Amudha Sukumar v. The Assistant Commissioner Of Income Tax, Business Circle I, Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.03.2021 CORAM: THE HONOURABLE MR. JUSTICE C.SARAVANAN W.P.Nos.28288 & 5744 of 2014andW.M.P.No.38791 of 2014 Amudha Sukumar ... Petitioner in both W.Ps.Vs. The Assistant Commissioner of Income Tax, Business Circle I, Room No.309, 3[rd] Floor, 121 MG Road, Nungambakkam, Chennai – 600 034. ... Respondent in W.P.No.28288 of 20141.The Commissioner of Income Tax, Chennai – I. Income Tax Department, 121 MG Road, Aayakar Bhavan, Nungambakkam, Chennai – 600 034. 2.The Deputy Commissioner of Income Tax, Circle – I, Income Tax Department, 121 MG Road, Aayakar Bhavan, Nungambakkam, Chennai – 600 034. 3.The Assistant Commissioner of Income Tax, Business Circle I, Room No.390, 3[rd] Floor, Wanaparthy Block, 121 MG Road, Aayakar Bhavan, Chennai – 600 034. ... Respondent in W.P.No.5744 of 2014 PRAYER in W.P.No.28288 of 2014:- Writ Petition is filed underArticle 226 of the Constitution of India praying for theissuance of Writ of Certiorarified Mandamus, to call for therecords of the respondent contained in the Assessment Orderdated 28.08.2014 in PAN , and to quash the same, andconsequently to forbear the respondent, or any of its agents,from taking any further action under Section 147 of the IncomeTax Act, 1961 against the petitioner for the Assessment Yearhttps://hcservices.ecourts.gov.in/hcservices/2006-07. PRAYER in W.P.No.5744 of 2014:- Writ Petition is filed underArticle 226 of the Constitution of India praying for theissuance of Writ of Certiorarified Mandamus, to call for therecords quashing the impugned order issued by the thirdrespondent in its proceedings vide PAN: /2006-07dated 29.01.2014 dismissing the objections of the petitionerto the reopening of her income tax assessment for theassessment year 2006-07 under Section 147 of the Income TaxAct, 1961 and consequently forbearing the respondents or anyof their subordinates, agents or any other person claimingunder the respondents from reassessing the petitioner's incometax for the assessment year 2006-07 under the thirdrespondent's notice issued on 05.11.2012 under Section 148 ofthe Income Tax Act, 1961. For Petitioner : Mr.Sathish Parasaran Senior Counsel for (in both W.Ps) M/s.Suhrith ParthasarathyFor Respondents : M/s.Hema Muralikrishnan (in both W.Ps) Senior Standing CounselC O M M O N O R D E RBy this common order, both these writ petitions are beingdisposed. 2.In W.P.No.5744 of 2014, the petitioner has challengedthe impugned communication dated 29.04.2014 over ruling theobjection of the petitioner against reopening of theAssessment completed under Section 143(3) of the Income TaxAct on 28.11.2008 for the Assessment year 2006-2007. The saidwrit petition was originally disposed of along with a batch ofWrit Appeals by a decision of the Division Bench of this Courton 04.07.2014. Against the said order, the petitionerpreferred an appeal before the Hon'ble Supreme Court. 3.At the time of admission, the Hon'ble Supreme Courtpassed an interim order dated 29.08.2014 which reads as under:In the meanwhile, the reassessmentorder shall not be framed by the AssessingOfficer, if not framed so far. 4.The Hon'ble Supreme Court thereafter passed a finalorder pursuant to which this writ petition in W.P.No.5744 of2014 is listed before this Court for final disposal. 5.The respondent however claim that on 28.08.2014 i.e.,one day before the interim order was obtained by thepetitioner from the Hon'ble Supreme Court on 29.08.2014, orderhad been passed. It is therefore submitted that the presenthttps://hcservices.ecourts.gov.in/hcservices/writ petition was liable to be dismissed. Before 3.At the time of admission, the Hon'ble Supreme Courtpassed an interim order dated 29.08.2014 which reads as under:In the meanwhile, the reassessmentorder shall not be framed by the AssessingOfficer, if not framed so far. 4.The Hon'ble Supreme Court thereafter passed a finalorder pursuant to which this writ petition in W.P.No.5744 of2014 is listed before this Court for final disposal. 5.The respondent however claim that on 28.08.2014 i.e.,one day before the interim order was obtained by thepetitioner from the Hon'ble Supreme Court on 29.08.2014, orderhad been passed. It is therefore submitted that the presenthttps://hcservices.ecourts.gov.in/hcservices/writ petition was liable to be dismissed. Before proceedings with the merits of the case, I shall thereforefirst dispose W.P.No.28828 of 2014 wherein the petitioner haschallenged the Assessment order dated 28.08.2014 passed by therespondent pursuant to impugned communication dated 28.01.2014impugned in W.P.No.5744 of 2014. 6.On a reading of the order dated 28.08.2014, it isevident that the same has been backdated. The said orderstates that tax and interest are payable as per encloseddemand notice under Section 156. However on perusing thecomputation of tax in the said assessment order, thecomputation of tax is dated 01.09.2014. The notice of demandin Form 7 is dated 01.09.2014. Similarly, notice underSection 27 read with Section 271 of Income Tax Act is alsodated 01.09.2014. 7.These indicate that the Assessment order dated28.08.2014 impugned in W.P.No.28288 of 2014 has been backdatedwith a view to get over the interim order passed by theHon'ble Supreme Court in Petitioner's S.L.P.No.22291 of 2014dated 29.08.2014. Therefore the impugned order dated28.08.2014 passed under Section 143(3) read with 147 of theIncome Tax Act, 1961 impugned in W.P.No.28288 of 2014 isquashed. Accordingly, the aforesaid Writ Petition standsallowed. 7(a).I shall not proceed with the other two writpetitions.8.Thepetitionerhaschallengedtheimpugnedcommunication dated 29.01.2014 in W.P.No.5744 of 2014 seekingto re-open the completed Assessment for the Assessment Year2006-07. The case of the petitioner before this Court is thatthe petitioner had filed a regular return under Section 139 ofthe Income Tax Act, 1961 on 28.02.2007 pursuant to whichproceedings were initiated under Section 143(1) of the IncomeTax Act, 1961 on 27.07.2007. Thereafter, a notice underSection 143(2) of the Income Tax Act, 1961 was issued to thepetitioner. It is submitted that even at the time of filingof the returns on 28.02.2007, the petitioner had declared thesale of Agricultural land measuring 13.08 Acres at EgatturVillage, Chengalpet Taluk on 15.10.2005 and claimed that theCapital Gain on sale of land was exempted since sale ofAgricultural lands. Accordingly, no Agricultural Income wasadmitted during Assessment year 2006-07. It is furthersubmitted that after the notice under Section 143(2) wasissued to the petitioner on 09.01.2008 certain details werecalled for by the respondent when copies of the sale deedevidencing sale of the aforesaid land to M/s.HiranandaniRealtors Private Limited on 13.10.2005 was furnished to thedepartment along with all the documents to substantiate thatthe land in question was a agricultural land of the incomehttps://hcservices.ecourts.gov.in/hcservices/from the aforesaid land was accepted by the respondent during the Assessment years completed by the previous Assessmentyears as were. 9.It is further submitted that pursuant to a noticeissued under Section 143(2) of the Income Tax Act by acommunication dated 20.11.2008 it was specifically informed asfollows: the Assessment years completed by the previous Assessmentyears as were. 9.It is further submitted that pursuant to a noticeissued under Section 143(2) of the Income Tax Act by acommunication dated 20.11.2008 it was specifically informed asfollows: In continuation of the discussion had withyou by my Auditor regarding the above Assessmentand in reply to the details filed vide my letterdated 17.11.2008 I give below the further detailscalled for by you.Note on Sale of Agricultural Land: 1.The Agricultural land at Egattur Villagewas purchased on 26.02.1979 and agriculturalactivities was done in the land. Every year Ihave been admitting the Agricultural Income in myIT Returns. Copy of this purchase deed enclosedfor your reference. 2.This land was sold on 15.10.2005 forRs.23,00,00,000 and the sale proceeds weredeposited in the Bank. Copy of the Bankstatement is enclosed. 3.Out of this amount I have usedRs.13,00,00,000 for investment in Mutual fundsand I have gifted Rs.10,00,00,000 to my husbandMr.K.C.Sukumar (PAN No. ). This is thesource for all investments shown in your AIR. 10.It is therefore submitted that the reopening of theAssessment under Section 148 read with proviso to Section 147of the Income Tax was without jurisdiction. It is submittedthat there was no failure on the part of the petitioner totruly disclosure all the material facts that were required forthe Assessment. Therefore, it is submitted that therespondent issued a notice on 05.11.2012 at the fag end of thelimitation under Section 148 of the Income Tax Act. It issubmitted that from a reading of the reasons given forreopening of the Assessment itself, makes it clear that therewas a mere change of opinion and therefore there is no basisfor reopening of assessment. In this connection, a referencewas made to a communication dated 29.11.2012, of therespondent intimating the reasons for reopening the Assessmentvide notice dated 05.11.2012, which reads as under:As requested by you, the reason forreopening the wealth tax assessment for theA.Y.2006-07 is furnished as under:''The assessee has sold agricultural landof 13.08 acres at Rs.23,00,12,000/- toM/s.Hiranandani Realtors (P)Ltd, Mumbai. Theland was sold for a non-agricultural purposethat is to a real estate company and the priceat which it was sold outweighs the normallyhttps://hcservices.ecourts.gov.in/hcservices/prevailing market rate for agricultural land.'' 11.It is submitted that since the petitioner has acategorically taken a stand that the sale of the land was to areal estate developer and that the sale was declared as a saleof Agricultural land, question of reopening the Assessmentunder proviso to Section 147 cannot be countenanced. It isfurther submitted that in the impugned communication dated29.01.2014, the respondent has obtained information from theGovernment of Tamilandu in G.O.Ms.No.287 dated 08.07.2004,wherein it is stated that the land in the said area was underwas to be categorized as a urbanized land and that the landwas fetching a good amount form a reality company shows thatthere was a suppression of fact by the petitioner. In thisconnection, the learned counsel for the petitioner submitsthat the reasonings in the impugned communication dated29.01.2014 clearly shows no case was made out for reopening ofthe Assessment. 12.Defending the impugned order, the learned counsel forthe respondent submits that the petitioner has alreadyenclosed copy of the sale deed dated 15.10.2005 at the time ofAssessment but had not filed any of the other documents suchas patta, adangal and certificate regarding distance of landand population and therefore the petitioner made a false claimthat during the original Assessment and had failed to furnishall the documents required for assessment. 12.Defending the impugned order, the learned counsel forthe respondent submits that the petitioner has alreadyenclosed copy of the sale deed dated 15.10.2005 at the time ofAssessment but had not filed any of the other documents suchas patta, adangal and certificate regarding distance of landand population and therefore the petitioner made a false claimthat during the original Assessment and had failed to furnishall the documents required for assessment. 13.It is therefore submitted that petitioner was liableto pay tax on the sale of land in question under as capitalgains. It is further submitted that as per explanation 1 toSection 147, mere production on books of accounts otherevidence from which the material evidence could with duediligence have been discovered by the Assessing Officer willnot amount to disclosure within the meaning of Section 147 ofthe Income Tax Act, 1961. 14.Finally, the learned counsel for the respondent alsoplaced reliance on the decision of this Court in PrincipalCommissioner of Income Tax Vs. Shri.A.Lalichan in T.C.A.No.504of 2018 delivered on 11.10.2018. 15.He submits that the court has considered the decisionof the Supreme Court in the case of Sarifabibi Mohmed Ibrahim& Others Vs. Commissioner of Income Tax 1993 (204) ITR 0631and other decisions and held that the fact that the land isassessed to the Land Revenue as agricultural land under theState Revenue Law is certainly a relevant fact but it is notconclusive. 16.The learned counsel for the respondent furthersubmitted that this Court in Sarojini Devi Vs. T.Sri Krishna[AIR 1944 Mad 401] it was held that the expressionhttps://hcservices.ecourts.gov.in/hcservices/agricultural land should be given the widest meaning and if the land is assessed to the land revenue as agricultural landunder the State Revenue Law, it is a strong piece of evidenceof its character as an agricultural land, but on appeal, theConstitution Bench of the Hon'ble Supreme Court held thatinasmuch as, the agricultural land is exempted from thepurview of the definition of the expression ''assets'', it is''impossible to adopt so wide a test as would obviously defeatthe purpose of the exemption given'' 17.He further submits that the Division Bench of thisCourt in T.C.A.No.504 of 2018 has also considered the decisionof the Gujarat High Court in CIT Vs. Siddharth, wherein theGujarat High Court has evolved the 13 test to determine thecharacter of the land, which would could, whether the land inquestion Agricultural land or not for the purpose of Section 2(14) of the Income Tax Act submits that the Division Bench hasconsidered the same which reads as under: 1.Whether the land was classified in therevenue records as agricultural and whether itwas subject to the payment of land revenue? 2.Whether the land was actually orordinarily used for agricultural purposes at orabout the relevant time? 3.Whether such user of the land was for along period or whether it was of a temporarycharacter or by way of stopgap arrangement?4.Whether the income derived from theagricultural operations carried on in the landbore any rational proportion to the ivnestmentmade in purchasing the land? 5.Whether, the permission under Section 65of the Bombay land Revenue code was obtained forthe non-agricultural use of the land? If so,when and by whom (the vendor or the vendee)?Whether such permission was in respect of thewhole or a portion of the land? If thepermission was in respect of a portion of theland and if it was obtained in the past, whatwas the nature of the user of the said portionof the land on the material date? 6.Whether the land, on the relevant date,had ceased to be put to agricultural use? If so,whether it was put to an alternative use?Whethersuch cesser and/or alternative user was of apermanent or temporary nature? 5.Whether, the permission under Section 65of the Bombay land Revenue code was obtained forthe non-agricultural use of the land? If so,when and by whom (the vendor or the vendee)?Whether such permission was in respect of thewhole or a portion of the land? If thepermission was in respect of a portion of theland and if it was obtained in the past, whatwas the nature of the user of the said portionof the land on the material date? 6.Whether the land, on the relevant date,had ceased to be put to agricultural use? If so,whether it was put to an alternative use?Whethersuch cesser and/or alternative user was of apermanent or temporary nature? 7.Whether the land, though entered inrevenue records, had never been actually usedfor agriculture, that is, it had never beenploughed or tilled? Whether the owner meant orintended to use it for agricultural purposes? 8.Whether the land was situate in adevelopedarea?Whetheritsphysicalcharacteristics, surrounding situation and useof the lands in the adjoining area were such as https://hcservices.ecourts.gov.in/hcservices/ would indicate that the land was agricultural?9.Whether the land itself was developed byplotting and providing roads and otherfacilities? 10.Whether there were any previous sales ofportions of the land for non-agricultural use?11.Whether permission under Section 63 ofthe Bombay Tenancy and Agricultural Lands Act,1948, was obtained because the sale or intendedsale was in favour of a non-agriculturist? Ifso, whether the sale or intended sale to suchnon-agriculturist was for non-agricultural oragricultural user? 12.Whether the land was sold on yardage oron acreage basis? 13.Whether an agriculturist would purchasethe land for agricultural purposes at the priceat which the land was sold and whether the ownerwould have ever sold the land valuing it as aproperty yielding agricultural produce on thebasis of its yield? 18.Under these circumstances, the learned counsel for therespondent submits that the impugned order communicating thereasons over ruling the objection of the petitioner againstreopening of the Assessment vide communication dated29.01.2014 cannot be interfered with and therefore prays for adismissal of the writ petition. 19.I have considered the arguments advanced by thelearned counsel for the petitioner and the respondent. 20.The only question to be determined in this case iswhether there was a true and full disclosure of all materialfacts by the petitioner for the purpose of assessment underSection 147 of the Income Tax Act, 1961. As per Explanation 1to Section 147 of the Income Tax Act, 1961, mere production onbooks or other evidence from which material evidence couldwith due diligence have been discovered by the AssessingOfficer will not necessarily amount to disclosure to themeaning of proviso to Section 147 of the Income Tax Act. Thefact that the petitioner had claimed exemption from payment ofTax as the land was sold to real estate company is not indispute. The petitioner has enclosed copy of the sale deedwhich claim indicates sale was made to a real estate companynamely M/s.Hiranandani Realtors Private Limited. The name ofthe buyer itself indicates its business. Therefore, it cannotbe said that there was failure on the part of disclosurematerial evidence at the time of assessment. 21.The petitioner had also sent a representation inresponse to notice under Section 143(2) of the Income Tax Actindicating the sale to M/s.Hiranandani Realtors PrivateLimited. The fact that the petitioner may or may not havehttps://hcservices.ecourts.gov.in/hcservices/been enclosed the other documents such as patta, adangal and 21.The petitioner had also sent a representation inresponse to notice under Section 143(2) of the Income Tax Actindicating the sale to M/s.Hiranandani Realtors PrivateLimited. The fact that the petitioner may or may not havehttps://hcservices.ecourts.gov.in/hcservices/been enclosed the other documents such as patta, adangal and certificate of distance of land and population is notmaterial. Particularly in the light of the fact that therespondent themselves had admitted that the petitioner hadenclosed copy of the sale deed dated 15.102005 along with theletter dated 17.08.2008. There was an adequate declaration bythe petitioner that the land in question was the agriculturalland. Thus, it cannot be countenanced that there was afailure on the part of the disclosure of material evidencerequired for completing the Assessment. 22.The guidelines of the Hon'ble Gujarat High Court whichhas been extracted above though the relevant for determiningwhether the land in question was an Agricultural land or aNon-Agricultural land it has to be viewed from the prospectusof the petitioner. Then petitioner had taken a bonafide standthat the petitioner had sold an Agricultural land andtherefore she was entitled to exclude the amount from paymentof tax as capital gains. Further the reasons in the impugnedorder that in terms of G.O.Ms.No.287 issued by the Housing andUrban Development (UD 4 2) department dated 08.07.2004 thatthere was a draft Master Plan for the Mamallapuram LocalPlanning Area as consented to by the Government under Sub-Section (2) of Section 24 of the said Act, was returned to theCommissioner of Town and Country Planning, and he wasrequested to acknowledge the receipt of the same. TheCommissioner of Town and Country Planning was requested toensure that the various requirements specified in the TamilNadu Town and Country Planning Act, 1971 (Tamil Nadu Act 35 of1972) and the Master Plan (Preparation, Publication andSanction) Rules are strictly adhered to by the local planningauthority, before the Master Plan was resubmitted to theGovernment for final approval under Section 28 of the saidAct. 23.The fact that the petitioner had enclosed copy of thesale deed dated 15.10.2005 at the time of Assessment has notbeen denied. The property in question is not very far fromCity of Madras and therefore the respondent cannot state thatthe petitioner had not disclosed truly and fully of thematerial that are required for completing the assessment. Ifthere is any doubt at the time of completion of Assessmentunder Section 143(3) of the Income Tax Act on 28.11.2008, therespondent could have called for further information for thepetitioner. Considering the fact that the petitioner hadenclosed copy of the sale deed of M/s.Hiranandani RealtorsPrivate Limited and since the name indicates sale to thereality company, the respondent should have either rejectedthe case of the petitioner called for further information.Thus, there was no failure on the part of the petitioner todisclosure all material facts required for completing theassessment. 24.In the light of the above, I find no merits in theimpugned communication dated 29.01.2014. In the result,https://hcservices.ecourts.gov.in/hcservices/W.P.No.5744 of 2014 also deserves to be allowed. 25.These writ petitions are thus allowed. No costs.Consequently, connected Miscellaneous Petitions are closed. Sd/-Assistant Registrar(CS-V) 24.In the light of the above, I find no merits in theimpugned communication dated 29.01.2014. In the result,https://hcservices.ecourts.gov.in/hcservices/W.P.No.5744 of 2014 also deserves to be allowed. 25.These writ petitions are thus allowed. No costs.Consequently, connected Miscellaneous Petitions are closed. Sd/-Assistant Registrar(CS-V) //True copy//Sub Assistant RegistrarjasTo1.The Assistant Commissioner of Income Tax, Business Circle I, Room No.309, 3[rd] Floor, 121 MG Road, Nungambakkam, Chennai – 600 034.2.The Commissioner of Income Tax, Chennai – I. Income Tax Department, 121 MG Road, Aayakar Bhavan, Nungambakkam, Chennai – 600 034.3.The Deputy Commissioner of Income Tax, Circle – I, Income Tax Department, 121 MG Road, Aayakar Bhavan, Nungambakkam, Chennai – 600 034.4.The Assistant Commissioner of Income Tax, Business Circle I, Room No.390, 3[rd] Floor, Wanaparthy Block, 121 MG Road, Aayakar Bhavan, Chennai – 600 034. +1cc to M/s.Hema Muralikrishnan, Advocate SR.No.16737 +2cc to M/s.Suhrith Parthasarathy, Advocate SR.No.16736 W.P.Nos.28288 & 5744 of 2014andW.M.P.No.38791 of 2014 EV(CO)GMY(02/07/2021) https://hcservices.ecourts.gov.in/hcservices/