Jugal Kishore Paliwal v. ITO/NFAC

Case snapshot

Sections / provisions: Section 148; 282A of Income-tax Act; 1961

Questions before the Court / Tribunal

• Jugal Kishore Paliwal Vs ITO/NFAC(Chattisgarh High Court) Date-1st April,2022 Sub- Reassessment notice u/s 148 on account of bogus purchases of Rice, Defects alleged in Sanction u/s 151, issue of notice and reasons recorded- Writ dismissed The Single bench of Chattisgarh High Court in this case was dealing with multiple Writ petitions it appears of the same family/group where the primary allegation was that there was bogus purchases of Rice based on statements recorded of different parties. In the Writ challenge interalia was made to the absence of application of mind by the Sanctioning authority as well as defect in the signature on the notice/approval. However, the Court brushed aside all these arguments by relying on the decision in the case of Phoolchand Bajranglal , Raymonds Woolen Mills etc. Moreover, the Court also interpreted Section 282A of the Act dealing with authentication…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Order Reserved on 07.03.2022 Order delivered on 01/04/2022 WPT No. 28 of 2022 • Jugal Kishore Paliwal S/o Late Ramavtar Paliwal, aged about 51 years Proprietor of Shri Ji Rice Product, having his office at, Main Road, NH10, Post Sendri, Bilaspur, District Bilaspur (CG) ---- Petitioner Versus 1. Joint Commissioner of Income Tax Range 1, Bilaspur, Income Tax Department, Aayakar Bhawan, Vyapar Vihar, Bilaspur, District Bilaspur 495001 (CG) 2. The Income Tax Officer/ Assessing Officer, Having Office At, Ward 2(1), Vyapar Vihar, District Bilaspur (CG) 3. National Faceless Assessment Centre, Through Additional/ Joint/ Deputy/ Assistant Commissioner of Income Tax Department, Ministry of Finance (Goi), Room No.

356 C.R. Building, IP Estate, New Delhi, Delhi- 110002. ---- Respondents WPT No. 31 of 2022 • M/s Saraswati Agro Industries A Partnership Firm, Having Its Office At, Ward No. 12, Kesla, Post Bilha, District Bilaspur, Chhattisgarh, Through Its Partner, Shri Manish Kumar Agrawal. ---- Petitioner Versus 1. Joint Commission er of Income Tax Range 1, Bilaspur, Income Tax Department, Aayakar Bhawan, Vyapar Vihar, Bilaspur, District Bilaspur 495001, Chhattisgarh. 2. The Income Tax Officer / Assessing Officer Ward 2(1) Having Office At, Vyapar Vihar, Bilaspur District Bilaspur Chhattisgarh. 3. National Faceless Assessment Centre Through Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income Tax Officer, Income Tax Department, Ministry Of Finance (Goi), Room No.

NH 130, Main Road, Post Bodri, Bilaspur, District- Bilaspur, Chhattisgarh. ---- Petitioner Versus 1. Joint Commissioner of Income Tax Range 1, Bilaspur, Income Tax Department, Aayakar Bhawan, Vyapar Vihar, Bilaspur, District- Bilaspur, Chhattisgarh-495001 2. The Income Tax Officer/assessing Officer Having Office At, Ward 2(1), Vyapar Vihar, District- Bilaspur, Chhattisgarh. 3. National Faceless Assessment Centre Through Additional/joint/deputy/assistant Commissioner Of Income Tax Department, Ministry Of Finance (Gol), Room No. 356 C.R. Building, IP Estate, New Delhi, Delhi-110002 ---- Respondents For Petitioners : Mr. Ankit Singhal, Advocates. For Respondents : Mrs. Naushina Afrin Ali with Mr. Ajay Kumrani,Advocates on behalf of Mr. Amit Chaudhary, Advocate. Hon'ble Mr. Justice Parth Prateem Sahu CAV Order 1. Since common issue is involved in above three petitions, they were heard together and are being decided by this common order. 2. Challenge in these three writ petitions is to the notice issued under Section 148 of the Income Tax Act, 1961 (for short 'the Act of 1961'), for the assessment year 2016-17. 3. Facts of WPT No.28/2022 in brief are that petitioner is running a rice mill in the name and style of M/s Shri Ji Rice Product. Petitioner submitted his return on 15.9.2016 for the assessment year 2016-17 declaring his total income as Rs.13,33,000/-. His case was selected for compulsory scrutiny based on information received regarding three suspicious transaction reports. Upon

examination, it revealed that petitioner obtained bogus purchase bills of Rs.1,73,83,410/- from M/s Shri Shyamji Rice Agrotech, M/s Navdurga Traders & M/s Shrinath Paddy Process and thereby income escaped assessment. 4. Facts of WPT No.31/2022 in brief are that petitioner is engaged in the business of running rice mill.. He submitted his return on 30.9.2016 for the assessment year 2016-17 declaring total income at Rs.1,49,763/-. Based on information received from Income Tax Officer (Investigation) Raipur, an enquiry was conducted in which it revealed that M/s Saraswati Agro Industries credited Rs.30,00,000/- in the account of bogus entity related to M/s Deepak Nanjyani during financial year 2015-16 and also obtained bogus purchase bills of Rs.34,20,000/- from M/s Navdurga Traders and M/s Deepak Nanjyani. 5. Facts of WPT No.37/2022 in brief are that petitioner is engaged in the business of running rice mill. She submitted her return on 13.10.2016 for the assessment year 2016-17 declaring her total income as Rs.8,92,380/-. Petitioner's case was selected for compulsory scrutiny based on information in form of survey report. As per information, petitioner has shown bogus purchases from M/s Nav Durga Traders, proprietor of which is Shri Vijay Kumar Sharma. M/s Nav Durga Traders is bogus entity having no genuine business. 6. All three petitioners were served with notice under Section 148 of the Act of 1961.

7. Mr. Ankit Singhal, learned counsel for petitioners in above writ petitions would submit that respondent Department had issued notice under Section 148 of the Act of 1961 without there being any reason to believe in terms of Section 147 of the Act of 1961 that income of assessees has escaped assessment. The Assessing Officer has not supplied reasons to believe along with notice under Section 148 of the Act of 1961. Material based upon which Assessing Officer recorded reason to believe was not supplied nor sanction/ approval under Section 151 of the Act of 1961 was supplied. On receipt of impugned notice under Section 148 of the Act of 1961, petitioners submitted an application (Annexure P-2) before the Assessing Officer for providing copy of reasons recorded for issuance of notice under Section 148 of the Act of 1961 along with documents relied upon as also copy of sanction / approval granted by the Joint Commissioner of Income Tax under Section 151 of the Act of 1961.

Appellant / petitioner / assessee submissions

Respondents along with Covering Memo dated 27.9.2021 (Annexure P-3) supplied Annexure-A containing reasons for proceeding under Section 148 of the Act of 1961, but copy of sanction/approval under Section 151 of the Act of 1961 was not supplied. Petitioners made reminder request for providing copy of sanction/approval under Section 151 of the Act of 1961 on 30.9.2021 but the same was not provided to them. As time was running, petitioners submitted objections (Annexure P-5) to notice issued under Section 148 of the Act of 1961. In the objection petitioners raised specific grounds amongst other of non-supply of copy of sanction/approval granted under Section

and Rs.30,00,000/- from M/s Navdurga Traders and M/s Deepak Nanjiyani respectively, which are bogus entities. In case of petitioner Smt. Vidhya Nagdeo (WPT No.37/2022) upon receiving suspicious transaction report from the Income Tax Officer (Investigation), Raipur, it revealed that petitioner, who is Proprietor of M/s Yash Industries, Bilaspur, took bogus purchase bills of Rs.80,03,876/- from M/s Navdurga Traders during financial year 2015-16. Based upon aforementioned material, the Assessing Officer formed reasons to believe that income of respective petitioners escaped assessment. There was prima facie material available with Assessing Officer based upon which he recorded reasons to believe that income of assessees' escaped assessment. Hence, there is due compliance of provisions of Section 147 of the Act of 1961. She submits that submission of learned counsel for petitioners that at the time of issuance of notice under Section 148 of the Act of 1961, proper approval/sanction under Section 151 of the Act of 1961 was not there, is not correct. Screen shot of ITBA Portal is filed along with additional reply dated 7.3.2022 which clearly mentions as to proceedings initiated by Assessing Officer and on 31.3.2021 print approval was uploaded. In ITBA portal unless and until the approval is uploaded, the portal will not allow uploading of notice under Section 148 of the Act of 1961. She further contended that submission of learned counsel

In approval/sanction under Section 151 of the Act of 1961, the authority concerned has mentioned “yes, fit”, which is mentioned only after due application of mind. The High Court of Gujarat in case of Lalita Ashwin vs. State of Gujarat reported in Special Civil Application Nos.1626 & 1627/2014 has observed that only because the Joint Commissioner of Income Tax granted approval by writing 'yes' to the reasons recorded, the notice of reopening cannot fail. Hence, submission of learned counsel for petitioners that there is no application of mind by authority concerned is not correct. Approval/sanction has been supplied little late to the petitioners but the fact remains that prior to issuance of notice under Section 148 of the Act of 1961, there was due approval/sanction by competent

authority for issuance of notice, as reflecting from Page No.14 of additional reply i.e. screen shot of web portal. The only requirement of approving authority is to approve or reject or sent back proposal. In case at hand, the approving authority has mentioned 'yes, fit'. Proper reasons are recorded in terms of Section 147 of the Act of 1961 and further proper approval/ sanction was accorded by authority competent, as required under Section 151 of the Act of 1961 before issuance of notice under Section 148 of the Act of 1961. Hence, petitioners are not entitled for any relief as claimed in these petitions and the same are liable to be dismissed. She places her reliance in cases of Kalyanji Mavji & Co. v. CIT reported in (1976) 1 SCC 985; M/S. Phool Chand Bajrang Lal vs Income-Tax Officer reported in (1993) 4 SCC 77; ACIT vs. Rajesh Jhaveri reported in (2008) 14 SCC 208 ; Raymond Woollen Mills Ltd. vs. ITO, Centre Circle XI, Range Bombay & ors reported in (2008) 14 SCC 218. 9. In reply, learned counsel for petitioners would submit that in WPT No.37/2022 copy of approval/sanction granted under Section 151 of the Act of 1961 was provided only on 16.2.2022. He also pointed out that in all these writ petitions, application was forwarded to the National Faceless Assessment Centre, New Delhi for not providing relevant material/ information/ documents and information. With respect to certain information sought by petitioners in letter dated 17.12.2021 it is mentioned not available in the office of Income Tax Officer, Bilaspur.

Revenue / respondent submissions

Notification of the year 2018, the Department is required to issue notice under Section 131, only after enquiry, proceeding under Section 147 of the Act of 1961 could have been initiated by the Assessing Officer. It is for the Assessing Officer to spell out all reasons and grounds available for reopening of assessment, but the same are missing in case of petitioners. No specific reason to believe is recorded satisfying the Assessing Officer that there is tangible material for issuance of notice under Section 148 of the Act of 1961. The Assessing Officer has not conducted any inquiry, only based on information received from other sources, initiated proceedings for issuance of notice under Section 148 of the Act of 1961. Information received from other sources does not fulfil requirement of Section 147 of the Act of 1961. In support of his contention, he also places reliance upon decision of Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & ors reported in (2003) 1 SCC 72; judgements of Delhi High Court in cases of Ferrous Infrastructure Pvt. Ltd. Vs. Deputy Commissioner of Income Tax reported in 2015 SCC Online Del. 9693 ; Sabh Infrastructure Ltd. v. Asstt. Commissioner of Income Tax reported in 2017 SCC Online Del 10863; Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd. reported in 2017 SCC Online Del 8691; 8. Mrs. Naushina Aafrin Ali, learned counsel for respondents vehemently opposes submissions of learned counsel for

10. At this stage, Mrs. Naushina Afreen Ali, learned counsel for respondents would submit that along with copy of rejection of objection, notice under Section 143 (2) of the Act of 1961 was also issued to the respective petitioners. Petitioners can very well explain to authority concerned about return submitted by them under Section 139 of the Act of 1961. 11.I have heard learned counsel for the parties and perused the documents placed on record by respective parties. 12. So far as submission of learned counsel for petitioners that there was no proper sanction/approval on the date of issuance of notice under Section 148 of the Act of 1961 is concerned, provision under Section 151 of the Act of 1961 provides for “sanction for issuance of notice”. Authority prescribed for grant of sanction/approval within four years of relevant assessment year is the 'Joint Commissioner of Income Tax'. Under Section 151 (2) of the Act of 1961 the Joint Commissioner is required to record his satisfaction on the reasons recorded by Assessing Officer. Respondents along with their additional reply have placed on record copy of screen shot of ITBA web portal in which there is mention of 'print approval' against name of respective petitioner with DIN number showing status to be generated with an option to view attachments. From the screen shot placed on record by respondents along with their additional return, accord of sanction/approval with DIN number of authority showing status to be generated on 31.3.2021, prima facie it cannot be said that there was no sanction/approval for

material available on the basis of which department can reopen case and not sufficiency or correctness of material to be considered. Petitioners are having opportunity to reply to notice under Section 148 of the Act of 1961, participate in proceedings and raise all grounds available to them in accordance with law. At this stage, this Court is only required to see whether there is prima facie material before the Assessing Officer to initiate proceedings and other requirements under the law, precondition i.e. of taking approval/sanction under Section 151 of the Act of 1961, before issuance of notice under Section 148 of the Act of 1961 is followed or not. 19. Next submission of learned counsel for petitioners is that approval/sanction granted under Section 151 of the Act of 1961 has not been digitally signed and dated. In rebuttal, submission of learned counsel for respondents is that as per provisions of Section 282-A of the Act of 1961, mention of name of competent authority sanction/approval is sufficient. Relevant portion of Section 282A of the Act of 1961 is extracted below for ready reference:- "282A.Authentication of notices and other documents.—(1) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed. (2) Every notice or other document to be issued,

In view of specific provision under the Act of 1961, the document i.e. sanction/approval under Section 151 of the Act of 1961 issued by Competent Authority in case of petitioners will be deemed to be an authenticated document. In the 'Note' appended at the bottom of sanction/approval under Section 151 of the Act of 1961, it is mentioned that “ if digitally signed”, the date of signature may be taken as date of document. Further submission of learned counsel for respondents in this regard is that approval is an inter-departmental correspondence; notices issued to petitioners are digitally signed by Assessing Officer.

Court / Tribunal analysis and reasoning

We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case.

Operative decision and relief

The notice issued under Section 148 of the Act of 1961 is not sustainable and it is liable to be quashed. He submits that proposal for issuance of notice was sent to the Joint Commissioner of Income Tax on 31.3.2021, sanction/approval under Section 151 of the Act of 1961 was granted on the same day, hence time of grant of sanction is having significance. In the notice impugned there is mention of date and time by authority but in the sanction/approval date and time is not mentioned. It is contended that requirement under the Act of 1961 is that sanction/approval should be prior to the date and time of issuance of notice under Section 148 of the Act of 1961.

forwarded to the Joint Commissioner of Income Tax. Mere making mention of 'fit case' or 'yes' in approval by the Joint Commissioner of Income Tax or Principal Commissioner of Income Tax while exercising powers under Section 151 of the Act of 1961 will not be considered to be sanction/approval granted after proper application of mind and in accordance with provisions of the Act of 1961. Referring to decision in case of Commissioner of Income Tax Jabalpur (MP) vs. M/s S. Goyanka Lime and Chemical Ltd. reported in (2014) SCC Online MP 4550 , he submits that Division Bench of Madhya Pradesh High Court while dismissing appeal preferred by the Commissioner of Income Tax has observed that the Joint Commissioner of Income Tax has only recorded “Yes, I am satisfied” on the format, which indicates, as if, he was to sign only on the dotted line without application of mind. The Department preferred Special Leave Petition No.11916/2015 before Hon'ble Supreme Court against the order of Division Bench of Madhya Pradesh High Court which came to be dismissed vide order dated 8.7.2015. In instant case also the Joint Commissioner of Income Tax has only mentioned “fit case” on approval which shows total non-application of mind by the authority, hence impugned notice is liable to be quashed on this count alone. He contended that notice under Section 131 of the Act of 1961 is also not issued to petitioners seeking clarification or explanation. As per direction issued by the Department vide

The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs.” 18. Hon'ble Supreme Court in above rulings has held that at the stage of issuance of notice for re-opening of assessment, the Court is only require to see whether there is prima facie

Hence, in view of aforementioned provision of law as also submission of learned counsel for respondents based on the Notification No.4/2017 dated 03.04.2017 documents granting sanction/approval under Section 151 of the Act of 1961 cannot be said to be an unauthenticated document. 21. For the foregoing discussions, I do not find present to be a fit case to interfere with proceedings of re-assessment initiated by respondent Department against petitioners upon issuance of notice under Section 148 of the Act of 1961. 22. Accordingly, all above three writ petitions stand dismissed. Sd/- (Parth Prateem Sahu) Judge roshan/-

Ratio and legal principle

The narrow proposition associated with Jugal Kishore Paliwal v. ITO/NFAC concerns jugal kishore paliwal vs ito/nfac(chattisgarh high court) date-1st april,2022 sub- reassessment notice u/s 148 on account of bogus purchases of rice, defects alleged in sanction u/s 151, issue of notice and reasons recorded- writ dismissed the single bench of chattisgarh high court in this case was dealing with multiple writ petitions it appears of the same family/group where the primary allegation was that there was bogus purchases of rice based on statements recorded of different parties. in the writ challenge interalia was made to the absence of application of mind by the sanctioning authority as well as defect in the signature on the notice/approval. however, the court brushed aside all these arguments by relying on the decision in the case of phoolchand bajranglal , raymonds woolen mills etc. moreover, the court also interpreted section 282a of the act dealing with authentication… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in WPT No. 28 of 2022 and connected petitions.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Dismissed” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Jugal Kishore Paliwal Vs ITO/NFAC(Chattisgarh High Court) Date-1st April,2022 Sub- Reassessment notice u/s 148 on account of bogus purchases of Rice, Defects alleged in Sanction u/s 151, issue of notice and reasons recorded- Writ dismissed The Single bench of Chattisgarh High Court in this case was dealing with multiple Writ petitions it appears of the same family/group where the primary allegation was that there was bogus purchases of Rice based on statements recorded of different parties. In the Writ challenge interalia was made to the absence of application of mind by the Sanctioning authority as well as defect in the signature on the notice/approval. However, the Court brushed aside all these arguments by relying on the decision in the case of Phoolchand Bajranglal , Raymonds Woolen Mills etc. Moreover, the Court also interpreted Section 282A of the Act dealing with authentication… Its practical value lies in the way the Chhattisgarh High Court connected the governing provisions—Section 148; 282A of Income-tax Act; 1961—to the procedural posture and evidence before it.

The authority level is High Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of Section 148; 282A of Income-tax Act; 1961 and the decision date 2022-04-01; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Jugal Kishore Paliwal v. ITO/NFAC, the proceeding is WPT No. 28 of 2022 and connected petitions, and the decision is dated 2022-04-01. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as Hon'ble Mr. Justice Parth Prateem Sahu. A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with Section 148; 282A of Income-tax Act; 1961. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Dismissed. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is REVIEW_APPEAL_SLP_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• Section 148 — apply the exact version considered in the judgment.
• 282A of Income-tax Act — apply the exact version considered in the judgment.
• 1961 — apply the exact version considered in the judgment.

Case network

• Yogini Bipin Soneta v. ITO — Bombay High Court · Dismissed
• Divya Capital One (P) Ltd. v. ACIT — Delhi High Court · Quashed / set aside
• ITO (Exemption) v. Innovative Welfare and Educational Society — ITAT Delhi · Quashed / set aside
• Harsh Kaushal Corporation v. ITO — Bombay High Court · Quashed / set aside

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