Parag Keshav Bopardikar v. Income Tax Officer & Ors

Signature Not Verified $~2 IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of Decision : 27.05.2025 +W.P.(C) 6475/2025 & CM APPL No.29510/2025 PARAG KESHAV BOPARDIKAR.....PetitionerThrough:Mr Shashi Mathews, Mr AbhishekBoob and Ms Sunidhi, Advocates.Through:Mr Shashi Mathews, Mr AbhishekBoob and Ms Sunidhi, Advocates. versus INCOME TAX OFFICER & ORS. .....RespondentsThrough:Mr. Debesh Panda, SSC Ms. ZehraKhan, Mr. Vikramaditya Singh, JSCsMsAnaunttaShankarandMsRavicha Sharma, Advocates.Khan, Mr. Vikramaditya Singh, JSCsMsAnaunttaShankarandMsRavicha Sharma, Advocates. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (ORAL) 1.The petitioner has filed the present petition, inter alia, praying asunder:- “a. That this Hon’ble Court be pleased to Issue a Writof certiorari, or a Writ in the nature of certiorari, or anyother appropriate Writ, Order or directions, quashingthe Impugned Orders; and / orb. That this Hon’ble Court be pleased to Issue a Writof mandamus, or a Writ in the nature of mandamus, orany other appropriate Writ, Order or directions to theRespondents to grant complete credit of TDS to thePetitioner, to the extent deducted and deposited by theBuyers into the Government treasury, by reading downtheinternalSOPNoCPC(TDS)/26QB/CreditTransfer, dated 12.07.2022, to that extent, and to grantconsequential refund in terms of ITR filed by the Signature Not Verified Petitioner; and / or.” 2.The petitioner is a Non-Resident Indian and a tax resident ofthe United States of America . In the year 1998, the petitioner hadpurchasedaresidentialproperty[thesubjectproperty]inPune,Maharashtra. The petitioner was desirous of selling the subject property andcertain prospective buyers had also shown interest to purchase the subjectproperty. The petitioner states that Dr. Sharad Moreshwar Hardikar and MrsLeela Sharad Hardikar [the buyers] had formally expressed their interest topurchase the subject property and on 18.03.2015 offered to pay earnestmoney for concluding the transaction. The petitioner accepted the said offerand conveyed his consent to sell the same to the buyers. He also informedthe buyers that he intended to open a new bank account in India to ensurethat the sale proceeds are repatriated to him. The buyers stated that the TaxDeducted at Source on the sale of the subject property was requiredto be deducted at the rate of 20 percent as the petitioner was a non-resident.The buyers called upon the petitioner on 05.09.2015, to confirm hiswillingness for deduction of the TDS at the rate of 20 percent, which thepetitioner affirmed. Thereafter, on 08.09.2015, the petitioner and the buyersexecuted the sale deed for the subject property at the agreed consideration of₹2.00 Crores. Out of the aforesaid sum, the buyers credited a sum of ₹1,81,31,823/- to the petitioner’s bank account and withheld the remaining amount of ₹18,68,177/-. There is no dispute that this amount was deposited by the buyers with the Government to the credit of the petitioner. 3.The petitioner computed the balance of income tax liability at₹1,91,780/- and deposited the same as advance tax. Thereafter, on 27.10.2015, the petitioner repatriated the balance amount of sale proceeds toUSA. The petitioner claimed that he was not aware at the material time thathe was also required to file the Income Tax Return for the relevantperiod and therefore, had failed to do so. 3.The petitioner computed the balance of income tax liability at₹1,91,780/- and deposited the same as advance tax. Thereafter, on 27.10.2015, the petitioner repatriated the balance amount of sale proceeds toUSA. The petitioner claimed that he was not aware at the material time thathe was also required to file the Income Tax Return for the relevantperiod and therefore, had failed to do so. 4.On 04.03.2023, the Assessing Officer issued a notice underSection 148A(b) of the Income Tax Act, 1961 [the Act] on the basis of theinformation available that the petitioner had sold the subject property, whichaccording to the AO, suggested that the petitioner’s income has escapedassessment. The petitioner responded to the said notice and furnished alldetails to establish that he had discharged his tax liability on the saleconsideration received for the subject property and, therefore, no part of theincome, which was chargeable to tax, had escaped assessment. However, theAO did not accept the same and proceeded to pass an order dated15.04.2023 under Section 148A(d) holding that it is a fit case for issuance ofnotice under Section 148 of the Act. The said order was forwarded to thepetitioner along with a notice dated 15.04.2023 issued under Section 148 ofthe Act. 5.The petitioner claims that the said communication was received by thepetitioner on 18.04.2023. The petitioner stated that immediately on receiptof the said information, he once again contacted the buyers and pointed outto them that Form 26AS reflected the credit of ₹2,00,000/- as against the actual credit amount of ₹18,68,177/-. As per the petitioner the buyers should have deposited the requisite sum with the Government. The petitioner wasinformed by the buyers that in fact the amount of ₹18,68,177/- was deposited by them to the credit of the petitioner, however, the TDS return been filed under Form 26QB, which relates to a resident-Indian instead ofForm 27Q, which would be applicable in case of NRIs. The petitioner statesthat the buyers also proceeded to approach the Bank for correcting the TDSchallan on 20.05.2023. 6.On 30.10.2024, the AO issued a notice under Section 142 of the Actseeking furnishing of certain documents. The petitioner responded to thesame and sent various further communications.It is not necessary toexamine the same, as the issue essentially relates to non-grant of credit ofTDS deducted and deposited on account of using an unaccounted tax. 7.It is material to note that on 04.03.2025, the AO issued the proposedassessment order accepting the ITR filed by the petitioner. However, the AOalso issued a computation sheet reflecting the demand of ₹46,81,013/- and also issued notice to the aforesaid effect. However, thereafter by thecommunicationdated04.03.2025,theinitialassessmentorderwaswithdrawn and the computation sheet was confirmed without furnishing anyreasoning. The AO also initiated penalty proceedings under Section 270A ofthe Act. The petitioner once again filed a detailed reply pointing out that theentire tax liability had been discharged, but the credit of the same was noteffected on account of returns filed under Form 26QB instead of Form 27Q. 8.On the last date of hearing, that is, 21.05.2025, this Court passed thefollowing order:- “1. The petitioner, a Non-Resident Indian , hasfiled the present petition, inter alia, impugning thecommunicationsdated04.03.2025[impugnedcommunications] issued by the Assessing Officer in respect of the Assessment Year 2016- 17. 2. A plain reading of the impugned communicationsindicates that they seek to withdraw an assessmentorder passed under Section 147 of the Income Tax Act,1961 and to substitute the same by converting a cleanassessment order into one that raises the demand and,inrelationthereto,seekstoinitiatepenaltyproceedings. 8.On the last date of hearing, that is, 21.05.2025, this Court passed thefollowing order:- “1. The petitioner, a Non-Resident Indian , hasfiled the present petition, inter alia, impugning thecommunicationsdated04.03.2025[impugnedcommunications] issued by the Assessing Officer in respect of the Assessment Year 2016- 17. 2. A plain reading of the impugned communicationsindicates that they seek to withdraw an assessmentorder passed under Section 147 of the Income Tax Act,1961 and to substitute the same by converting a cleanassessment order into one that raises the demand and,inrelationthereto,seekstoinitiatepenaltyproceedings. 3. Prima facie, we find no provisions under the lawthat could have permitted the AO to suo motowithdraw an assessment order. Although a demand hasbeen raised, it is ex facie erroneous, as it is on accountof non-deposit of Tax Deducted at Source .However, the TDS was deducted and deposited by thedeductor. The only ground on which credit for theTDS has been denied to the petitioner is that thedeductor has erroneously used an incorrect form whichis applicable to a resident Indian instead of the one foran NRI.The AO has not only proceeded to raise ademand but has also thought it to be a fit case forissuance of penalty proceedings. This indicates acomplete non-application of mind to the facts of thepresent case. 4. The learned counsel appearing for the Revenueseeks time to file a counter affidavit, clearly indicatingthe statutory provisions under which the impugnedcommunications have been issued. 5. Let the counter affidavit be filed on or before thenext date of hearing.next date of hearing. 6. List on 27.05.2025.” 9.Pursuant to the aforesaid order, the AO has filed a counter affidavit,inter alia, affirming as under:- “7. In the instant case, the buyer filed incorrect FormNo.26QB instead of Form 27Q and did not provideany certificate in Form 16A to the Petitioner as a proofof payment of TDS. 8.On perusal of the details of challan on OLTAS ofTRACES, it is found that the buyer has erroneouslydepositedtheamountagainsthisPAN- Signature Not Verified AAPPH5855F,whereinRs.16,68,177/-(Rs.18,68,177/- - Rs.2,00,000/-) is still available toconsume. The PAN of buyers is lyingwith Circle-11, Pune. 14. That it is respectfully submitted that the initialAssessment Order dated 04.03.2025 (at AnnexureP/14) which was issued at 1.11 pm accepted the returnof the Petitioner. However, along with the initialAssessment Order dated 04.03.2025 (Annexure P/14)which was issued at 1.11 pm, a demand raised by CPC,asreflectedintheComputationSheetdated04.03.2025 due to mismatch in TDS deposit, andconsequently, the Notice of Demand dated 04.03.2025were issued to the Petitioner on 04.03.2025 at 1.11pm(at pages 62-66 of Annexure P/1). 15. That later on the communication letter dated04.03.2025 at 5.20 pm (at pages 60-61 of AnnexureP/1) was issued erroneously and inadvertently byinitiating penalty u/s 270A which is not applicable forthis year. However again no modification in returnedincome as filed by the Petitioner was made by the AO.16. However, since, the provisions of levy penalty incase the income assessed is greater than the maximumamount not chargeable to tax, where no return ofincome has been furnished [or where return has beenfurnished for the first time under section 148] u/s 270Ais effective from 01.04.2017, and the instant caserelated to FY 2015-16 (AY 2016-17), the penaltyproceedings u/s 270A is hereby dropped vide Orderdated 12.03.2025 (Annexure P/16 at p.131) to thebenefit of the Petitioner.17.That,inviewoftheaforesaidfactsandcircumstances, this Hon'ble Court may be pleased topass the necessary orders in the instant petition.” 10.The learned counsel appearing for the Revenue submits that theRevenue has been unable to correct the error, as under the StandardOperating Procedure , the consent of the buyers is required, alongwith an indemnity bond and other documents. Signature Not Verified 10.The learned counsel appearing for the Revenue submits that theRevenue has been unable to correct the error, as under the StandardOperating Procedure , the consent of the buyers is required, alongwith an indemnity bond and other documents. Signature Not Verified 11.On a pointed query, as to why the buyers’ consent would be required,the learned counsel for the Revenue submits that the same would benecessary in order to obviate any action on the part of the buyers to recoverthe amount of the TDS that had been deposited. She states that although,there is no dispute as to the deposit of the TDS, but the petitioner’s case hasbeen withheld only on account of the documents required from the buyers. 12.In the peculiar facts of this case, we consider it apposite to direct theRevenue to correct the record and reflect the TDS deposited by the buyers tothe petitioner’s credit under the return filed in the Form 26QB with effectfrom the date, the amount was deposited.The Revenue shall furthercompute the amount of the refund, if any, that may be due to the petitionerin accordance with law. All the orders and communication not in conformitywith the aforesaid directions shall be treated as having been set aside. 13.The petition is allowed in the aforesaid terms. The pendingapplication is also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 27, 2025 M Click here to check corrigendum, if any