Wp/3232/2022 Of Naresh Balchandrarao Shinde v. Income Tax Officer, Ward-5(3), Nagpur And Others

IN THE HIGH COURT OF JUDICATURE AT BOMBAYNAGPUR BENCH, NAGPUR.WRIT PETITION NO. 3232 OF 2022Naresh Balchandrarao Shinde,Aged about 60 years, Residing at Gurunirmal Bhavan,Near New MLA Hostel, Civil Lines, Nagpur-440 001(MS) India. ....... PETITIONER...V E R S U S...1.Income Tax Officer, Ward -5(3), Nagpur.Saraf Chambers, Sadar, Nagpur, Maharashtra-440 001.Email: Principal Chief Commissioner ofIncome Tax, Nagpur.Aayakar Bhawan, Civil Lines, Nagpur.3. The Union of India, through its Secretary,Department of Revenue, Ministry of Finance,Government of India, New Delhi.-110 002. ....... RESPONDENTS-------------------------------------------------------------------------------------------------------------Shri K.A.Hirani, Advocate for petitioner.Shri Anand Parchure, Advocate for respondents.–-----------------------------------------------------------------------------------------------------------CORAM:- A.S.CHANDURKAR AND URMILA JOSHI-PHALKE, JJ.DATE :- 26[th] SEPTEMBER, 2022. JUDGMENT(Per A.S.CHANDURKAR, J.) Rule. Rule made returnable forthwith and heard the learned counsel for the parties. 2.The challenge raised in this writ petition is to the order dated31.03.2022 passed under Section 148A(d) of the Income Tax Act, 1961 (forshort, the Act of 1961). 3.Facts relevant for considering the challenge as raised are that thepetitioner is an individual assessee to tax. On 23.03.2022 he was served witha notice under Section 148 A(b) of the Act of 1961 calling upon him to showcause as to why notice under Section 148 of the Act of 1961 should not beissued. It was stated that on the basis of information it was found that forAssessment Year 2015-16 income chargeable to tax had escaped assessmentwithin the meaning of Section 147 of the Act of 1961. The petitioner wasinformed that he purchased immovable property for Rs.40,00,000/- and thathe had deposited cash of Rs. 20,71,500/- and Rs.16,20,000/-in his bankaccount. The petitioner was called upon to submit his response to the noticeon or before 29.03.2022. The petitioner has submitted his response on29.03.2022 by stating that he had not purchased the property in question buta sale deed dated 03.02.2015 was executed in favour of his daughter who hadpurchased the suit property. The petitioner was only acting as special powerof attorney holder for her. The amount of Rs.40,00,000/- did not belong tothe assessee. As regards deposit of cash of Rs.16,20,000/- was concerned, thesame was denied by the petitioner. He sought source of information as regards the aforesaid deposit. It was thus the case of the petitioner that afterexcluding the aforesaid two amounts, the income remaining was only to theextent of Rs.20,71,500/- which was less than the limit of Rs.50,00,000/- asstipulated in Section 149(1)(b) of the Act of 1961. The Assessing Officerhowever did not accept the petitioner’s explanation and on the basis ofinformation available on record, satisfaction was recorded that income to thetune of Rs.76,91,500/- was likely to have escaped assessment in the hands ofthe assessee for Assessment Year 2015-16. Hence it was proposed to issuenotice under Section 148 of the Act of 1961. Being aggrieved said order hasbeen challenged. 4.Shri K.A.Hirani, learned counsel for the petitioner submitted thatwhile responding to the notice issued under Section 148 A(b) copy of theregistered sale deed dated 03.02.2015 was supplied to the Assessing Officerwhich clearly indicated that the petitioner was not a party to the transactionof sale/purchase of the property in question. The property had beenpurchased by his daughter who was separately assessed for income tax andthe name of the petitioner was mentioned as he was her constituted attorney.Despite supplying copy of the registered sale deed, the Assessing Officerignored the same while passing the order under Section 148A(d) of the Act of1961. He also submitted that the source of information with regard to deposit 4.Shri K.A.Hirani, learned counsel for the petitioner submitted thatwhile responding to the notice issued under Section 148 A(b) copy of theregistered sale deed dated 03.02.2015 was supplied to the Assessing Officerwhich clearly indicated that the petitioner was not a party to the transactionof sale/purchase of the property in question. The property had beenpurchased by his daughter who was separately assessed for income tax andthe name of the petitioner was mentioned as he was her constituted attorney.Despite supplying copy of the registered sale deed, the Assessing Officerignored the same while passing the order under Section 148A(d) of the Act of1961. He also submitted that the source of information with regard to deposit of Rs.16,20,000/- was not intimated to the petitioner especially when thepetitioner had sought for such information. Under Section 149(1)(b) of theAct of 1961 the time limit for issuing the notice for re-opening of theassessment beyond three years but not less than ten years when the amountinvolved was Rs.50,00,000/-. If these two transactions were excluded thenthe income likely to have escaped assessment was only to the extent ofRs.20,71,500/-. Since this undisputed material was available on record withthe Assessing Officer, there was no justification in permitting re-opening ofthe proceedings on this count. It was submitted that the petitioner would berequired to contest proceedings under Section 148 of the Act of 1961 for nojustifiable reason. On this count, it was submitted that this was a fit case toexercise writ jurisdiction and quash the impugned order. 5.Shri Anand Parchure, learned counsel for the respondentssupported the impugned order. It was submitted at the outset that thepetitioner could contest the notice issued under Section 148 of the Act of1961 and there was no reason to entertain the writ petition. There would bean opportunity for the petitioner to file a reply to the assessment proceedingsand thereafter, if aggrieved, the petitioner could challenge the same. Thelearned counsel relied upon the reply as filed and submitted that theproceedings were initiated on the basis of the information flagged on the Insight Portal for information filing of returns for the Assessment Year 2015-16. It was thus submitted that the writ petition was liable to be dismissed. 6.We have heard the learned counsel for the parties and we haveperused the documents on record. To consider whether the writ petitioncould be entertained, it would be necessary to refer to certain undisputedfacts. The notice under Section 148 A(b) dated 23.03.2022 grants time to thepetitioner to respond to the same by 29.03.2022. The period as granted isless than seven days as prescribed by Section 148A(b) of the Act of 1961.Nevertheless, the petitioner has responded to the notice by his reply dated29.03.2022. Alongwith the reply, copy of the registered sale deed dated03.02.2015 indicating that it was his daughter who had purchased theimmovable property therein was supplied. The petitioner’s daughter isseparately assessed for tax. The name of the petitioner is mentioned asspecial power of attorney holder for his daughter. The registered sale deedclearly indicates that the petitioner is not the purchaser of the immovableproperty mentioned therein but it is his daughter, a separate assessee. Theamount of consideration mentioned is Rs.40,00,000/- and it is stated that thepurchaser had availed housing loan for the same. On a bare perusal of theregistered sale deed, it becomes evident that the petitioner is not the Alongwith the reply, copy of the registered sale deed dated03.02.2015 indicating that it was his daughter who had purchased theimmovable property therein was supplied. The petitioner’s daughter isseparately assessed for tax. The name of the petitioner is mentioned asspecial power of attorney holder for his daughter. The registered sale deedclearly indicates that the petitioner is not the purchaser of the immovableproperty mentioned therein but it is his daughter, a separate assessee. Theamount of consideration mentioned is Rs.40,00,000/- and it is stated that thepurchaser had availed housing loan for the same. On a bare perusal of theregistered sale deed, it becomes evident that the petitioner is not the purchaser of the said property as stated in the notice issued under Section148A (b) of the Act of 1961. Despite supplying copy of the registered saledeed to the Assessing Officer, it has not been taken into consideration by himbefore passing the order under Section 148A(d) of the Act of 1961. The samethus clearly indicates lack of application of judicious mind to the material onrecord. The amount of Rs.40,00,000/- as mentioned in the notice issued on23.03.2022 under Section 148A(b) thus deserves to be excluded fromconsideration. 7.As regards deposit of cash of Rs.16,20,000/- is concerned, thepetitioner had sought disclosure of the material or the source of informationon the basis of which such notice was issued. The petitioner denied havingdeposited the aforesaid amount in his bank account. The material/source ofinformation was not supplied to the petitioner. Be that as it may, even if theamount of Rs.40,00,000/- as mentioned in the notice dated 23.03.2022 isexcluded from consideration for the reason that the petitioner is not thepurchaser of the property in question, the amount remaining forconsideration is Rs.20,71,500/- and Rs.16,20,000/- thus totalingRs.36,91,500/-. In this regard, if the provisions of Section 149(1)(b) of theAct of 1961 are considered, it is seen that only if the amount in question thatis likely to have escaped assessment is Rs.50,00,000/- or more, the time limit for issuing notice to re-open the assessment is three years but less than tenyears. Thus if the income that is likely to escape assessment is onlyRs.36,91,500/- after excluding the amount of Rs.40,00,000/-, it is clear thatthe proceedings are not liable to be re-opened as the amount involved is lessthan the one contemplated under Section 149(1)(b) of the Act of 1961 andthe same pertains to Assessment Year 2015-16. The notice under Section148(b) is dated 23.03.2022 which is beyond the permissible period of threeyears. On this count, a case for interference has been made out. 8.In the light of this undisputed position, it would be futile to requirethe petitioner to face proceedings under Section 148 of the Act of 1961. Thematerial on record that was placed before the Assessing Officer warrantedconsideration especially in the light of the fact that the document relied was aregistered sale deed. If the amount of Rs.40,00,000/- mentioned therein isexcluded from consideration, the notice as issued on 23.03.2022 falls foul ofthe provisions of Section 149(1)(b) of the Act of 1961. Hence for this reason,we do not find that the petitioner should be required to further contest theproceedings under Section 148 of the Act of 1961. 9.In that view of the matter, the order dated 31.03.2022 passedunder Section 148 A(d) of the Income Tax Act, 1961 as well as notice dated31.03.2022 issued under Section 148 of the Act of 1961 are quashed and set aside. The respondents are free to take appropriate steps in accordance withlaw. Rule is made absolute in aforesaid terms with no order as to costs. (URMILA JOSHI-PHALKE, J.) (A.S.CHANDURKAR, J.) Andurkar.