Neutral Citation No: 2022/Dhc/004052 v. The Income Tax Officer Ward & Anr

$~12 IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 12851/2022 & CM APPL. 39113-14/2022 versus THE INCOME TAX OFFICER WARD & ANR. ..... Respondents % CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral):CM APPL. 39114/2022 Exemption allowed, subject to all just exceptions. Accordingly, this application stands disposed of. W.P.(C) 12851/2022 & CM APPL. 39113/2022 (for interim relief) 1.Present writ petition has been passed challenging the order passedunder section 148A(d) of the Income Tax Act, 1961 [the Act] and theconsequential Notice issued undersection 148 of the Act both dated27[th]July, 2022 for the Assessment Year 2016-17. 2.Learned Counsel for the Petitioner states that the impugned notice andorder have been passed in violation of principles of natural justice in asmuch as the detailed reply dated 8[th]June, 2022 to the Show Cause Notice dated 27[th]May, 2022 issued under section I48A(b) of the Act submitted bythe Petitioner, even though acknowledged by the Respondent, has not beenconsidered while passing the impugned order dated 27[th]July, 2022 undersection 148A(d) of the Act. 3.Today, learned counsel for the respondent states that he has receivedthe following e-mail dated 26[th]September, 2022, from the AssessingOfficer, which reads as under:- “Kindly find attached reply in the case of Civitech Developer PvtLtd, AAECC0108J, AY 2016-17 filed by the assessee against theorder u/s 148A(d) of the I.T.Act. The reply was duly approved by the Competent Authority. The copyof approval and soft copy is enclosed for necessary action. Further, I am directed to inform that the Hon'ble High Court mayremand the matter for fresh adjudication in a time bound matter, as”per the attached submission. 4.He has also handed over the proposed reply prepared by the AssessingOfficer. The same is reproduced hereinbelow:- “In the case of the assessee company -M/s Civitech DevelopersPrivate Limited, the information forming the basis of reassessmentproceedings is as follows:Private Limited, the information forming the basis of reassessmentproceedings is as follows: "Information has been received from the SRO Noida which revealed thattheassesseehassoldimmovablepropertyamountingtoRs.7,74,40,422/-.Since,credibleinformationwasflaggedbyInvestigation wing of the department and the information has beenshared after due verification and enquiries."theassesseehassoldimmovablepropertyamountingtoRs.7,74,40,422/-.Since,credibleinformationwasflaggedbyInvestigation wing of the department and the information has beenshared after due verification and enquiries." It is stated that based on the reasons recorded above, notice u/s 148was issued to the assessee on 28.06.2021was issued to the assessee on 28.06.2021 Subsequently, Hon'ble Supreme Court in its judgement in the case ofUOI & Ors. vs Ashish Aggarwal dated 04.05.2022 has upheld theUOI & Ors. vs Ashish Aggarwal dated 04.05.2022 has upheld the validity of the same and has directed that the above notice u/s 148may be treated as show cause u/s 148A.may be treated as show cause u/s 148A. It is stated that based on the reasons recorded above, notice u/s 148was issued to the assessee on 28.06.2021was issued to the assessee on 28.06.2021 Subsequently, Hon'ble Supreme Court in its judgement in the case ofUOI & Ors. vs Ashish Aggarwal dated 04.05.2022 has upheld theUOI & Ors. vs Ashish Aggarwal dated 04.05.2022 has upheld the validity of the same and has directed that the above notice u/s 148may be treated as show cause u/s 148A.may be treated as show cause u/s 148A. Information in this case has been flagged and received from theDirectorate of Income Tax (Intelligence & Criminal Investigation),New Delhi on insight portal that Sub Registrar Office, Noida hasinformed sale of immovable property amounting to Rs.7,74,40,422/ bythe assessee company and the said information was treated as reasonrecorded under the old regime before the provision of new section 149became applicable and under the old regime, there was norequirement of classification of information. Hence, the notice u/s 148dated 28.06.2021 stands upheld by Hon'ble Supreme Court and thesame was treated as showcause u/s 148A.Directorate of Income Tax (Intelligence & Criminal Investigation),New Delhi on insight portal that Sub Registrar Office, Noida hasinformed sale of immovable property amounting to Rs.7,74,40,422/ bythe assessee company and the said information was treated as reasonrecorded under the old regime before the provision of new section 149became applicable and under the old regime, there was norequirement of classification of information. Hence, the notice u/s 148dated 28.06.2021 stands upheld by Hon'ble Supreme Court and thesame was treated as showcause u/s 148A. It would be relevant here to refer to the judgement of Hon'ble DelhiHigh Court in the case of M/s Touchstone Holding Pvt Ltd. vs ITOdated 09.09.2022 upholding the reassessment proceedings in the caseof M/s Touchstone Holding Pvt Ltd for AY 2013-14 where in referencehas been made to the case of Raymond Woollen Mills Ltd vs ITO andOrs. wherein the Supreme Court has held as under:High Court in the case of M/s Touchstone Holding Pvt Ltd. vs ITOdated 09.09.2022 upholding the reassessment proceedings in the caseof M/s Touchstone Holding Pvt Ltd for AY 2013-14 where in referencehas been made to the case of Raymond Woollen Mills Ltd vs ITO andOrs. wherein the Supreme Court has held as under: It would be relevant here to refer to the judgement of Hon'ble DelhiHigh Court in the case of M/s Touchstone Holding Pvt Ltd. vs ITOdated 09.09.2022 upholding the reassessment proceedings in the caseof M/s Touchstone Holding Pvt Ltd for AY 2013-14 where in referencehas been made to the case of Raymond Woollen Mills Ltd vs ITO andOrs. wherein the Supreme Court has held as under:High Court in the case of M/s Touchstone Holding Pvt Ltd. vs ITOdated 09.09.2022 upholding the reassessment proceedings in the caseof M/s Touchstone Holding Pvt Ltd for AY 2013-14 where in referencehas been made to the case of Raymond Woollen Mills Ltd vs ITO andOrs. wherein the Supreme Court has held as under: "3. In this case, we do not have to give a final decision as to whetherthere is suppression of material facts by the assessee or not. We haveonly to see whether there was prima facie some material on the basisof which the Department could reopen the case. The sufficiency orcorrectness of the material is not a thing to be considered at thisstage. We are of the view that the court cannot strike down thereopening of the case in the facts of this case. It will be open to theassessee to prove that the assumption of facts made in the notice waserroneous. The assessee may also prove that no new facts came tothe knowledge of the Income-tax Officer after completion of theassessment proceeding. We are not expressing any opinion on themerits of the case. The questions of fact and law are left open to beinvestigated and decided by the assessing authority. The appellant willbe entitled to take all the points before the assessing authority. Theappeals are dismissed. There will be no order as to costs."there is suppression of material facts by the assessee or not. We haveonly to see whether there was prima facie some material on the basisof which the Department could reopen the case. The sufficiency orcorrectness of the material is not a thing to be considered at thisstage. We are of the view that the court cannot strike down thereopening of the case in the facts of this case. It will be open to theassessee to prove that the assumption of facts made in the notice waserroneous. The assessee may also prove that no new facts came tothe knowledge of the Income-tax Officer after completion of theassessment proceeding. We are not expressing any opinion on themerits of the case. The questions of fact and law are left open to beinvestigated and decided by the assessing authority. The appellant willbe entitled to take all the points before the assessing authority. Theappeals are dismissed. There will be no order as to costs." The assessee in its submission dated 08.06.2022 has stated that it hassubmitted various details before the ADIT(I&CI), New Delhi. Theassessee has adopted percentage completion method. Further, thesubmitted various details before the ADIT(I&CI), New Delhi. Theassessee has adopted percentage completion method. Further, the assessee company has stated that it had made sale of 26 flats forwhich sale workout to Rs.18,80,40,945/- in aggregate. Further, theassessee has also stated that for the sale of 13 immovable propertiesworkouttoRs.9,41,55,710-/.Since,theassesseehasadoptedpercentage completion method, it has booked sale at Rs.2,59,72,635.However, the submission was found lacking in any supportingdocumentary evidence i.e. sale deed, ledger accounts, bank statementetc to substantiate the same. Also, Percentage Completion Methodrequired reporting of revenues and expenses on a period by periodbasis, as determined by the percentage of the contract that has beenfulfilled. The current income and expenses are compared with thetotal estimated costs to determine the tax liability. The determinationof work completion also required for verification of percentagerevenue offered by the assessee company which is lacking insubmission. Further, it is contended that the merits of the case cannotbe looked into at this stage under writ.” 5.In view of the aforesaid instruction, the impugned order passed underSection 148A(d) of the Act and notice issued under Section 148 of the Actboth dated 27th July, 2022 for the Assessment year 2016-17 are set asideand the matter is remanded back to the Assessing Officer for a fresh decisionon merits within eight weeks in accordance with law. However, thePetitioner/Assessee is given liberty to file all supporting documentsincluding the sale deed, ledger documents and bank statements within threeweeks in accordance with law. 6.With the aforesaid directions, the present writ petition along withpending application stands disposed of. MANMOHAN, J SEPTEMBER 28, 2022/msh MANMEET PRITAM SINGH ARORA, J