Anand Shukla v. Income Tax Officer & Ors

$~8 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 6738/2016 & CM APPL. 27644/2016 ANAND SHUKLA ..... Petitioner Through: Ms. Sonia Mathur, Mr. AbhishekChauhan, Mr. Sushil Kumar Dubey and Mr.Rakshit Thakur, Advs. versus INCOME TAX OFFICER & ORS. ..... Respondents Through: Mr. Asheesh Jain, Adv. CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE NAJMI WAZIRIO R D E R%04.01.2017 1.The petitioner seeks a direction for quashing of a notice underSection 147/148 of the Income Tax Act, 1961 (in short the Act)proposing to open the completed assessment for Assessment Year(AY) 2009-10. The facts of the case are that the petitioner acquiredimmovable property i.e. 300 sq. mtrs. plot in Sector-72, NOIDA forRs. 52,92,000/- through an allotment letter dated 05.01.2009. Uponallotment, the petitioner had to pay Rs. 15,86,660/-, which he did.The balance was payable, according to the schedule indicated in theterms of the allotment. Apparently, in the given year for AY 2009-10the petitioner had not borrowed any amounts and utilized his ownfunds for the acquisition of the property.The returns filed wereaccepted under Section 143(1) of the Act. 2.Basing himself upon some information received with respect to registration of the property subsequently from the NOIDA Authority,the Income Tax Authorities as well as New Delhi Income TaxAuthorities issued notices under Section 147/148 ofthe Act.The“reasons to belief” recorded by the Assessing Officer (AO) read asfollows: “.... Reason for the belief that income has escapedassessment An AIR information in the case of Sh. AnandShukla was received in this office on 30.03.2016through DCIT Cr -72(1), Delhi that the assessee hasentered into the transaction regarding purchase ofimmovable property amounting to Rs. 52,92,000/-during the FY 2008-09 relevant to AY 2009-10. On perusal of AST data for AY 2009-10 theassessee has filed return of income of Rs. 14,97,311/-and for AY 2015-16 of Rs. 16,33,050.Deductionclaimed for house loan payment under Chapter- VIA orloss under the head income from house property inrespect of interest has not been revealed from the ITRs.In view of above, I have reason to believe thatthe assessee during the AY 2009-10 has been escapedassessment of Rs. 52,92,000/- invested in purchase ofimmovable property.Therefore this case is fit forissuing notice u/s 148 of the I.T. Act, 1961.Theapproval of Pr. CIT under section 151(1) of the I.T. Actis sought to issue notice u/s 148 of the Act....” 3.The petitioner wrote to the AO requesting for a copy of the“reasons to belief”.In that letter he also stated the circumstancessurrounding the acquisition of the property. Apparently, a query hadbeen made sometime in early January, 2016 from the Income TaxAuthorities with respect to the sources of the petitioner’s income anda pointed reference to the property.The petitioner had replied indicating that after the allotment, the balance sum was fundedthrough a bank loan; apart from the initial deposit of Rs. 15,86,660/-from his own funds.In support, the petitioner had also suppliedcopies of the bank account statements and other related documents.The petitioner preferred objections upon receipt of the copy of the“reasons to belief” recorded by the AO on 20.06.2016.However,even before that day, proceeding on assumptions that the objectionshad been lodged on 12.04.2016, the AO proceeded to reject theobjections on 13.06.2016. Significantly, the same order showed thatthe documents containing “reasons to belief” justification for the re-assessment were in fact furnished on 04.05.2016. indicating that after the allotment, the balance sum was fundedthrough a bank loan; apart from the initial deposit of Rs. 15,86,660/-from his own funds.In support, the petitioner had also suppliedcopies of the bank account statements and other related documents.The petitioner preferred objections upon receipt of the copy of the“reasons to belief” recorded by the AO on 20.06.2016.However,even before that day, proceeding on assumptions that the objectionshad been lodged on 12.04.2016, the AO proceeded to reject theobjections on 13.06.2016. Significantly, the same order showed thatthe documents containing “reasons to belief” justification for the re-assessment were in fact furnished on 04.05.2016. 4.It is argued that the information received from NOIDAAuthorities notwithstanding, the AO should have taken due care toscrutinize and examine the materials placed in January, 2016 and lateralong with the objections filed on 20.06.2016. In completely ignoringthem and proceeding mechanically on the assumption that since thereturns originally filed did not disclose any borrowings and, therefore,prima facie re-assessment was justified by virtue of informationsupplied by the NOIDA Authorities, the impugned notice isunsustainable. 5.The learned counsel for the Revenue urges that the impugnednotice cannot be termed as illegal because it is based upon objectiveinformation received by the NOIDA Authorities. At the point of timewhen the Income Tax Authorities received the information, it is amatter of record that the property- valued at Rs. 52 lacs, was notreflected in the original return for AY 2009-10 and could not be justified by the returns filed. It was submitted that having regard tothese and the fact that the Court has often reiterated that it is only aprima facie opinion, which has to be formed, the re-assessment noticein this case should be left undisturbed. 6.The materials brought on the record which were supplied to theconcerned AO in January, 2016, in the course of the inquiry, clearlyreveal that the borrowing to the tune of about Rs. 37 lacs – towardswhich subsequent interest payments became due, did not accrue in theyear under question i.e. AY 2009-10.At the point of time thepetitioner was allotted the plot (in January, 2009), the initial depositor amount payable, was met with by his own funds.In thesecircumstances, the question of the petitioner disclosing a loan, whichwas not even within his contemplation, much alone an existed reality,could not have arisen.Although the subsequent information withrespect to the value of the property having been registered in favourof the petitioner may be also a reality, at the same time we are of theopinion that the logic which compelled the Supreme Court to directthat assessees should be afforded an opportunity to lodge theirobjections in GKN Driveshafts (India) Ltd. vs ITO (2003) 259 ITR19(SC), was to provide a realistic opportunity and a chance to the AOwhereverneededtorevisitthere-assessmentnotice.Theconsideration by the AO has to be meaningful and objective. In thepresent instance the very fact that the AO disregarded all thedocuments furnished in January itself and proceeded to issue noticeunder section 147/148 of the Act, and compound his conduct by noteven awaiting the objections to deal with them, showed that there was a pre-disposition to reject the explanations offered by the petitioner.In the facts of this case that explanation was full and sufficient andwas reasonable enough to drop the entire re-assessment proceedings.7.Having regard to the totality of the circumstances, this Court isof the opinion that ends of justice could be met with in this case if theimpugned re-assessment notice under Section 147/148 of the Act isquashed.The impugned notice and all proceedings emanatingtherefrom are, accordingly quashed. The writ petition is allowed inthe above terms. S. RAVINDRA BHAT, J JANUARY 04, 2017/kk NAJMI WAZIRI, J