R.K.Agrawal, J. - (1.) By means of the present writ petition filed under Article 226 of the Constitution of India, the petitioners seek a writ, order or direction in the nature of certiorari calling for record of assessment of M/s Indra Prastha Chemicals (P) Ltd., petitioner No. 1, for the asst. yrs. 1993-94 and 1994-95 and quashing the entire proceedings including the notices under Section 148 of the IT Act, 1961, hereinafter referred to as the Act, and other consequential reliefs.
(2.) Briefly stated, the facts giving rise to the present petition are as follows : The petitioner No. 1 is a private limited, company incorporated under the provisions of the Companies Act, 1956. It was incorporated in the year 1989. Its registered office is situate at Isha Nagli, Mawana Road, Meerut. The petitioner No. 1 had established its factory for the manufacture of ethyl acetate, a chemical used in the manufacture of paints, etc. during financial year 1993-94. It commenced production on 16th Jan., 1995. The petitioners Nos. 2 and 3 became directors of the petitioner No. 1 during the asst. yr. 1993-94. However, they resigned from the directorship of the petitioner No. 1 on 25th March, 1996, the fact which was recorded by the Registrar of Companies, in March, 1996, itself. The petitioner No. 1 had received share application money from its directors and other- individuals to the extent of Rs. 38,66,000 during the previous year relevant to the asst. yr. 1993-94. The petitioner No. 1 also borrowed money from various sources during this period aggregating Rs. 12,23,000. Similarly, during the previous year relevant to the asst. yr. 1994-95, petitioner No. 1 had received share application money from its directors and other individuals to the extent of Rs. 19,34,000 and borrowed money from various other sources aggregating Rs. 2,19,000. According to the petitioners, as no income had been earned during the asst. yrs. 1993-94 and 1994-95, the petitioner No. 1 did not file any return of income for these assessment years. It is alleged by the petitioners Nos. 2 and 3 that they had not been served with any notice for the assessment of petitioner No. 1 for the asst. yrs. 1993-94 and 1994-95 and when they went to the State Bank of India, Branch Palhera, Meerut, to withdraw the pension from the account of petitioner No. 3 in May 2003 they were informed that pension account has been attached in recovery of arrears of demand of income-tax of the petitioner No. 1 for the asst. yrs. 1993-94 and 1994-95. On enquiry they came to know that the Asstt. CIT, Circle 1, Meerut, respondent No. 2, has vide order dt. 26th March, 2002 assessed the income of the petitioner No. 1 for asst. yrs. 1993-94 and 1994-95. After obtaining copies of the assessment order they preferred revisions before CIT, Meerut, under Section 264 of the Act. The CIT, Meerut, respondent No. 1, vide order dt. 21st Nov., 2003, had allowed the revisions and after setting aside the assessment order dt. 26th March, 2002, remanded the matter to the assessing authority for making assessment afresh in accordance with law in the light of the directions contained in the order. After the matter was remanded, it is alleged by the petitioners that they had inspected the assessment record for the two assessment years in question and have found that on the basis of a report submitted by the IT Inspector on 20th April, 1999, proceedings under Section 147 of the Act have been initiated. The report of IT Inspector, dt. 20th April, 1999 as also the note put up by the Asstt. CIT, Circle 1, Meerut, dt. 26th April, 1999, has been field as Annex. 5 to the writ petition. The order dt. 21st Nov., 2003 passed by the GIT, Meerut, is under challenge in the present writ petition on the ground that he had not decided the plea of the petitioner that notice issued under Section 148 of the Act had not been served upon petitioner No. 1. Certain additional grounds have also been raised in the present writ petition regarding jurisdiction assumed by the Asstt. CIT, Circle 1, Meerut, respondent No. 2, for taking proceedings under Section 147 of the Act. The main ground of challenge is that the Asstt. CIT had not recorded any reasons for initiating the proceedings under Section 147 and issuance of the notices under Section 148 of the Act. Moreover, the reasons given in the report of the IT Inspector did not constitute relevant material for initiating the proceedings under Section 147 and issuance of notices under Section 148 of the Act.
(3.) We have heard Sri S.P. Gupta, learned senior counsel assisted by Sri S.D. Singh on behalf of the petitioners and Sri Ashok Kumar, learned standing counsel appearing for the respondents.;