CHUNIBHAI HARIBHAI GAJERA V. PRINCIPAL COMMISSIONER OF INCOME TAX 1

SCA/5251/2022

AI Insights

In this case, Chunibhai Haribhai Gajera, the petitioner, contested an income tax assessment that significantly increased his declared income after a scrutiny assessment. The Income Tax Department had issued a demand notice following the assessment, which the petitioner sought to stay. The primary contention was regarding a gift received, which the department did not accept as a valid explanation for the capital increase. The High Court of Gujarat, after hearing both parties, decided not to grant an absolute stay on the demand but directed the appellate authority to expedite the appeal process.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 676747 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 28-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: DEVANG VYAS
• Assessee Lawyers: MANISH SHAH
• Keywords: Appeal; Assessment Order; Attachment notice; Capital introduction; Cash credit; Gift; Income Tax; Scrutiny assessment; Stay of demand
• Section: 143(3); 143(2); 68; 246A; 156; 226(3)

Judgement Text

"C/SCA/5251/2022 ORDER DATED: 28/03/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 5251 of 2022 ========================================================== CHUNIBHAI HARIBHAI GAJERA Versus PRINCIPAL COMMISSIONER OF INCOME TAX 1 ========================================================== Appearance: MR MANISH J SHAH(1320) for the Petitioner(s) No. 1 MR DEVANG VYAS, ADDITIONAL SOLICITOR GENERAL OF INDIA for the Respondent(s) No. 1,2,3 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Date : 28/03/2022 ORAL ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR) 1. Though the matter is listed for admission, by consent of learned advocates appearing for the parties, it is taken it for final disposal since this Special Civil Application can be disposed of at this stage as it lies in a narrow compass in the light of fair submission made by learned counsel appearing for petitioner. 2. We have heard Mr. Manish J. Shah, learned counsel appearing for the petitioner and Mr. Devang Vyas, learned Additional Solicitor General of India, who has accepted notice Page 1 of 6 C/SCA/5251/2022 ORDER DATED: 28/03/2022 on behalf of respondents 1 to 3 and waived service of notice on them. 3. Petitioner filed his return of income on 27.2.2018 for the Assessment Year 2017-18 declaring a total income of Rs.2,83,40,520/-. Return of income filed by the petitioner was selected for scrutiny assessment by issuing notice under Section No.143(2) of The Income Tax Act, 1961 (hereinafter referred to as ‘IT Act’ for short) with the flagged parameters of ‘increase in capital and details of assets and liabilities’. During the course of assessment proceedings, show cause notice came to be issued to the petitioner/assessee for explaining the source of capital introduction, which is claimed to have been sourced through receipt of gift of Rs.10,93,00,000/- from Shri Girdharbhai Gajera via proper channel. Not accepting the version putforth by the petitioner/assessee whereunder it was contended that it was a gift, the Assessing Officer vide order dated 16.12.2019 passed an assessment order under Section 143(3) of IT Act by holding said gift as a cash credit under Section 68 of the IT Act and determined the assessment at Rs.13,76,40,520/- as against the declared income of Rs.2,83,40,520/- and consequently, issued demand notice under Section 156 of the IT Act. Page 2 of 6 C/SCA/5251/2022 ORDER DATED: 28/03/2022 4. Assessee being aggrieved by said order of assessment filed an appeal under Section 246A of IT Act before Commissioner of Income Tax (Appeals)-2, Surat. Alongside filing an appeal, an application for stay was also filed before the 2nd respondent namely, the Assessing Officer. However, 2nd respondent passed an order directing the assessee to pay 20% of the demand, on the ground that assessment order came to be passed after considering the information furnished by the assessee. Being aggrieved by the same, petitioner/assessee preferred an application for stay of entire demand on 25.1.2020 before 1st respondent against aforesaid order of Assessing Officer and urged the demand of Rs.11,87,82,252/- raised under the demand notice under Section 156 of the IT Act be stayed. In the meanwhile, petitioner/assessee is said to have received an attachment notice issued under Section 226(3) of IT Act by the Assessing Officer for recovery of demand as made in the demand notice on 15.2.2022. 5. Petitioner/asseee contends that he was not aware of any order having been passed by 1st respondent much less on 20.2.2020 and he came to know only after going through the Page 3 of 6 C/SCA/5251/2022 ORDER DATED: 28/03/2022 income tax portal upon receiving the attachment order that an order came to be passed on 20.2.2020 directing the petitioner to pay 10% of the outstanding amount till 10.3.2020 and on making payment of that demand, recovery has been stayed upto 31.3.2020 or decision of high pitched committee, whichever was earlier. It is also stated that even the application for stay made before the 1st respondent is also pending. Hence, seeking for complete stay of the demand, petitioner is contending that under similar circumstances, similar benefit has been extended to similarly placed assessee and the amount received through bank channel by way of gift having been accepted as a reasonable explanation, same benefit ought to be extended to the petitioner as petitioner is having a good case on merits before the appellate authority. Hence, learned counsel appearing for petitioner has reiterated grounds urged in the petition and has prayed for entire demand being stayed. 6. Per contra, Mr. Devang Vyas, learned Additional Solicitor General of India would oppose said prayer, by contending that order passed by the Principal Commissioner of Income Tax is in consonance with the facts obtained in the Page 4 of 6 C/SCA/5251/2022 ORDER DATED: 28/03/2022 present case and has prayed for rejection of the petition. 7. Mr. Manish Shah, learned counsel appearing for the petitioner would contend by way of alternate submission that in the event this Court is not agreeable to grant an absolute stay of the demand as prayed for, atleast the appellate authority may be directed to dispose of the appeal within a time frame since the entire business of the petitioner would get jeopardised by virtue of the order of attachment. Hence, he prays for suitable directions being issued to the appellate authority. 8. Having heard the learned advocates appearing for the parties and on perusal of the order passed by the 1st respondent, we are of the considered view that first respondent having taken into consideration the order passed by the Assessing Officer and explanation offered by the petitioner with regard to unexplained investment has partially accepted the plea of the assessee and as such, reduced the demand from 20% as determined by the Assessing Officer to 10% of the total demand. Said finding recorded by 1st respondent would not call for our interference. However, insofar as 2nd prayer is Page 5 of 6 C/SCA/5251/2022 ORDER DATED: 28/03/2022 concerned namely, for early disposal of the appeal, we are of the considered view that it merits acceptance since petitioner has pleaded both before the Assessing Authority as well as before the Appellate Authority that present assessee stands on the same footing of an assessee to whom the benefit has been extended and as such, appellate authority will have to examine the petitioner’s case on merits namely, the appellate authority would be required to examine this aspect also while adjudicating the appeal expeditiously and as such, we direct the 3rd respondent-appellate authority to hear, adjudicate and dispose of the appeal filed by e-filing Acknowledgement No.291721151150120 (date of filing 15.1.2020) filed against the assessment order dated 16.12.2019 (for the Assessment Year 2017-18) expeditiously and at any rate within an outer limit of three months from today. Petitioner is permitted direct service. Learned Additional Solicitor General of India, who is on advance notice, shall forward copy of this order to the jurisdictional appellate authority for compliance. (ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) RADHAKRISHNAN K.V. Page 6 of 6 "