessment year and the Assessing Officer has obtained prior Provided that no notice approval of the specified authority to issue under this section shall such notice: be issued unless there is information with the Provided further that no such approval shall Assessing Officer which be required where the Assessing Officer, with suggests that the income the prior approval of the specified authority, chargeable to tax has has passed an order under clause (d) of escaped assessment in Section 148A to the effect that it is a fit case the case of the assessee to issue a notice under this section: for the relevant assessment year:

Provided also that any return of income, required to be furnished by an assessee Provided further that under this section and furnished beyond the where the Assessing period allowed shall not be deemed to be a Officer has received return under Section 139. information under the scheme notified under Explanation-1.-- Section 135A, no notice under this section shall For the purposes of this section and Section be issued without prior 148A the information with the Assessing approval of the specified Officer which suggests that the income authority. chargeable to tax has escaped assessment means,-- (2) The return of income required under sub-

(i) any information in the case of the section (1) shall be assessee for the relevant assessment furnished in such form year in accordance with the risk and verified in such management strategy formulated by the manner and setting forth Board from time to time; such other particulars, as may be prescribed, and

(ii) any audit objection to the effect that the the provisions of this Act assessment in the case of the assessee shall, apply accordingly for the relevant assessment year has as if such return were a not been made in accordance with the return required to be provisions of this Act; or furnished under Section 139:

(iii) any information received under an agreement referred to in Section 90 or Provided that any return Section 90A of the Act; or of income required under sub-section (1), furnished

(iv) any information made available to the after the expiry of the Assessing Officer under the scheme period specified in the notified under Section 135A; or notice under the said

W.P.(C) No.16357 of 2025 Page 9 of 76

(v) any information which requires action in sub-section, shall not be consequence of the order of a Tribunal deemed to be a return or a Court. under Section 139:

Explanation-2.-- (3) For the purpose of this section and Section For the purposes of this section, where,-- 148A, the information with the Assessing

(i) a search is initiated under Section 132 Officer which suggests or books of account, other documents or that the income any assets are requisitioned under chargeable to tax has Section 132A, on or after the 1st day of escaped assessment April, 2021, in the case of the assessee; means-- or

(i) any information in

(ii) a survey is conducted under Section the case of the 133A, other than under sub-section (2A) assessee for the of that section, on or after the 1st day of relevant assessment April, 2021, in the case of the assessee; year in accordance or with the risk management

(iii) the Assessing Officer is satisfied, with strategy formulated the prior approval of the Principal by the Board from Commissioner or Commissioner, that time to time; or any money, bullion, jewellery or other valuable article or thing, seized or (ii) any audit objection to requisitioned under Section 132 or the effect that the Section 132A in case of any other assessment in the person on or after the 1st day of April, case of the assessee 2021, belongs to the assessee; or for the relevant assessment year has

(iv) the Assessing Officer is satisfied, with not been made in the prior approval of Principal accordance with the Commissioner or Commissioner, that provisions of this Act;

any books of account or documents, or seized or requisitioned under Section 132 or Section 132A in case of any other (iii) any information person on or after the 1st day of April, received under an 2021, pertains or pertain to, or any agreement referred to information contained therein, relate to, in Section 90 or the assessee, the Assessing Officer Section 90A of the shall be deemed to have information Act; or which suggests that the income chargeable to tax has escaped (iv) any information assessment in the case of the assessee made available to the where the search is initiated or books of Assessing Officer account, other documents or any assets under the scheme are requisitioned or survey is conducted notified under in the case of the assessee or money,

W.P.(C) No.16357 of 2025 Page 10 of 76 bullion, jewellery or other valuable Section 135A; or article or thing or books of account or documents are seized or requisitioned in (v) any information case of any other person. which requires action in consequence of the Explanation-3.-- order of a Tribunal or a Court; or For the purposes of this section, specified authority means the specified authority (vi) any information in referred to in Section 151. the case of the assessee emanating 148A. Conducting inquiry, providing opportunity from survey before issue of notice under Section 148.-- conducted under Section 133A, other The Assessing Officer shall, before issuing than under sub-

any notice under Section 148,-- section (2A) of the said section, on or

(a) conduct any enquiry, if required, with the after the 1st day of prior approval of specified authority, with September, 2024. respect to the information which suggests that the income chargeable to tax has 148A. Procedure before escaped assessment; issuance of notice under Section 148.--

(b) provide an opportunity of being heard to the assessee, by serving upon him a (1) Where the Assessing notice to show cause within such time, as Officer has information may be specified in the notice, being not which suggests that less than seven days and but not income chargeable to tax exceeding thirty days from the date on has escaped assessment which such notice is issued, or such time, in the case of an as may be extended by him on the basis assessee for the relevant of an application in this behalf, as to why assessment year, he a notice under Section 148 should not be shall before issuing any issued on the basis of information which notice under Section 148 suggests that income chargeable to tax provide an opportunity of has escaped assessment in his case for being heard to such the relevant assessment year and results assessee by serving of enquiry conducted, if any, as per clause upon him a notice to

(a); show cause as to why a notice under Section 148

(c) consider the reply of assessee furnished, should not be issued in if any, in response to the show-cause his case and such notice notice referred to in clause (b); to show cause shall be accompanied by the

(d) decide, on the basis of material available information which on record including reply of the assessee, suggests that income whether or not it is a fit case to issue a chargeable to tax has notice under Section 148, by passing an escaped assessment in order, with the prior approval of specified his case for the relevant

W.P.(C) No.16357 of 2025 Page 11 of 76 authority, within one month from the end assessment year. of the month in which the reply referred to in clause (c) is received by him, or where (2) On receipt of the notice no such reply is furnished, within one under sub-section (1), the month from the end of the month in which assessee may furnish time or extended time allowed to furnish a his reply within such reply as per clause (b) expires: period, as may be specified in the notice.

Provided that the provisions of this section shall not apply in a case where,-- (3) The Assessing Officer shall, on the basis of

(a) a search is initiated under Section 132 or material available on books of account, other documents or any record and taking into assets are requisitioned under Section account the reply of the 132A in the case of the assessee on or assessee furnished after the 1st day of April, 2021; or under sub-section (2), if any, pass an order with

(b) the Assessing Officer is satisfied, with the the prior approval of the prior approval of the Principal specified authority Commissioner or Commissioner that any determining whether or money, bullion, jewellery or other valuable not it is a fit case to article or thing, seized in a search under issue notice under Section 132 or requisitioned under Section Section 148. 132A. in the case of any other person on or after the 1st day of April, 2021, belongs (4) The provisions of this to the assessee; or section shall not apply to income chargeable to tax

(c) the Assessing Officer is satisfied, with the escaping assessment for prior approval of the Principal any assessment year in Commissioner or Commissioner that any the case of an assessee books of account or documents, seized in where the Assessing a search under Section 132 or Officer has received requisitioned under Section 132A, in case information under the of any other person on or after the 1st day scheme notified under of April, 2021, pertains or pertain to, or Section 135A. any information contained therein, relate to, the assessee; or Explanation.--

(d) the Assessing Officer has received any For the purposes of this information under the scheme notified section and Section 148, under Section 135A pertaining to income "specified authority"

chargeable to tax escaping assessment for means the specified any assessment year in the case of the authority referred to in assessee. Section 151.

Explanation.--

For the purposes of this section, specified authority means the specified authority

W.P.(C) No.16357 of 2025 Page 12 of 76 referred to in Section 151.

Analysis and discussions:

7. The facts are undisputed that alleging bogus purchases to the tune of Rs.34,99,247/- effected from M/s. Madhumita Steel Industries during the Financial Year 2019-20 [related to Assessment Year 2020-21] which is stated to have escaped assessment of tax, the petitioner was issued with Notice dated 12.03.2024 under Section 148A(b) [pre-amended provision] by the ITO and an Order dated 23.03.2024 under Section 148(d) was passed, consequent upon which a Notice dated 23.03.3024 was issued under Section 148 contemplating assessment of tax under the IT Act.

7.1. Such Notice under Section 148 and the Order under Section 148A(d) was quashed by this Court in Order dated 15.04.2024 on the conceded position by counsel for the both sides that no opportunity of hearing was afforded to the petitioner before passing Order under Section 148(d). Meticulous reading of Order dated 15.04.2024 of this Court in the first writ petition would reveal that the Notice dated 12.03.2024 under Section 148A(b) [pre-amended] remained intact, but the Assessing Officer was directed to pass appropriate order after hearing the petitioner by affording an opportunity of hearing.

W.P.(C) No.16357 of 2025 Page 13 of 76 7.2. It is of significance to have regard to the expression "information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment" as found incorporated in relevant provisions referred to supra.

7.3. As the word "suggest" being not defined in the IT Act, the meaning can be ascertained from the Advanced Law Lexicon, wherefrom it can be culled out that,

"The word „suggest‟, either in its meaning as ordinarily employed or as affected by the context of the will, that can be regarded as expressive of confidence, or belief, or desire, or hope or will, or as the equivalent of a word of entreaty or recommendation: is in fact, and a precatory word at all, in the ordinary sense."

Per Black‟s Law Dictionary, Revised Fourth Edition, 1968 the following meaning is given:

"Suggest.-- To introduce indirectly to the thought; to propose with diffidence or modesty; to hint; to intimate. Sims Vrs. Ratcliff, 62 Ind.App. 184, 110 N.E. 122, 123."

Meaning of "suggest" as per The New Merriam-Webster Dictionary, 1989 Edition is:

"1. To put (as a thought, plan, or desire) into a person‟s mind;

2. to remind or evoke by association or ideas syn.

Imply, hint, intimate, insinuate, connote."

W.P.(C) No.16357 of 2025 Page 14 of 76 It is reflected in Oxford Advanced Learner‟s Dictionary of Current English, Eighth Impression, 1985 that,

"Suggest.--

1. Suggest something to somebody; suggest to somebody that...; suggest doing something, propose; put forward for consideration, as a possibility ***

2. Bring (an idea, possibility, etc.) into the mind: ***

3. (reflex) come into the mind: An idea suggests itself to me, has occurred to me."

7.4. From an analogous reading of the Order passed under Section 148A and the Notice under Section 148, it is understood that the Assessing Officer is in possession of "information" about bogus purchases made by the petitioner during the Financial Year 2019-20. Section 148A uses the word "information" which triggers action by the Assessing Officer. The connotation of "information" in the context of reopening of assessment has succinctly been laid down in the case of Larsen & Toubro Limited Vrs. State of Jharkhand, (2017) 103 VST 1 (SC) (Paragraphs 21, 22 & 27) = (2017) 13 SCC 780 which may be reproduced herein below:

"21. It is also pertinent to understand the meaning of the word „information‟ in its true sense. According to the Oxford Dictionary, „information‟ means facts told, heard or discovered about somebody/something. The Law Lexicon describes the term „information‟ as the act or process of informing, communication or W.P.(C) No.16357 of 2025 Page 15 of 76 reception of knowledge. The expression „information‟ means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or having a bearing on the assessment. We agree that a mere change of opinion or having second thought about it by the competent authority on the same set of facts and materials on the record does not constitute „information‟ for the purposes of the State Act. But the word "information" used in the aforesaid Section is of the widest amplitude and should not be construed narrowly. It comprehends not only variety of factors including information from external sources of any kind but also the discovery of new facts or information available in the record of assessment not previously noticed or investigated. Suppose a mistake in the original order of assessment is not discovered by the Assessing Officer, on further scrutiny, if it came to the notice of another assessor or even by a subordinate or a superior officer, it would be considered as information disclosed to the incumbent officer. If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Officer in such circumstances is in one sense extraneous to the record. It will be information in his possession within the meaning of Section 19 of the State Act. In such cases of obvious mistakes apparent on the face of the record of assessment, that record itself can be a source of information, if that information leads to a discovery or belief that there has been an escape of assessment or underassessment or wrong assessment.

W.P.(C) No.16357 of 2025 Page 16 of 76 22. There are a catena of judgments of this Court holding that assessment proceedings can be reopened if the audit objection points out the factual information already available in the records and that it was overlooked or not taken into consideration. Similarly, if audit points out some information or facts available outside the record or any arithmetical mistake, assessment can be re-opened.

***

27. The expression „information‟ means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or after bearing on the assessment. We are of the clear view that on the basis of information received and if the assessing officer is satisfied that reasonable ground exists to believe, then in that case the power of the assessing authority extends to reopening of assessment, if for any reason, the whole or any part of the turnover of the business of the dealer has escaped assessment or has been under assessed and the assessment in such a case would be valid even if the materials, on the basis of which the earlier assessing authority passed the order and the successor assessing authority proceeded, were same. ***"

7.5. The action based on the subjective opinion or satisfaction can judicially be reviewed first to find out the existence of the facts or circumstances on the basis of which the authority is alleged to have formed the opinion. It is true that ordinarily the Court should not inquire into the correctness or otherwise of the facts

W.P.(C) No.16357 of 2025 Page 17 of 76 found except in a case where it is alleged that the facts which have been found existing were not supported by any evidence at all or that the finding in regard to circumstances or material is so perverse that no reasonable man would say that the facts and circumstances exist. The Courts will not readily defer to the conclusiveness of the authority‟s opinion as to the existence of matter of law or fact upon which the validity of the exercise of the power is predicated. The doctrine of reasonableness thus may be invoked. Where there are no reasonable grounds for the formation of the authority‟s opinion, judicial review in such a case is permissible. Where the circumstances or material or state of affairs does not at all exist to form an opinion and the action based on such opinion can be quashed by the Courts. Hence, in effect there is no evidence whatsoever to form or support the opinion. The distinction between insufficiency or inadequacy of evidence and no evidence must, of course, be borne in mind. A finding based on no evidence as opposed to a finding which is merely against the weight of the evidence is an abuse of the power which courts naturally are loath to tolerate. Whether or not there is evidence to support a particular decision has always been considered as a question of law. When the conclusion is drawn is based on irrelevant matter, it is said that the authority would be deemed not to have applied its mind W.P.(C) No.16357 of 2025 Page 18 of 76 or it did not honestly form its opinion. The existence of circumstances is a condition precedent to form an opinion. The Court can inquire whether the facts and circumstances so found to exist have a reasonable nexus with the purpose for which the power is to be exercised. In other words, if an inference from facts does not logically accord with and flow from them, the Courts can interfere treating them as an error of law. Thus, the Court can see whether on the basis of the facts and circumstances found, any reasonable man can say that an opinion as is formed can be formed by a reasonable man. That would be a question of law to be determined by the Court. Where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. The Court can interfere if the constitutional or statutory term essential for the exercise of the power has either been misapplied or misinterpreted. The Courts have always equated the jurisdictional review with the review for error of law and have shown their readiness to quash an order if the meaning of the constitutional or statutory term has been misconstrued or misapplied. It is permissible to interfere in a case where the power is exercised for improper purpose. If a power granted for one purpose is exercised for a different purpose, then it will be deemed that the W.P.(C) No.16357 of 2025 Page 19 of 76 power has not been validly exercised. If the power in this case is found not to have been exercised genuinely for the purpose of taking immediate action but has been used only to avoid embarrassment or wreck personal vengeance, then the power will be deemed to have been exercised improperly. The grounds which are relevant for the purpose for which the power can be exercised have not been considered or grounds which are not relevant and yet are considered and an order is based on such grounds, then the order can be attacked as invalid and illegal. On the same principle, the administrative action will be invalidated if it can be established that the authority was satisfied on the wrong question. The aforesaid principles of exercise of power vis-à-vis validity of exercising power has been discussed elaborately by the Hon‟ble Supreme Court of India in Amarendra Kumar Pandey Vrs. Union of India, 2022 SCC OnLine SC 881.

7.6. "Proceeding" is frequently used to denote a step in an action and obviously it has that meaning in such phrases as proceeding in any cause or matter. When used alone, however, it is in certain statutes to be construed as synonymous with or including action. Reference may be had to Halsbury‟s Laws of England, Vol. 1, 3rd Edition, page 6.

7.7. The term "proceeding" is a very comprehensive term and generally speaking means a prescribed course of action W.P.(C) No.16357 of 2025 Page 20 of 76 for enforcing a legal right. It is not a technical expression with a definite meaning attached to it, but the one, the ambit of whose meaning, will be governed by the statute. It indicates a prescribed mode in which judicial business is conducted. Refer: Babu Lal Vrs. Hazari Lal Kishori Lal, AIR 1982 SC 818 = (1982) 1 SCC 525.

In Commander Coast Guard Region (East) Vrs. O. Konavalov, 2001 SCC OnLine Mad 28 it is laid down that the word "Proceeding" has not been defined in the General Clauses Act, 1897. Oxford Dictionary explains the term "Proceeding" as "an action taken in a Court to settle a dispute." The Black‟s Law Dictionary, Seventh Edition, Edited by Bryan A. Garner, Editor-in-Chief, gives the meaning of the word "Proceeding" as:

"the regular and orderly progression of a law suit. Including all acts and events between the time of commencement and the entry of judgment; any procedural means for seeking redress from a tribunal or agency".

Words and Phrases (Legally Defined) [2nd Edition] Butterworths Publication explains the term "Proceedings" as:

"The term „proceeding‟ is frequently used to note a step in an action, and obviously it has that meaning in such phrases as "proceeding in any cause or matter". When used alone, however, it is in certain statutes to be construed as synonymous with, or including "action"

[Halsbury‟s Laws (3rd Edition) 5, 6]."

W.P.(C) No.16357 of 2025 Page 21 of 76 The term "Legal Proceedings" is explained as:

"*** „Legal Proceedings‟ mean prima facie that which the words would naturally import-- i.e., legal process taken to enforce the rights of the Shipowner, Runchiman & Co. Vrs. Smyth & Co., 1994 (20) T.L.R. 625, per Lord Alverstone,C.J., at P.626."

The said Dictionary also refers to a Book "The Law of Pleading under the Code of Civil Procedure" by Edwin E. Bryant, and quoted as under:

"*** „Proceeding‟ is a word much used to express the business done in courts. A proceeding in Court is an act done by the authority or direction of the court, express or implied. It is more comprehensive than the word „action‟, but it may include in its general sense all the steps taken or measures adopted in the prosecution or defense of an action, including the pleadings and Judgment."

The term „proceeding‟ would only mean a legal process taken to enforce the rights. The dictionary meaning of the word "proceeding" is "the institution of a legal action, any step taken in a legal action". In general sense, it is the form and manner of conducting juridical business before a Court or judicial officer; and regular and orderly progress in form of law including all possible steps in an action from its commencement to the execution of judgment. Term also refers to administrative proceedings before agencies, tribunals, bureaus or the like. See: Most Rev. P.M.A. Metropolitan Vrs. Moran Mar Marthoma, 1995 Supp (4) SCC 286 = AIR 1995 SC 2001.

W.P.(C) No.16357 of 2025 Page 22 of 76 In P.L. Kantha Rao Vrs. State of AP, AIR 1995 SC 807 = (1995) 2 SCC 471, it is stated that the word „proceeding‟ would depend upon the scope of the enactment wherein the expression is used with reference to a particular context where it occurs. It may mean a course of action for enforcing legal right. In the journey of litigation, there are several stages, one of which is the realisation of the judicial adjudication which attained finality. The expression "proceeding" is not a term of art, which has acquired a definite meaning. What its meaning is when it occurs in a particular statute or a provision of a statute will have to be ascertained by looking at the relevant statute. Bearing in mind that the term "proceeding" indicates something in which, business is conducted according to a prescribed mode it would be only right to give it a comprehensive meaning so as to include within it all matters coming up for judicial adjudication and not to confine it to a civil proceeding alone. Vide: Ram Chandra Aggarwal & Another Vrs. State of Uttar Pradesh & Another, AIR 1966 SC 1888 = 1966 Supp. SCR 393.

The term „proceeding‟ is a very comprehensive term and generally speaking, means a prescribed course of action for enforcing a legal right. It is a term giving the widest freedom to a Court of law so that it may do justice to the parties in the case. See: Kantaru Rajeevaru Vrs. Indian

W.P.(C) No.16357 of 2025 Page 23 of 76 Young Lawyers Association, (2020) 9 SCC 121 [9-Judge Bench].

Reference is made to Mathew M. Thomas Vrs. CIT, (1999) 2 SCC 543, wherein it has been said that it is sufficient to refer to the Judgment of the Court in Garikapati Veeraya Vrs. N. Subbiah Choudhry, AIR 1957 SC 540 wherein the court said at p.553:

"(i) That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding."

In Oriental Gas Co. Ltd. Vrs. State of WB, (1973) 32 STC 141 (Cal) it is observed that a proceeding under the sales tax statute comprehends the whole procedure for the levy, assessment, and collection of the tax liability of a dealer. When some step or action is taken for the ascertainment of imposition of that liability, the proceeding can be said to have commenced under the Act. Filing of return is a step in the procedure for the assessment of the liability of a dealer under the Act. By filing of such a return the machinery for assessment and imposition of liability is set in motion and with the filing of such a return a proceeding commences under the Act.

7.8. The word „initiate‟ has been employed in Section 20 of the Contempt of Courts Act, 1971, which provides that no Court shall initiate any proceedings for contempt, W.P.(C) No.16357 of 2025 Page 24 of 76 either on its own motion or otherwise, after the expiry of a period of one year from the date on which the contempt is alleged to have been committed. In the Pallav Sheth Vrs. Custodian, (2001) 107 Comp Cas 76 (SC) = (2001) 7 SCC 549 it has been held that in the case of suo motu proceedings, contempt proceeding must be initiated by the Court by issuing a notice and in other cases initiation can only be by a party filing an application. Under Section 20 of the Contempt of Courts Act, 1971 action can be initiated, either by filing an application or by the Court issuing notice suo motu, within a period of one year from the date on which the contempt is alleged to have been committed.

In Kishan Lal & Co. Vrs. Additional Commissioner of Commercial Tax, (2017) 102 VST 343 (Chhatisgarh) = 2017 SCC OnLine Chh 584 the initiation of proceeding has been described in the following manner:

"11. The word „initiate‟ or „initiation‟ has not been defined in the Act. Since it has not been defined in the Act, it would be appropriate to refer to the dictionary meaning of the word „initiate‟. In Webster‟s Third New International Dictionary, the word „initiate‟ has been defined as to begin or set going; make a beginning of; perform or facilitate the first actions, steps or stages of. Likewise, in Shorter Oxford English Dictionary, the word „initiate‟ has been defined as to begin, commence, enter upon; to introduce, set going, originate.

W.P.(C) No.16357 of 2025 Page 25 of 76 12. Black‟s Law Dictionary, 6th Edition, defines the words „initiate‟ and „initiative‟ as:

"Initiate: Commence; start; originate; introduce; inchoate. Courtesy, initiate is the interest which a husband has in the wife‟s lands after a child is born who may inherit, but before the wife dies. To propose for approval - as schedule of rates. Idaho Power Co. Vrs. Thompson, D.C. Idaho, 19 F. 2d 547,

579.

Initiative: An electoral process whereby designated percentages of the electorate may initiate legislative or constitutional changes through the filing of formal petitions to be acted on by the legislature or the total electorate. The power of the people to propose bills and laws, and to enact or reject them at the polls, independent of legislative assembly. Hughes Vrs. Bryan, Okl., 425 P. 2d 952, 954. Not all state constitutions provide for initiative."

13. Thus, the word „initiation‟ of suo motu revision as stated in proviso (a) to Section 9(3) of the Chhatisgarh Value Added Tax Act, 2005, has a definite connotation. Initiation of revisional proceeding is the time when the revisional authority applies its mind to the facts/materials on record and decides to direct issuance of notice in accordance with Rule 61 of the Rules proposing the proposed order and intimating the assessee his intention to take the proceeding in suo motu proceeding. Proviso

(a) to Section 49(3) of the Act is the condition precedent to exercise the power of revisional authority under that procedure. It merely contemplates initiation of proceeding by the revisional authority on its own or otherwise. The W.P.(C) No.16357 of 2025 Page 26 of 76 proceeding can be said to be initiated only when the revisional authority on its own motion or on the motion made otherwise decides to issue notice to the other side.

***

16. Therefore, what is required and condition precedent for initiation of proceeding by invoking Section 9(3) of the Chhatisgarh Value Added Tax Act, 2005, would be initiation of proceeding under Section 9(3) of the Act and initiation can be done only when the revisional authority applies its mind to the facts of the case on his own motion or on the information received. Once there is application of mind by the revisional authority for suo motu proceeding or on the basis of the information received and he decides to issue notice as contemplated under Rule 61 of the Chhatisgarh Value Added Tax Rules, then the exercise of initiation is complete and initiation cannot be said to be made only when the notice is received under Rule 61 by the assessee."

7.9. Perusal of record reveals that after passing of the Order dated 29.04.2025 under Section 148A(3) in compliance of the remand order being passed by this Court in the first writ petition and issue of notice for assessment under Section 148 of the IT Act pertaining to Assessment Year 2020-21, the petitioner has participated in the proceeding and can avail further opportunities not only before the Assessing Officer but also before the other statutory Authorities, if circumstances so warrant. In

W.P.(C) No.16357 of 2025 Page 27 of 76 the above premises, it is unwarranted to show indulgence in matter pertaining to Order dated 29.04.2025 passed under Section 148A(3) and Notice dated 29.04.2025 issued under Section 148 of the IT Act in exercise of extraordinary jurisdiction under Article 226/227 of the Constitution of India. Acceding to the contention of the petitioner would tantamount to rendering violence to the provisions of Section 148.

8. The above narration of factual matrix read juxtaposition with the Order dated 15.04.2024 passed in W.P.(C) No.8865 of 2024 makes it abundantly clear that this Court, in effect, relegated the petitioner to avail the opportunity of hearing and participation in the proceeding sought to be initiated by the ITO and the ITO was required to proceed with the matter post-service of Notice dated 12.03.2024 invoking provisions of Section 148A(b) of the IT Act. It is significant to take note that while disposing of the first writ application, this Court consciously did not quash the proceeding initiated by the ITO under Section 148A. Therefore, this Court has no doubt in mind that though Notice dated 20.03.2025 (after disposal of the first writ petition) is purported to have been issued under Section 148(1) [as amended with effect from 01.09.2024 by virtue of the Finance (No.2) Act, 2024], is in continuation of already initiated proceeding by Notice dated 12.03.2024.

W.P.(C) No.16357 of 2025 Page 28 of 76 8.1. It is well-settled principle of law as reiterated by the Supreme Court in Shri Anant R. Kulkarni Vrs. Y.P. Education Society, (2013) 6 SCR 1124 qua the effect with respect to setting aside an order that:

"It is a settled legal proposition that, once the Court sets aside an order of punishment on the ground, that the enquiry was not properly conducted, the Court should not severely preclude the employer from holding the inquiry in accordance with law. It must remit the concerned case to the disciplinary authority, to conduct the enquiry from the point that it stood vitiated, and to conclude the same in accordance with law. However, resorting to such a course depends upon the gravity of delinquency involved. Thus, the court must examine the magnitude of misconduct alleged against the delinquent employee. It is in view of this, that courts/tribunals, are not competent to quash the charge-sheet and related disciplinary proceedings, before the same are concluded, on the aforementioned grounds. (Vide: Managing Director, ECIL, Hyderabad etc. etc. Vrs. B. Karunakar etc. etc., AIR 1994 SC 1074; Hiran Mayee Bhattacharyya Vrs. Secretary, S.M. School for Girls, (2002) 10 SCC 293; U.P. State Spinning C. Ltd. Vrs. R.S. Pandey, (2005) 8 SCC 264; and Union of India Vrs. Y.S. Sandhu, Ex-Inspector, AIR 2009 SC 161)."

8.2. A reference to Anantdeep Singh Vrs. The High Court of Punjab and Haryana at Chandigarh, (2024) 9 SCR 135 may not be inept in the present context, wherein it has been stated thus:

W.P.(C) No.16357 of 2025 Page 29 of 76 "Once the termination order is set aside and judgment of the High Court dismissing the writ petition challenging the said termination order has also been set aside, the natural consequence is that the employee should be taken back in service and thereafter proceeded with as per the directions. Once the termination order is set aside then the employee is deemed to be in service. We find no justification in the inaction of the High Court and also the State in not taking back the appellant into service after the order dated 20.04.2022. No decision was taken either by the High Court or by the State of taking back the appellant into service and no decision was made regarding the back wages from the date the termination order had been passed till the date of reinstatement which should be the date of the judgment of this Court. In any case, the appellant was entitled to salary from the date of judgment dated 20.04.2022 till fresh termination order was passed on 02.04.2024. The appellant would thus be entitled to full salary for the above period to be calculated with all benefits admissible treating the appellant to be in continuous service."

8.3. The ITO in Notice dated 20.03.2025 under Section 148A recorded the following:

"It is to be mentioned that an Order under Section 148A(d) was passed on 23.03.2024 in your case after giving you opportunity of being heard vide this office notice under Section 148A(b) dated 12.03.2024. But, being aggrieved with the order and basing upon the fact that you were not able to see your e-mail on account of some personal matters, you filed a writ petition on 08.04.2024 before Hon‟ble High Court of Orissa. Hon‟ble High Court of Orissa vide its Order in W.P.(C) No.8865 of 2024 dated 15.04.2024 directed the undersigned by remitting W.P.(C) No.16357 of 2025 Page 30 of 76 the matter back to this office to hear afresh by giving opportunity of hearing to the assessee and pass appropriate order in accordance with law. You are, therefore, requested to submit the following details/ documents for further proceedings. ***"

8.4. Minute reading of Notice dated 20.03.2025 (Annexure-2) makes the position clear that the proceeding under Section 148A as initiated by issue of Notice dated 12.03.2024 was never terminated by virtue of Order dated 15.04.2024 in the first writ petition; rather it has extended benefit to the assessee to participate and directed the Assessing Officer to hear afresh and pass appropriate order in accordance with law. The Assessing Officer considered the reply and explanation of the petitioner-assessee furnished on 16.04.2025 in response to the Notice dated 20.03.2025 (Annexure-2) and opportunity afforded vide Letter dated 09.04.2025, passed Order dated 29.04.2025 under Section 148(3) of the IT Act. This Court does not find any infirmity or irregularity in such process being adopted by the Assessing Officer in compliance of direction contained in Order dated 15.04.2024 passed in W.P.(C) No.8865 of 2024.

8.5. Under the aforesaid premise, the contention of Sri Chitrasen Parida, learned Advocate that fresh Notice dated 20.03.2025 issued is vitiated does not hold water and, such contention is repelled hereby.

W.P.(C) No.16357 of 2025 Page 31 of 76 9. Another point is canvassed by Sri Chitrasen Parida, learned Advocate by contending that the income alleged to have been escaped assessment being quantified at Rs.34,99,247/- vide Order dated 29.04.2025 under Section 148A(3) pertaining to Financial Year 2019-20 being less than Rs.50,00,000/-, i.e., the amount escaped assessment, the ITO is denuded of power to issue Notice under Section 148 of the IT Act.

9.1. In this respect this Court has ventured to read in-

between lines contained in Order dated 29.04.2025 (Annexure-3), wherein the following is recorded by the ITO in order to afford an opportunity to the petitioner whether to proceed any further with the Notice dated 29.04.2025 issued under Section 148 of the IT Act:

"7. Therefore, the fact of this case suggest that income chargeable to tax of Rs.33,99,247/- has escaped assessment within the meaning of Section 147 of the Act for the Financial Year 2019-20 relevant to Assessment Year 2020-21.

8. In view of the above facts and circumstances, on the basis of material available on record and considering the reply of the assessee, it is considered that it is a fit case for issue of notice under Section 148 of the Act in the case of M/s. Utkal Trading Company Pvt. Ltd., PAN:

AAACU3980G for the Financial Year 2019-20 relevant to Assessment Year 2020-21."

W.P.(C) No.16357 of 2025 Page 32 of 76 9.2. The Notice dated 29.04.2025 under Section 148 reveals thus:

"2. I, therefore, propose to assess or reassess such income or recomputed the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2020-21 and I, hereby, require you to furnish within 30 days from the service of this notice, a return in the prescribed form for the Assessment Year 2020-21."

9.3. Conjoint reading of Order under Section 148A and the Notice under Section 148, both dated 29.04.2025 clarifies that the ITO requires further reply from the assessee, who is competent to adjudicate not only the factual position whether the escaped assessment amounts to or likely to amount to Rs.50,00,000/- or more so as to proceed with the matter pursuant to Notice dated 29.04.2025.

9.4. It is pertinent to have reference to provisions of Section 149 of the IT Act as relied on by the learned counsel for the petitioner to buttress his contention:

Prior to amendment by virtue of Post amendment by virtue the Finance (No.2) Act, 2024 of the Finance (No.2) Act, with effect from 01.09.2024 2024 with effect from 01.09.2024

149. Time limit for notice.-- 149. Time limit for notices under sections 148 (1) No notice under Section 148 shall be issued and 148A.

for the relevant assessment year,--

(1) No notice under

W.P.(C) No.16357 of 2025 Page 33 of 76 (a) if three years have elapsed from the end of Section 148 shall be the relevant assessment year, unless the issued for the case falls under clause (b); relevant assessment year--

(b) if three years, but not more than ten years, have elapsed from the end of the relevant (a) if three years and assessment year unless the Assessing three months Officer has in his possession books of have elapsed account or other documents or evidence from the end of which reveal that the income chargeable to the relevant tax, represented in the form of-- assessment year, unless the case

(i) an asset; falls under clause

(b)

(ii) expenditure in respect of a transaction or in relation to an event or occasion; (b) if three years and оr three months, but not more than

(iii) an entry or entries in the books of five years and account, three months, have elapsed which has escaped assessment amounts to from the end of or is likely to amount to fifty lakh rupees or the relevant more: assessment year unless the Provided that no notice under Section 148 Assessing Officer shall be issued at any time in a case for the has in his relevant assessment year beginning on or possession books before 1st day of April, 2021, if a notice of account or under Section 148 or Section 153A or other documents Section 153C could not have been issued at or evidence that time on account of being beyond the related to any time limit specified under the provisions of asset or clause (b) of sub-section (1) of this section or expenditure or Section 153A or Section 153C, as the case transaction or may be, as they stood immediately before entries which the commencement of the Finance Act, show that the 2021:

income chargeable to tax, Provided further that the provisions of this which has sub-section shall not apply in a case, where escaped a notice under Section 153A, or Section assessment, 153C read with Section 153A, is required to amounts to or is be issued in relation to a search initiated likely to amount under Section 132 or books of account, to fifty lakh other documents or any assets requisitioned rupees or more.

under Section 132A, on or before the 31st day of March, 2021:

(2) No notice to show cause under Section

W.P.(C) No.16357 of 2025 Page 34 of 76 Provided also that for cases referred to in 148A shall be issued clauses (i), (iii) and (iv) of Explanation 2 to for the relevant Section 148, where,-- assessment year,--

(a) a search is initiated under Section (a) if three years 132: or have elapsed from the end of (b) a search under Section 132 for which the relevant the last of authorisations is executed; assessment year, or unless the case falls under clause (c) requisition is made under Section (b); 132A, (b) if three years, but after the 15th day of March of any financial not more than year and the period for issue of notice under five years, have Section 148 expires on the 31st day of elapsed from the March of such financial year, a period of end of the fifteen days shall be excluded for the relevant purpose of computing the period of limitation assessment year as per this section and the notice issued unless the income under Section 148 in such case shall be chargeable to tax deemed to have been issued on the 31st which has day of March of such financial year: escaped assessment, as Provided also that where the information as per the referred to in Explanation I to Section 148 information with emanates from a statement recorded or the Assessing documents impounded under Section 131 or Officer, amounts Section 133A, as the case may be, on or to or is likely to before the 31st day of March of a financial amount to fifty year, in consequence of, -- lakh rupees or more.

(a) a search under Section 132 which is initiated; or

(b) a search under Section 132 for which the last of authorisations is executed;

or

(c) a requisition made under Section 132A,

after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of Section 148A in such case shall be deemed to have been issued on the 31st day of

W.P.(C) No.16357 of 2025 Page 35 of 76 March of such financial year.

Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of Section 148A or the period during which the proceeding under Section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of Section 148A does not exceed seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.

Explanation.--

For the purposes of clause (b) of this sub- section, „asset‟ shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.

(1A) Notwithstanding anything contained in sub-

section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause

(b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under Section 148 shall be issued for every such assessment year for assessment, reassessment or re-

computation, as the case may be.

(2) The provisions of sub-section (1) as to the

W.P.(C) No.16357 of 2025 Page 36 of 76 issue of notice shall be subject to the provisions of Section 151.

9.5. In the context of challenge made to Order passed under Section 148A of the IT Act by way of writ petition, this Court in the case of Shiv Mettalicks Pvt. Ltd. Vrs. Pr. CIT, (2023) 453 ITR 544 = 2023 SCC OnLine Ori 6971 held as follows:

"2. As regards the challenge to an order passed under Section 148A(d) of the Income-tax Act, 1961 (Act) at an intermediate stage, this court has in its order dated December 1, 2022 in a batch of writ petitions of which W.P.(C) No. 9191 of 2022 [Kailash Kedia Vrs. ITO, (2023) 453 ITR 540 (Orissa)] was a lead matter, declined to interfere relegating the parties to a stage of passing of assessment orders under Section 147 of the Act. In doing so, this court followed the order dated September 2, 2022 of the Supreme Court of India in S. L. P. (C) No. 14823 of 2022 = Anshul Jain Vrs. Pr. CIT, [reported at (2022) 449 ITR 256 (SC)], which in turn affirmed the judgment dated June 2, 2022 of the Division Bench of the Punjab and Haryana High Court in C. W. P. No. 10219 of 2022, Anshul Jain Vrs. Pr. CIT, (2022) 449 ITR 251 (P&H).

3. The court‟s attention has been drawn to a subsequent order dated January 3, 2023 of another Bench of the Supreme Court of India, the composition of which is different from the Bench which heard the aforementioned case in Anshul Jain (supra), where another order dated June 2, 2022 of the High Court of Punjab and Haryana in C.W.P. No. 10073 of 2022

W.P.(C) No.16357 of 2025 Page 37 of 76 [Red Chilli International Sales Vrs. ITO, (2023) 452 ITR 218 (P&H)] was challenged. In the said S.L.P.(C) No. 86 of 2023 [Red Chilli International Sales Vrs. ITO, (2023) 452 ITR 222 (SC)], the following order was passed by the Supreme Court of India on January 3, 2023 (page 224 of 452 ITR) :

„Delay condoned.

We agree with the petitioner that the impugned judgment rejecting the writ petition on the ground of alternative remedy does not take into consideration several judgments of this court, on the jurisdiction of High Court, as writ petitions have been entertained to be examined whether the jurisdiction preconditions for issue of notice under Section 148 of the Income-tax Act, 1961 is satisfied. The provisions of reopening under the Income-tax Act, 1961 have undergone an amendment by the Finance Act, 2021, and consequently the matter would require a deeper and in depth consideration keeping in view the earlier case law. Accordingly, we set aside the observations made by the High Court in the impugned judgment observing that the writ petition would not be maintainable in view of the alternative remedy, clarify that this issue would be examined in depth by the High Court if and when it arises for consideration. We do deem it open to examine this issue in the present case after having examined the notice under Section 148A(b) including the annexure thereto, the reply filed by the petitioner and the order under Section 148A(d) of the Income-tax Act, 1961.

Recording the aforesaid, the special leave petition is disposed of. We clarify that the dismissal of the

W.P.(C) No.16357 of 2025 Page 38 of 76 special leave petition would not be construed as a finding or observation on the merits of the case.

Pending application(s), if any, shall stand disposed of.‟

4. As the court views it although the aforementioned order did not take note of the order of the co-ordinate Bench of the Supreme Court of India in Anshul Jain (supra), the net result is that the Supreme Court of India declined to interfere with the order of the Punjab and Haryana High Court in Red Chilli International Sales (supra) matter.

5. Consequently, this court is not persuaded that it should interfere with the impugned order dated November 24, 2022 in the present case under Section 148A(d) of the Act."

9.6. It is seen that in the case of Anshul (supra) the grievance of the petitioner was that his objection raised against Notice under Section 148A was not taken care of. Yet, the Hon‟ble Supreme Court did not interfere with the order of dismissal of writ petition by the High Court of Punjab & Haryana. Per advocate for the petitioner, similar stance is taken in the instant case. Therefore, this Court finds that no case is made out by the petitioner to interfere with the issue of Notice under Section 148 by the Assessing Officer after taking decision to initiate proceeding on passing order under Section 148A(d)/Section 148(3) of said Act. The tenor or pith and substance of provisions of Section 148A(d) [pre-

W.P.(C) No.16357 of 2025 Page 39 of 76 amendment] and Section 148A(3) [post-amendment] being identical, and both of them lead to proceeding under Section 148 of the IT Act, this Court does not feel it expedient to show indulgence in the present matter.

9.7. The following observations made in Anshul Jain Vrs.

Principal Commissioner of Income Tax, (2022) 449 ITR 251 (P&H) are relevant for the present purpose:

"Whether at this stage of Notice under Section 148, writ Court should venture into the merits of the controversy when AO is yet to frame assessment/reassessment in discharge of statutory duty casted upon him under Section 147 of the Act ?

***

Thus, the consistent view is that where the proceedings have not even been concluded by the statutory authority, the writ Court should not interfere at such a pre-mature stage. Moreover it is not a case where from bare reading of notice it can be axiomatically held that the authority has clutched upon the jurisdiction not vested in it. The correctness of order under Section 148A(d) is being challenged on the factual premise contending that jurisdiction though vested has been wrongly exercised. By now it is well settled that there is vexed distinction between jurisdictional error and error of law/fact within jurisdiction. For rectification of errors statutory remedy has been provided. In the light of aforesaid settled proposition of law, we find that there is no reason to warrant interference by this Court in exercise of the jurisdiction under Article 226/227 of the Constitution of India at this

W.P.(C) No.16357 of 2025 Page 40 of 76 intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed."

9.8. Since the petitioner is issued with Notice under Section 148 of the IT Act, it is needless to observe that the petitioner shall have fullest of opportunity to raise not only issues with respect to facts but also legal questions which shall be dealt with by the Assessing Officer in the proceeding. In other words, the petitioner shall have opportunity for stating its case, which shall be considered by the Assessing Officer in the order of assessment including the grounds of challenge against the Order dated 29.04.2025 passed under Section 148A.

9.9. It is candidly conceded by Sri Chitrasen Parida, learned Advocate for the petitioner to a query from the Bench during the course of hearing of the present matter that the point at issue raised herein this second round of litigation is not raised before the Assessing Officer appearing before him in pursuance of direction vide Order dated 15.04.2024 passed in W.P.(C) No.8865 of 2024. The petitioner for the purpose of assessment may participate in the proceeding initiated under Section 148 of the IT Act.

Interference in writ jurisdiction at the stage of Notice for assessment/reassessment:

W.P.(C) No.16357 of 2025 Page 41 of 76 10. This Court may take into account the rulings through which the scope of "entertainment of writ petition" as contradistinguished from "maintainability of writ petition"1 has been laid down with reference to self- restrained exercise of discretionary power qua notice for assessment or assessment order.

10.1. In Income Tax Officer, Calcutta Vrs. Selected Dalurband Coal Company Pvt. Ltd., (1997) 10 SCC 68, the Hon‟ble Supreme Court held as follows:

"At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have now to go on, we do not and we ought not to express any opinion on merits."

10.2. As required under Section 148A of the IT Act, the Assessing Officer having obtained prior approval of the competent authority issued Notice dated 29.04.2025 after complying with the direction of this Court in the first writ petition. Therefore, meddling at this stage by this Court would be premature and entertainment of

1 Reference may be had to Godrej Sara Lee Ltd. Vrs. Excise and Taxation Officer-

cum-Assessing Authority, (2023) 3 SCR 871, for the distinctive feature in "entertainmentability" and "maintainability" of writ petition when effective and efficacious alternative remedy is available.

W.P.(C) No.16357 of 2025 Page 42 of 76 writ petition by exercise of power under Article 226 of the Constitution of India would run contrary to settled principles.

10.3. Self-imposed restriction for entertainment of writ jurisdiction has been succinctly enunciated by the Hon‟ble Supreme Court in Star Paper Mills Ltd. Vrs. State of U.P., (2006) 10 SCC 201 = 2006 SCC OnLine SC 979 which is to the following effect:

"4. In response, learned counsel for the respondents submitted that on factual adjudication it was to be established by the appellant that its case is covered by the ratio of this Court‟s decision in Krishi Utpadan Mandi Samiti case [1995 Supp (3) SCC 433].

„10. The issues relating to entertaining writ petitions when alternative remedy is available, were examined by this Court in several cases and recently in State of H.P. Vrs. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499.

11. Except for a period when Article 226 was amended by the Constitution (Forty-second Amendment) Act, 1976, the power relating to alternative remedy has been considered to be a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion and never a rule of law. Despite the existence of an alternative remedy it is within the jurisdiction or discretion of the High Court to grant relief under Article 226 of the Constitution. At the same time, it cannot be lost sight of that though W.P.(C) No.16357 of 2025 Page 43 of 76 the matter relating to an alternative remedy has nothing to do with the jurisdiction of the case, normally the High Court should not interfere if there is an adequate efficacious alternative remedy. If somebody approaches the High Court without availing the alternative remedy provided, the High Court should ensure that he has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction.

12. Constitution Benches of this Court in K.S. Rashid and Son Vrs. Income Tax Investigation Commission, 1954 SCR 738 = AIR 1954 SC 207, Sangram Singh Vrs. Election Tribunal, Kotah, (1955) 2 SCR 1 = AIR 1955 SC 425, Union of India Vrs. T.R. Varma, 1958 SCR 499 = AIR 1957 SC 882, State of U.P. Vrs. Mohd. Nooh, 1958 SCR 595 = AIR 1958 SC 86 and Venkataraman and Co. Vrs. State of Madras, (1966) 2 SCR 229 = AIR 1966 SC 1089 held that Article 226 of the Constitution confers on all the High Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted.

W.P.(C) No.16357 of 2025 Page 44 of 76 13. Another Constitution Bench of this Court in State of M.P. Vrs. Bhailal Bhai, (1964) 6 SCR 261 = AIR 1964 SC 1006 held that the remedy provided in a writ jurisdiction is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. The power to give relief under Article 226 of the Constitution is a discretionary power. Similar view has been reiterated in N.T. Veluswami Thevar Vrs. G. Raja Nainar, 1959 Supp (1) SCR 623 = AIR 1959 SC 422, Municipal Council, Khurai Vrs. Kamal Kumar, (1965) 2 SCR 653 = AIR 1965 SC 1321, Siliguri Municipality Vrs. Amalendu Das, (1984) 2 SCC 436 = AIR 1984 SC 653, S.T. Muthusami Vrs. K. Natarajan, (1988) 1 SCC 572 = AIR 1998 SC 616, Rajasthan SRTC Vrs. Krishna Kant, (1995) 5 SCC 75 = AIR 1995 SC 1715, Kerala SEB Vrs. Kurien E. Kalathil, (2000) 6 SCC 293 = AIR 2000 SC 2573, A. Venkatasubbiah Naidu Vrs. S. Chellappan, (2000) 7 SCC 695, L.L. Sudhakar Reddy Vrs. State of A.P., (2001) 6 SCC 634, Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha Vrs. State of Maharashtra, (2001) 8 SCC 509, Pratap Singh Vrs. State of Haryana, (2002) 7 SCC 484 and GKN Driveshafts (India) Ltd. Vrs. ITO, (2003) 1 SCC 72.

14. In Harbanslal Sahnia Vrs. Indian Oil Corporation Ltd., (2003) 2 SCC 107 this Court held that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of

W.P.(C) No.16357 of 2025 Page 45 of 76 compulsion and the court must consider the pros and cons of the case and then may interfere if it comes to the conclusion that the Petitioner seeks enforcement of any of the fundamental rights; where there is failure of principles of natural justice or where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.

15. In Veerappa Pillai Vrs. Raman & Raman Ltd., 1952 SCR 583 = AIR 1952 SC 192, CCE Vrs.

Dunlop India Ltd., (1985) 1 SCC 260 = AIR 1985 SC 330, Ramendra Kishore Biswas Vrs. State of Tripura, (1999) 1 SCC 472 = AIR 1999 SC 294, Shivgonda Anna Patil Vrs. State of Maharashtra, (1999) 3 SCC 5 = AIR 1999 SC 2281, C.A. Abraham Vrs. ITO, (1961) 2 SCR 765 = AIR 1961 SC 609, Titaghur Paper Mills Co. Ltd. Vrs. State of Orissa, (1983) 2 SCC 433 = AIR 1983 SC 603, H.B. Gandhi Vrs. Gopi Nath & Sons, 1992 Supp (2) SCC 312, Whirlpool Corporation Vrs. Registrar of Trade Marks, (1998) 8 SCC 1 = AIR 1999 SC 22, Tin Plate Co. of India Ltd. Vrs. State of Bihar, (1998) 8 SCC 272 = AIR 1999 SC 74, Sheela Devi Vrs. Jaspal Singh, (1999) 1 SCC 209 and Punjab National Bank Vrs. O.C. Krishnan, (2001) 6 SCC 569 this Court held that where hierarchy of appeals is provided by the statute, the party must exhaust the statutory remedies before resorting to writ jurisdiction.

16. If, as was noted in Ram and Shyam Co. Vrs.

State of Haryana, (1985) 3 SCC 267 = AIR 1985 SC 1147 the appeal is from „Caesar to

W.P.(C) No.16357 of 2025 Page 46 of 76 Caesar‟s wife‟ the existence of alternative remedy would be a mirage and an exercise in futility. ... There are two well recognized exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings themselves are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.‟

The above position was recently highlighted in U.P. State Spinning Co. Ltd. Vrs. R.S. Pandey, (2005) 8 SCC 264, SCC pp. 270-72, paras 10-16."

10.4. In a case where assessment order was challenged, the High Court quashed the same invoking writ jurisdiction; however, the Hon‟ble Supreme Court in the matter of Commissioner of Income Tax Vrs. Chhabil Dass Agarwal, (2014) 1 SCC 603 = 2013 SCC OnLine SC 717 = (2013) 357 ITR 357 (SC) reiterated the scope and purport of exercise of power under Article 226 of the Constitution of India and re-stated the self-imposed restrictions qua entertainment of writ petition:

W.P.(C) No.16357 of 2025 Page 47 of 76 "12. The Constitution Benches of this Court in K.S. Rashid and Son Vrs. Income Tax Investigation Commission, AIR 1954 SC 207, Sangram Singh Vrs. Election Tribunal, AIR 1955 SC 425, Union of India Vrs. T.R. Varma, AIR 1957 SC 882, State of U.P. Vrs. Mohd. Nooh, AIR 1958 SC 86 and K.S. Venkataraman and Co. (P) Ltd. Vrs. State of Madras, AIR 1966 SC 1089 have held that though Article 226 confers very wide powers in the matter of issuing writs on the High Court, the remedy of writ is absolutely discretionary in character. If the High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of the principles of natural justice or the procedure required for decision has not been adopted. [See N.T. Veluswami Thevar Vrs. G. Raja Nainar, AIR 1959 SC 422, Municipal Council, Khurai Vrs. Kamal Kumar, AIR 1965 SC 1321 = (1965) 2 SCR 653, Siliguri Municipality Vrs. Amalendu Das, (1984) 2 SCC 436, S.T. Muthusami Vrs. K. Natarajan, (1988) 1 SCC 572, Rajasthan SRTC Vrs.

Krishna Kant, (1995) 5 SCC 75, Kerala SEB Vrs. Kurien E. Kalathil, (2000) 6 SCC 293, A. Venkatasubbiah Naidu Vrs. S. Chellappan, (2000) 7 SCC 695, L.L. Sudhakar Reddy Vrs. State of A.P., (2001) 6 SCC 634, Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha Vrs. State of Maharashtra, (2001) 8 SCC 509, Pratap Singh Vrs. State of Haryana, (2002) 7 SCC 484 and GKN Driveshafts (India) Ltd. Vrs. ITO, (2003) 1 SCC 72.]

W.P.(C) No.16357 of 2025 Page 48 of 76 ***

15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, AIR 1964 SC 1419, Titaghur Paper Mills Co. Ltd. Vrs. State of Orissa, (1983) 2 SCC 433 and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

10.5. This Court in the case of National Aluminium Company Ltd. Vrs. Employees State Insurance Corporation, 2012 SCC OnLine Ori 90 has observed as follows:

"24. This Court in the case of Rohit Kumar Behera Vrs.

State of Orissa, 2012 (II) ILR-CUT 395, held as under:

„21. Law is well settled that unless it is shown that the notice to show cause has been issued

W.P.(C) No.16357 of 2025 Page 49 of 76 palpably without any authority of law, the show cause notice cannot be quashed in exercise of writ jurisdiction under Articles 226 and 227 of the Constitution.‟ ***"

10.6. Bearing in mind the above principles, the scope of alternative remedy vis-à-vis entertainment of writ petition for exercising extraordinary jurisdiction under Article 226 of the Constitution of India qua the impugned Notice and Order vide Annexures-1 and 3 issued by the ITO, it may not be out of place to have regard to Union of India Vrs. Coastal Container Transporters Association, (2019) 20 SCC 446, wherein it has been laid down by the Hon‟ble Supreme Court as follows:

"30. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal

W.P.(C) No.16357 of 2025 Page 50 of 76 lies to this Court. The judgment of this Court in the case of Union of India Vrs. Guwahati Carbon Ltd., (2012) 11 SCC 651 = 2012 SCC OnLine SC 210 relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has held that excise law is a complete code in order to seek redress in excise matters and held that entertaining writ petition is not proper where alternative remedy under statute is available.

When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. Further, as held by the High Court, it cannot be said that even from the contents of show cause notices there are no factual disputes. Further, the judgment of this Court in the case of Malladi Drugs & Pharma Ltd. Vrs. Union of India, (2020) 12 SCC 808 = 2004 SCC OnLine SC 358, relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage."

10.7. The Supreme Court of India in South India Tanners & Dealers Association Vrs. Deputy Commissioner of Commercial Taxes, (2008) 23 VST 8 (SC) expressed displeasure in entertainment of writ petition against the Show Cause Notice. It has been laid down in the said

W.P.(C) No.16357 of 2025 Page 51 of 76 case the modality for the Authority in the following terms:

"2. We have repeatedly stated that as far as possible the High Courts should not interfere in matters at show cause notice stage.

3. Without reply to the show cause notice the appellants herein preferred Original Petitions before the Tamil Nadu Taxation Special Tribunal which decided the matters against the assessees. The assessees filed writ petitions against the order passed by the Special Tribunal in the High Court of Madras in which impugned judgments have been delivered, against which these Civil Appeals have been filed. We find that the assessees have never replied to the show cause notices till date.

4. We are of the view that in such circumstances the Special Tribunal/High Court ought not to have interfered and they ought to have directed the assesse to reply to the show cause notice and exhaust the statutory remedy under the Act, which they have not done till date.

5. In the circumstances, to put an end to this controversy we, first of all, grant liberty to the Department to amend the show cause notices and take up additional grounds, if so advised, within a period of eight weeks from today. They will accordingly give an opportunity to the assessees to reply to the amended show cause notice as well as the original show cause notice within a period of six weeks from the date of the assesses receiving the amended show cause notice.

W.P.(C) No.16357 of 2025 Page 52 of 76 6. On receiving replies from the assessees the Assessing Authority shall hear and dispose of the matters as expeditiously as possible in accordance with law and in accordance with the directions given hereinabove.

7. We make it clear that the Assessing Authority will decide the matters uninfluenced by any observations made by the High Court/Tribunal in the earlier round of litigation.

8. All contentions on both sides are expressly kept open. At this stage we do not wish to express any opinion on the merits of the case."

10.8. In an identical case relating to writ petition questioning the Show Cause Notice relating to service tax under Chapter-V of the Finance Act, 1994, viz. Bhubaneswar Development Authority Vrs. Commissioner of Central Excise, 2015 SCC OnLine Ori 53, this Court observed as follows:

"5. After hearing the learned counsel for the respective parties, it would be relevant herein to take note that the judgment of the Hon‟ble Supreme Court in the case of Collector of Central Excise, Hyderabad Vrs. M/s. Chemphar Drugs and Liniments, Hyderabad, (1989) 2 SCC 127 and in particular, Para-9 thereof is quoted as hereunder:

„9. *** In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11-A of the Act, it has to be established that the duty of excise W.P.(C) No.16357 of 2025 Page 53 of 76 has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case.‟

6. Hon‟ble Single Judge of Calcutta High Court in the case of Infinity Infotech Parks Ltd., (2015) 85 VST 465 (Cal) appears to have placed reliance on the judgment of Hon‟ble Supreme Court as noted hereinabove in Para-66 which admittedly, is a leading judgment on the issue raised in the present case. In the said case, the Hon‟ble Supreme Court came to conclude that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. But most importantly, the Hon‟ble Supreme Court has noted thereafter that „Whether in a particular set of

W.P.(C) No.16357 of 2025 Page 54 of 76 facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case.

7. On perusal of the aforesaid judgment of the Hon‟ble Supreme Court, it is clear therefrom that Hon‟ble Supreme Court in the said case was dealing with an appeal filed by the Collector of Central Excise, Hyderabad against an order passed by the Tribunal.

In the facts and circumstances of the said case, Hon‟ble Supreme Court came to hold that this finding of fact having been ultimately held against the revenue by the Tribunal which is the final fact forum and dismissed the appeal filed by the revenue on the basis that it did not want to interfere the facts determined by the Tribunal in the said case.

8. In the present set of circumstances of the case, any finding by the Court at this stage is likely to be prejudicial, either the Petitioner-BDA or the Service Tax Authority. ***"

10.9. In Supreme Paper Mills Limited Vrs. Assistant Commissioner of Commercial Taxes, (2010) 11 SCC 593 = (2010) 31 VST 1 (SC), the Hon‟ble Supreme Court after taking note of earlier case being Sales Tax Officer, Ganjam Vrs. Uttareswari Rice Mills, (1973) 3 SCC 171 = AIR 1972 SC 2617 = (1972) 30 STC 567 (SC) = (1973) 89 ITR 6 (SC), wherein challenge was made to Show Cause Notice, has been pleased to make the following observation:

W.P.(C) No.16357 of 2025 Page 55 of 76 "14. In our considered opinion, the ratio of the aforesaid decision in Uttareswari Rice Mills case, (1973) 3 SCC 171 of this Court is squarely applicable to the facts of the present case. The expression used in Section 11-E of the Act is that the Commissioner must be satisfied on information or otherwise that the registered dealer has furnished incorrect statement of his turnover or furnished incorrect particulars of his sale in the return. A Show Cause Notice is issued to the dealer with the purpose of informing him that the Department proposes to reopen the assessment because the Commissioner himself is satisfied that the dealer has furnished incorrect statement of his turnover or incorrect particulars of his sales in the return submitted, so as to enable the dealer to reply to the show-cause notice as to why the said power vested in the Commissioner should not be exercised.

15. A notice was issued in order to provide an opportunity of natural justice to the dealer. There is nothing in the language of the aforesaid provision which either expressly or impliedly mandates the recording of any reasons. The provision of the Act nowhere postulates that the reasons which led to the issue of the said notice should be incorporated in the notice itself, and that in case of failure to do so, the same would invalidate the notice.

16. The aforesaid provision is clear and explicit and there is no ambiguity in it. If the legislature had intended to give any other meaning as suggested by the counsel appearing for the appellant it would have made specific provision laying down such conditions explicitly and in clear words. It is a well- settled principle in law that the court cannot add

W.P.(C) No.16357 of 2025 Page 56 of 76 anything into a statutory provision, which is plain and unambiguous. Language employed in a statute itself determines and indicates the legislative intent. If the language is clear and unambiguous it would not be proper for the court to add any words thereto and evolve some legislative intent not found in the statute."

10.10. Challenge being made to the Show Cause Notice, the Hon‟ble Supreme Court in the case of CCE Vrs. Krishna Wax (P) Ltd., (2020) 12 SCC 572 = 2019 SCC OnLine SC 1470 at Paragraphs 7, 10 and 13 discussed thus:

"7. Section 11-A thus deals with various facets including non-levy and non-payment of excise duty and contemplates issuance of a show-cause notice by the Central Excise Officer requiring the "person chargeable with duty" to show cause why "he should not pay the amount specified in the notice".

In terms of sub-section (10) of said Section 11-A, the person concerned has to be afforded opportunity of being heard and after considering his representation, if any, the amount of duty of excise due from such person has to be determined by the Central Excise Officer. Without going into other details regarding the period of limitations and the circumstances under which show-cause notice can be issued, the crux of the matter is that such determination is after the issuance of show-cause notice followed by affording of opportunity and consideration of representation, if any, made by the person concerned.

W.P.(C) No.16357 of 2025 Page 57 of 76 ***

10. The issuance of show-cause notice under Section 11- A also has some significance in the eye of the law. The day the show-cause notice is issued, becomes the reckoning date for various issues including the issue of limitation. If we accept the submission of the respondent that a prima facie view entertained by the department whether the matter requires to be proceeded with or not is to be taken as a decision or determination, it will create an imbalance in the working of various provisions of Section 11-A of the Act including periods of limitation. It will be difficult to reckon as to from which date the limitation has to be counted.

***

13. It must be noted that while issuing a show-cause notice under Section 11-A of the Act, what is entertained by the Department is only a prima facie view, on the basis of which the show-cause notice is issued. The determination comes only after a response or representation is preferred by the person to whom the show-cause notice is addressed. As a part of his response, the person concerned may present his view point on all possible issues and only thereafter the determination or decision is arrived at. In the present case even before the response could be made by the respondent and the determination could be arrived at, the matter was carried in appeal against the said internal order. The appellant was therefore, justified in submitting that the appeal itself was premature."

W.P.(C) No.16357 of 2025 Page 58 of 76 10.11. In Union of India Vrs. Bajaj Tempo Ltd., (1998) 9 SCC 281 it is advised that the appropriate course for the assessee was to reply to the show cause notice enabling the authorities to record their findings of fact in each case and then, if necessary, the matter could be proceeded to the Tribunal and thereafter to the High Court.

10.12. The Hon‟ble Supreme Court in Union of India Vrs.

Guwahati Carbon Ltd., (2012) 11 SCC 651 has held as under:

"8. Before we discuss the correctness of the impugned order, we intend to remind ourselves the observations made by this Court in Munshi Ram vs. Municipal Committee, Chheharta, (1979) 3 SCC 83. In the said decision, this Court was pleased to observe that:

„23. *** when a revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum and in that manner, and all the other forums and modes of seeking remedy are excluded.‟ ***"

10.13. The petitioner, in the instant case, has the fullest opportunity to refute allegations, if any, and rebut adverse finding/observations involved in the matter, as discussed above. The petitioner may also raise legal issues as well as factual disputes before the Assessing

W.P.(C) No.16357 of 2025 Page 59 of 76 Officer during the course of proceeding. It is possible for the petitioner to seek further time, if according to him the time given by the authority for filing the reply was required to be extended in order to enable it to collect further material. It cannot, therefore, be said that the Notice dated 29.04.2025 under Section 148 is vulnerable. Reference can be made to GKN Driveshafts (India) Ltd. Vrs. ITO, (2003) 1 SCC 72 as the guiding rule for the Adjudicating Authorities as enunciated by the Hon‟ble Supreme Court of India. Paragraph 5 of said Judgment speaks as follows:

"We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to 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 above said five assessment years."

10.14. The Hon‟ble Supreme Court in the case of State of Maharashtra and Others Vrs. Greatship (India) Limited, 2022 SCC OnLine SC 1262 reiterated the scope for

W.P.(C) No.16357 of 2025 Page 60 of 76 interference where there is existence of statutory remedy in exercise of power under Article 226/227 of the Constitution of India. The following are the observations:

"14. At the outset, it is required to be noted that against the assessment order passed by the Assessing Officer under the provisions of the MVAT Act and CST Act, the assessee straightway preferred writ petition under Article 226 of the Constitution of India. It is not in dispute that the statutes provide for the right of appeal against the assessment order passed by the Assessing Officer and against the order passed by the first appellate authority, an appeal/revision before the Tribunal. In that view of the matter, the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India challenging the assessment order in view of the availability of statutory remedy under the Act. At this stage, the decision of this Court in the case of United Bank of India Vrs. Satyawati Tondon, (2010) 8 SCC 110 in which this Court had an occasion to consider the entertainability of a writ petition under Article 226 of the Constitution of India by by-passing the statutory remedies, is required to be referred to. After considering the earlier decisions of this Court, in paragraphs 49 to 52, it was observed and held as under:

„49. The views expressed in Titaghur Paper Mills Co. Ltd. Vrs. State of Orissa, (1983) 2 SCC 433 were echoed in CCE Vrs. Dunlop India Ltd., (1985) 1 SCC 260 in the following words : (SCC p. 264, para 3)

W.P.(C) No.16357 of 2025 Page 61 of 76 „3. *** Article 226 is not meant to short-circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution. But then the Court must have good and sufficient reason to bypass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters.

We can also take judicial notice of the fact that the vast majority of the petitions under Article 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.‟

50. In Punjab National Bank Vrs. O.C. Krishnan, (2001) 6 SCC 569 this Court considered the question whether a petition under Article 227 of the Constitution was maintainable against an order passed by the Tribunal under Section 19 of the DRT Act and observed : (SCC p. 570, paras 5-6)

„5. In our opinion, the order which was passed by the Tribunal directing sale of mortgaged property was appealable under Section 20 of the Recovery of Debts

W.P.(C) No.16357 of 2025 Page 62 of 76 Due to Banks and Financial Institutions Act, 1993 (for short „the Act‟). The High Court ought not to have exercised its jurisdiction under Article 227 in view of the provision for alternative remedy contained in the Act. We do not propose to go into the correctness of the decision of the High Court and whether the order passed by the Tribunal was correct or not has to be decided before an appropriate forum.

6. The Act has been enacted with a view to provide a special procedure for recovery of debts due to the banks and the financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit, which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the Court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutional provisions. This was a case where the High Court should not have entertained the petition under Article 227 of the Constitution and should have directed the respondent to

W.P.(C) No.16357 of 2025 Page 63 of 76 take recourse to the appeal mechanism provided by the Act.‟

51. In CCT Vrs. Indian Explosives Ltd., (2008) 3 SCC 688 the Court reversed an order passed by the Division Bench of the Orissa High Court quashing the showcause notice issued to the respondent under the Orissa Sales Tax Act by observing that the High Court had completely ignored the parameters laid down by this Court in a large number of cases relating to exhaustion of alternative remedy.

52. In City and Industrial Development Corpn. Vrs.

Dosu Aardeshir Bhiwandiwala, (2009) 1 SCC 168 the Court highlighted the parameters which are required to be kept in view by the High Court while exercising jurisdiction under Article 226 of the Constitution. Paras 29 and 30 of that judgment which contain the views of this Court read as under:

„29. In our opinion, the High Court while exercising its extraordinary jurisdiction under Article 226 of the Constitution is duty-bound to take all the relevant facts and circumstances into consideration and decide for itself even in the absence of proper affidavits from the State and its instrumentalities as to whether any case at all is made out requiring its interference on the basis of the material made available on record. There is nothing like issuing an ex parte writ of mandamus, order or direction in a public law remedy. Further, while considering W.P.(C) No.16357 of 2025 Page 64 of 76 the validity of impugned action or inaction the Court will not consider itself restricted to the pleadings of the State but would be free to satisfy itself whether any case as such is made out by a person invoking its extraordinary jurisdiction under Article 226 of the Constitution.

30. The Court while exercising its jurisdiction under Article 226 is duty-bound to consider whether:

(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;

(b) the petition reveals all material facts;

(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;

(d) person invoking the jurisdiction is guilty of unexplained delay and laches;

(e) ex facie barred by any laws of limitation;

(f) grant of relief is against public policy or barred by any valid law; and host of other factors.

The Court in appropriate cases in its discretion may direct the State or its instrumentalities as the case may be to W.P.(C) No.16357 of 2025 Page 65 of 76 file proper affidavits placing all the relevant facts truly and accurately for the consideration of the Court and particularly in cases where public revenue and public interest are involved. Such directions are always required to be complied with by the State. No relief could be granted in a public law remedy as a matter of course only on the ground that the State did not file its counter-affidavit opposing the writ petition. Further, empty and self-defeating affidavits or statements of Government spokesmen by themselves do not form basis to grant any relief to a person in a public law remedy to which he is not otherwise entitled to in law.‟

53. In Raj Kumar Shivhare Vrs. Directorate of Enforcement, (2010) 4 SCC 772 the Court was dealing with the issue whether the alternative statutory remedy available under the Foreign Exchange Management Act, 1999 can be by- passed and jurisdiction under Article 226 of the Constitution could be invoked. After examining the scheme of the Act, the Court observed:

„31. When a statutory forum is created by law for redressal of grievance and that too in a fiscal statute, a writ petition should not be entertained ignoring the statutory dispensation. In this case the High Court is a statutory forum of appeal on a question of law. That should not be

W.P.(C) No.16357 of 2025 Page 66 of 76 abdicated and given a go-by by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great respect, fell into a manifest error by not appreciating this aspect of the matter. It has however dismissed the writ petition on the ground of lack of territorial jurisdiction.

32. No reason could be assigned by the appellant‟s counsel to demonstrate why the appellate jurisdiction of the High Court under Section 35 of FEMA does not provide an efficacious remedy. In fact there could hardly be any reason since the High Court itself is the appellate forum.‟

15. Applying the law laid down by this Court in the aforesaid decision, the High Court has seriously erred in entertaining the writ petition under Article 226 of the Constitution of India against the assessment order, bypassing the statutory remedies."

10.15. The Hon‟ble Delhi High Court in the context of affording personal hearing during the course of Faceless Assessment, in the case of Assotech Realty Private Limited Vrs. National E-Assessment Centre and Another, 2022 SCC OnLine Del 582 laid down as follows:

"This Court in the case of Bharat Aluminium Company Ltd. Vrs. Union of India & Ors., 2022 SCC OnLine Del 105 = (2022) 442 ITR 101 (Del) = (2022) 325 CTR 252 (Del)] has held that the use of the expression "may" in Section W.P.(C) No.16357 of 2025 Page 67 of 76 144B(7)(viii) is not decisive. Where discretion is conferred upon quasi judicial authority whose decision has civil consequences, the word "may" which denotes discretion should be construed to mean a command. Consequently, the requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory."

10.16. The present case is neither a case of lack of jurisdiction nor can there be any allegation of violation of principles of natural justice. It is enunciated in Deepak Agro Foods Vrs. State of Rajasthan, (2008) 7 SCC 748 = (2008) 10 SCR 877 = (2008) 16 VST 454 (SC) as follows:

"17. All irregular or erroneous or even illegal orders cannot be held to be null and void as there is a fine distinction between the orders which are null and void and orders which are irregular, wrong or illegal. Where an authority making order lacks inherent jurisdiction, such order would be without jurisdiction, null, non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes at its very authority to pass any order and such a defect cannot be cured even by consent of the parties. (See Kiran Singh Vrs. Chaman Paswan, AIR 1954 SC 340). However, exercise of jurisdiction in a wrongful manner cannot result in a nullity-- it is an illegality, capable of being cured in a duly constituted legal proceedings.

18. Proceedings for assessment under a fiscal statute are not in the nature of judicial proceedings, like proceedings in a suit inasmuch as the assessing officer does not adjudicate on a lis between an assessee and the State and, therefore, the law on

W.P.(C) No.16357 of 2025 Page 68 of 76 the issue laid down under the civil law may not stricto sensu apply to assessment proceedings. Nevertheless, in order to appreciate the distinction between a null and void order and an illegal or irregular order, it would be profitable to notice a few decisions of this Court on the point.

19. In Rafique Bibi Vrs. Sayed Waliuddin, (2004) 1 SCC 287 explaining the distinction between null and void decree and illegal decree, this Court has said that a decree can be said to be without jurisdiction, and hence a nullity, if the court passing the decree has usurped a jurisdiction which it did not have; a mere wrong exercise of jurisdiction does not result in a nullity. The lack of jurisdiction in the court passing the decree must be patent on its face in order to enable the executing court to take cognizance of such a nullity based on want of jurisdiction. The Court further held that a distinction exists between a decree passed by a court having no jurisdiction and consequently being a nullity and not executable and a decree of the court which is merely illegal or not passed in accordance with the procedure laid down by law. A decree suffering from illegality or irregularity of procedure, cannot be termed inexecutable."

10.17. Constitution Bench comprising 5-Judges of the Hon‟ble Supreme Court of India has been pleased to cull out distinction between "want of jurisdiction" and "irregular assumption of jurisdiction" in the case of Central Potteries Ltd. Vrs. State of Maharashtra, (1963) 1 SCR 166 = AIR 1966 SC 932 = (1962) 13 STC 472 which is to the following effect:

W.P.(C) No.16357 of 2025 Page 69 of 76 "7. In this connection it should be remembered that there is a fundamental distinction between want of jurisdiction and irregular assumption of jurisdiction, and that whereas an order passed by an authority with respect to a matter over which it has no jurisdiction is a nullity and is open to collateral attack, an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity. It may be liable to be questioned in those very proceedings, but subject to that it is good, and not open to collateral attack. Therefore even if the proceedings for assessment were taken against a non-registered dealer without the issue of a notice under Section 10(1) that would be a mere irregularity in the assumption of jurisdiction and the orders of assessment passed in those proceedings cannot be held to be without jurisdiction and no suit will lie for impeaching them on the ground that Section 10(1) had not been followed. This must a fortiori be so when the appellant has itself submitted to jurisdiction and made a return. We accordingly agree with the learned Judges that even if the registration of the appellant as a dealer under Section 8 is bad that has no effect on the validity of the proceedings taken against it under the Act and the assessment of tax made thereunder."

10.18. Lack of jurisdiction strikes at the very root of the action/act and want of jurisdiction might vitiate proceedings rendering the orders passed and exercise thereof, a nullity. But a mere error in exercise of

W.P.(C) No.16357 of 2025 Page 70 of 76 jurisdiction would not vitiate the legality and validity of the proceedings and the said order was valid unless set aside in the manner known to law by laying a challenge, subject to law of limitation. Vide, Budhia Swain Vrs. Gopinath Dev, (1999) 4 SCC 396 = (1999) 2 SCR 1189.

10.19. Noteworthy here to have regard to the following observation of the Hon‟ble Supreme Court of India in CIT Vrs. A. Raman and Co., (1968) 67 ITR 11 = 1967 SCC OnLine SC 49 = (1968) 1 SCR 10 = AIR 1968 SC 49:

"The High Court was also of the view that the inference raised by the Income-tax Officer that the Hindu undivided families of the assessees had made profit by sale of articles purchased from the assessees larger than the profit which the assessees had made, was not justified, since there was no evidence on the record about the price at which similar goods were sold by the assessees to other merchants and about the profit which those other merchants made by sale of those goods. But in a petition under Article 226 of the Constitution the taxpayer may challenge the validity of a Notice under Section 147 of the Income-tax Act, 1961, on the ground that either branch of the condition precedent does not exist, but an investigation whether the inferences raised by the Income-tax Officer from the information are correct or proper cannot be made. Counsel for the Commissioner is, therefore, right in contending that the High Court entered upon an investigation of matters which were not within their competence.

***

W.P.(C) No.16357 of 2025 Page 71 of 76 Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed is not prohibited. A taxpayer may resort to a device to divert the income before it accrues or arises to him. Effectiveness of the device depends not upon considerations of morality, but on the operation of the Income-tax Act. Legislative injunction in taxing statutes may not, except on peril of penalty, be violated, but it may lawfully be circumvented."

10.20. This Court is of the considered view that at the stage of notice to proceed with assessment under Section 148 of the IT Act, and without submitting any reply to the quasi judicial authority with respect to factual disparity, if any in the notice, the discretionary remedy by way of writ petition is not to be entertained. The present case cannot be construed as a case of lack of jurisdiction of the ITO in the facts and circumstances of the matter. It is revelation from perusal of pleadings adumbrated by the petitioner that a jurisdictional question vis-a-vis facts has been raised, which is subject matter in an adjudicatory process on the facts to be discerned by the Assessing Officer or the competent Appellate Authority, if circumstance so warrants.

10.21. Since the ITO-Assessing Officer has taken a decision upon affording opportunity to the petitioner in course of proceeding under Section 148A and proceeded to issue Notice under Section 148 as a sequel thereof, the petitioner would have ample opportunity to agitate issues before the Assessing Officer. Therefore, this Court W.P.(C) No.16357 of 2025 Page 72 of 76 holds entertainment of the writ petition at the stage of notice would be premature. Doing otherwise would frustrate the tax administration and adjudication process. This Court is alive to the fact that the statute under consideration, viz., the IT Act and rules framed thereunder, provides sufficient safeguard for the assessee-petitioner, more so, when against the final orders of adjudication, appeal lies.

Conclusion:

11. Given the perspective of legal position and the facts on record, it is apparent that the Notice dated 29.04.2025 has been issued for alleged transactions of purchases effected from M/s. Madhumita Steel Industries Pvt. Ltd. under Section 148 contemplating initiation of proceeding for assessment upon being satisfied by virtue of Order dated 29.04.2025 passed under Section 148A of the IT Act in compliance of direction contained in the Order dated 15.04.2024 in W.P.(C) No.8865 of 2024 of this Court.

11.1. Sections 147, 148, 148A and 149 as they stand as of now, suggest that proceeding under Section 148 cannot be lightly resorted to for re-opening assessment. The information may not be a ground to give unbridled powers to the Revenue. While the expression "information to suggest" under amended law bears

W.P.(C) No.16357 of 2025 Page 73 of 76 importance, the expression "escapement of income chargeable to tax" still remains the primary condition to be satisfied before invoking powers under Section 147 of the Act. Nevertheless, escapement of income is a sine qua non for initiation of proceeding under Section 147. Thus, availability of information which suggests that there is an escapement of income is a prerequisite for issue of notice under Section 148. Record reveals bogus purchase to the tune of Rs.34,99,247/-, but the income generated out of it requiring thorough examination of books of account or other documents that may be made available during the course of assessment may shoot up beyond the specified pecuniary limit under Section 148. It is reiterated that it is for the adjudicating authority to consider on the basis of material placed and explanation proffered before him during the course of proceeding for assessment. The contention of the petitioner that no Notice under Section 148 could be issued by the ITO for alleged escapement of income on account of purchases to the tune of Rs.34,99,247/- may be attractive, but careful consideration of the same suggests rejection of such contention bearing in mind the effect of income generated out of such purchases that got escaped from being assessed.

11.2. Another angle of consideration of the case at hand is, on account of remand Order dated 15.04.2024 passed in

W.P.(C) No.16357 of 2025 Page 74 of 76 W.P.(C) No.8865 of 2024 by quashing the Order dated 23.03.2024 made under Section 148A(d) of the IT Act, as it existed prior to amendment, along with consequential Notice under Section 148, there is no ambiguity that the matter to proceed further from the stage of Notice under Section 148A(b). Thus, the Assessing Officer cannot be faulted with in passing Order dated 29.04.2025 (Annexure-3) after affording opportunity of hearing to the petitioner and issue of Notice under Section 148 (Annexure-1).

12. On consideration of discussions on the facts and with the conspectus of law taken note of supra, in the result, this Court does not find merit in challenge as to Notice dated 29.04.2025 (Annexure-1) issued under Section 148 of the IT Act by the Income Tax Officer, Ward-3, Rourkela. Further challenge as to Order dated 29.04.2025 (Annexure-3) also does not warrant interference on the fact and in the circumstances discussed in the foregoing paragraphs.

13. The writ petition, being devoid of merit, is liable to be dismissed and this Court does so. However, it may be apt to observe that it will be open to the petitioner to raise all grounds available to it in accordance with law, including the grounds taken in the writ petition at the appropriate stage.

W.P.(C) No.16357 of 2025 Page 75 of 76 14. With the aforesaid observation(s), the writ petition and the pending interlocutory application(s), if any, stand disposed of, but in the circumstances, there shall be no order as to costs.

I agree.

(HARISH TANDON) (MURAHARI SRI RAMAN) CHIEF JUSTICE JUDGE

Signature Not Verified Digitally Signed Signed by: ASWINI KUMAR SETHY Designation: Personal Assistant (Secretary-in-Charge) Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 11-Jul-2025 14:20:53

High Court of Orissa, Cuttack The 1st July, 2025//MRS/Laxmikant

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