Nafr v. Assistant Commissioner Of Income Tax, Central Circle-I, Raipur,District Raipur (Cg).Assistant Commissioner Of Income Tax, Central Circle-I, Raipur,District Raip

1 NAFR HIGH COURT OF CHHATTISGARH, BILASPURWPT No.38 of 2022 M/s Satguru Infra Projects (A Partnership Firm), Kanker CityCentre, Near Bus Stand Kanker (CG) through its Partner:Rajesh Kumar Devnani, S/o Late Shri Hariram Devnani, S/oLate Shri Hariram Devnani, aged about 47 years, R/o Amapara,Kanker, P.O. P.S., Tehsil & District Kanker. M/s Satguru Infra Projects (A Partnership Firm), Kanker CityCentre, Near Bus Stand Kanker (CG) through its Partner:Rajesh Kumar Devnani, S/o Late Shri Hariram Devnani, S/oLate Shri Hariram Devnani, aged about 47 years, R/o Amapara,Kanker, P.O. P.S., Tehsil & District Kanker. ---- Petitioner Versus Assistant Commissioner of Income Tax, Central Circle-I, Raipur,District Raipur (CG).Assistant Commissioner of Income Tax, Central Circle-I, Raipur,District Raipur (CG). ---- Respondents For Petitioner :Mr. Sunny Agrawal, Advocate For Respondent :Mr. Amit Chaudhary, Advocate with Mr. Ajay Kumrani, AdvocateAjay Kumrani, Advocate Hon'ble Mr. Justice Parth Prateem Sahu Order on Board 25.3.2022 1. Aggrieved by action of respondent in issuing notice underSection 148 of the Income Tax Act, 1961 (for short 'the Act of1961') with respect to assessment year 2014-15, petitioner hasfiled this petition seeking for following relief:-Section 148 of the Income Tax Act, 1961 (for short 'the Act of1961') with respect to assessment year 2014-15, petitioner hasfiled this petition seeking for following relief:- “10.1. That, the Hon'ble Court may kindly bepleased to call for the entire records pertaining tothe present case.pleased to call for the entire records pertaining tothe present case. 10.2 That, the Hon'ble Court may kindly bepleased to quash the impugned notice dated28.03.2021 (Annexure P/1) and, in lieu thereofquash/set aside the notice dated 04.12.2021(Annexure P/2) & letter dated (10.01.2022 &11.01.2022) (Annexure P/3) issued in furtheranceof assessment proceedings initiated as againstthe petitioner. 10.3 That, the Hon'ble Court may kindly be pleased to quash entire proceedings initiated inlieu of notice under Section 148 of the Act, 1961for the assessment year 2014-15. 10.4. That, this Hon'ble Court may kindly bepleased to grant any other relief (s), which it maydeemed fit and proper in the aforesaid facts andcircumstances of the case.” 2. Mr. Sunny Agrawal, learned counsel for petitioner would submitthat in return of assessment year 2014-15 petitioner hasdisclosed that on 25.1.2014 he has purchased agricultural landsituated in village Deori worth Rs.1,10,07,000/-. Upon issuanceof notice under Section 142 (1) of the Act of 1961 petitionersubmitted explanation annexing relevant documents as requiredby the Department. Considering the documents submitted bypetitioner along with explanation/reply to notice under Section142 (1) of the Act of 1961, respondent passed assessmentorder under Section 143 (3) on 30.6.2016. The order underSection 143 (3) is passed after considering entire material andupon satisfaction of respondent. In Paragraph-3 of assessmentorder under Section 143 (3) of the Act of 1961, the officer haselaborately discussed the issue of purchase of 6.81 acre ofagricultural land in village Deori (situated more than 2 kms awayfrom municipality limits) by petitioner for Rs.1,17,87,000/-.Impugned notice under Section 148 of the Act of 1961 is issuedon 28.3.2021 i.e. after lapse of more than four years. It is alsocontended that in the facts and circumstances of the case, theAssessing Officer has not recorded reasons as required underthe provisions of Section 147 of the Act of 1961 that the income chargeable to tax has escaped assessment by reason of thefailure on the part of assessee to make a return under Section139 or to disclose fully and truly all material facts necessary forhis assessment. Petitioner has disclosed all material factsnecessary for his assessment upon issuance of notice underSection 142 (1) and only thereafter petitioner assessment underSection 143 (3) has been ordered by the Assessing Officer afterrecording his satisfaction. Reasons assigned for issuance ofnotice is non-deduction of TDS as required under Section 194-IA of the Act of 1961 would not apply to the facts of presentcase. Section 194-IA applies to payment on transfer of certainimmovable properties other than agricultural land. As perdocuments placed before the Assessing Officer as alsorecorded by him that land purchased is an agricultural land andlocated beyond two kilometer from municipal limits. In view ofaforementioned facts of case, learned counsel for petitionerprays for quashment of notices dated 28.3.2021, 04.12.2021and 10/11-01-2022. 3. Mr. Amit Choudhary, learned counsel for the respondent wouldsubmit that notice under Section 148 of the Act of 1961 hasbeen issued within a period of 4 to 6 years. Petitioner has notdeducted tax on the value of property purchase and shown,which is capital asset of petitioner. Non-deduction of TDScaused loss to the revenue to the tune of Rs.1,10,017/-,therefore, considering return submitted by petitioner, theAssessing Officer has recorded reasons in terms of Section 147submit that notice under Section 148 of the Act of 1961 hasbeen issued within a period of 4 to 6 years. Petitioner has notdeducted tax on the value of property purchase and shown,which is capital asset of petitioner. Non-deduction of TDScaused loss to the revenue to the tune of Rs.1,10,017/-,therefore, considering return submitted by petitioner, theAssessing Officer has recorded reasons in terms of Section 147 and only thereafter issued impugned notice which cannot besaid to be illegal or arbitrary. He submits that in return it hasbeen specifically pleaded that it is the Ariel distance of propertyto be considered, which is less than 2 kms from the villagewhere property is situated. Land purchased by petitioner is notin cultivation, hence it does not fall within the definition ofSection 2 (14) of the Act of 1961. Action taken againstpetitioner is in accordance with provisions of Section 161 of theAct of 1961. Petitioner has not deducted tax at source, asprovided under Section 194-IA of the Act of 1961, hence thisproceeding is initiated against petitioner. 4. I have heard learned counsel for parties and also peruseddocuments placed along with writ petition. documents placed along with writ petition. 5. Petitioner has placed on record assessment order dated30.6.2016 passed under Section 143 (3) of the Act of 1961 forthe assessment year 2014-15. In Paragraph-3 of assessmentorder the Assessing Officer has considered purchase of 6.81acre of agricultural land for Rs.1,17,87,000/- and furtherrecorded that it is situated in village Deori which is more than 2kms away from municipality of Kanker. Section 2 (14) of theAct of 1961 defines ‘capital asset’ and Section 2 (14) (iii) dealswith agricultural land in India, which reads as under:-30.6.2016 passed under Section 143 (3) of the Act of 1961 forthe assessment year 2014-15. In Paragraph-3 of assessmentorder the Assessing Officer has considered purchase of 6.81acre of agricultural land for Rs.1,17,87,000/- and furtherrecorded that it is situated in village Deori which is more than 2kms away from municipality of Kanker. Section 2 (14) of theAct of 1961 defines ‘capital asset’ and Section 2 (14) (iii) dealswith agricultural land in India, which reads as under:- “(iii) agricultural land in India, not being landsituate - situate - (a) xxxxx (b) in any area within the distance,measured aerially- measured aerially- “(iii) agricultural land in India, not being landsituate - situate - (a) xxxxx (b) in any area within the distance,measured aerially- measured aerially- (I) not being more than twokilometres, from the local limits ofany municipality or cantonmentboard referred to in item (a) whichhas a population of more than tenthousand but not exceeding onelakh; or (II) not being more than sixkilometres, from the local limits ofany municipality or cantonmentboard referred to in item (a) whichhas a population of more than onelakh but not exceeding ten lakh; or (III) not being more than eightkilometres, from the local limits ofany municipality or cantonmentboard referred to in item (a) whichhas a population of more than tenlakh.” 6. Perusal of reasons recorded for issuance of notice underSection 148 of the Act of 1961 and reasoning recorded by theAssessing Officer, it is apparent that Assessing Officer hasconsidered that petitioner assessee has capital asset as perSection 2 (14) of the Act of 1961 and considering the sale deedand case files, has arrived at a conclusion that TDS as requiredunder Section 194IA of the Act of 1961 was not deducted bypurchaser. No other reason has been recorded by theAssessing Officer. Section 148 of the Act of 1961 and reasoning recorded by theAssessing Officer, it is apparent that Assessing Officer hasconsidered that petitioner assessee has capital asset as perSection 2 (14) of the Act of 1961 and considering the sale deedand case files, has arrived at a conclusion that TDS as requiredunder Section 194IA of the Act of 1961 was not deducted bypurchaser. No other reason has been recorded by theAssessing Officer. 7. From perusal of impugned notice, it is apparent that there is nomention in reasons recorded by Assessing Officer that land isnot an agricultural land. Once it is considered by AssessingOfficer in the proceeding under Section 143 (3) of the Act of1961 that property/ asset purchased is an agricultural land andfurther recorded in the proceeding also to this effect. Recordingof reasons, as envisaged under provisions of Section 147 of themention in reasons recorded by Assessing Officer that land isnot an agricultural land. Once it is considered by AssessingOfficer in the proceeding under Section 143 (3) of the Act of1961 that property/ asset purchased is an agricultural land andfurther recorded in the proceeding also to this effect. Recordingof reasons, as envisaged under provisions of Section 147 of the Act of 1961, is mandatory for Assessing Officer before issuingnotice under Section 148 of the Act of 1961. In the facts andcircumstances of the case, “due to failure on the part of theassessee to disclose fully and truly all material facts necessary,income chargeable to tax has escaped assessment”. When theland of petitioner recorded by Assessing Officer is agriculturalland after satisfying his query, then in the facts of case, theprovisions referred to in by Assessing Officer for recordingreasons for issuance of notice under Section 148 of the Act of1961 are not applicable to the facts of the case. Hence, therewas no reason before the Assessing Officer to issue noticeunder Section 148 of the Act of 1961 to petitioner, as perrequirement under Section 147 of the Act of 1961. 8. As provisions of Section 194-IA of the Act of 1961 wasconsidered by Assessing Officer for issuance of notice underSection 148 of the Act of 1961 for not deducting TDS, therefore,I find it appropriate to extract relevant provisions of that section,which applies to land other than agricultural land, herein belowfor ready reference:- 8. As provisions of Section 194-IA of the Act of 1961 wasconsidered by Assessing Officer for issuance of notice underSection 148 of the Act of 1961 for not deducting TDS, therefore,I find it appropriate to extract relevant provisions of that section,which applies to land other than agricultural land, herein belowfor ready reference:- “194-IA.Payment on transfer of certainimmovable property other than agriculturalland.—(1) Any person, being a transferee,responsible for paying (other than the personreferred to in section 194LA) to a resident transferorany sum by way of consideration for transfer of anyimmovable property (other than agricultural land),shall, at the time of credit of such sum to theaccount of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draftor by any other mode, whichever is earlier, deductan amount equal to one per cent of such sum asincome-tax thereon. (2) No deduction under sub-section (1) shall bemade where the consideration for the transfer of animmovable property is less than fifty lakh rupees.(3) The provisions of section 203A shall not apply toa person required to deduct tax in accordance withthe provisions of this section.” 9. From perusal of afore quoted provision it is clear that these provisions will be attracted upon transfer of certain immovableproperty other than agricultural land. As discussed in precedingparagraphs, the Assessing Officer upon submission of return bypetitioner for the assessment year 2014-15 disclosing purchaseof agricultural land, issued notice under Section 142 (1) of theAct of 1961. Petitioner submitted relevant documents to satisfyquery made by Assessing Officer in the notice under Section142 (1) of the Act of 1961. Thereafter assessment order underSection 143 (3) of the Act of 1961 was passed. The AssessingOfficer in Paragraph-3 of the order under Section 143 (3)discussed about agricultural land purchased by petitionermeasuring 6.81 acre situated in village Deori to be more thantwo kilometer away from limits of municipality of Kanker. Inthese circumstances, this Court is of the considered opinion thatwhen provision of the Act of 1961, which is made basis forissuance of notice under Section 148 of the Act of 1961 itself isnot attracted to the facts of present case, notice issued underSection 148 is not sustainable and it is liable to be quashed. 10. For the foregoing discussions, writ petition is allowed. Impugnednotice, Annexure P-1, issued under Section 148 of the Act of1961 and all consequent proceedings arising therefrom arehereby quashed. notice, Annexure P-1, issued under Section 148 of the Act of1961 and all consequent proceedings arising therefrom arehereby quashed. Sd/-(Parth Prateem Sahu)Judge Roshan/-