Fathima Najmudheen V. Union of India and The Income Tax Officer, Ward 1 & TPS

WP(C)/21882/2023

AI Insights

The case involves Fathima Najmudheen, the petitioner, who challenged the notices and orders issued by the Income Tax Officer regarding her alleged failure to file income tax returns for the assessment year 2016-2017 after selling property. The petitioner argued that she was not given adequate time to respond to the initial notice due to the unavailability of sale deed copies, which was crucial for her to prepare a proper response. The court considered the recent Supreme Court judgment in Union of India vs. Ashish Agarwal, which clarified the legal position on Sections 147 to 151 of the Income Tax Act, and found merit in the petitioner's arguments, leading to the quashing of the impugned orders and notices.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 820384 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 02-08-2023
• Assessment Year: misc
• Other Referred Cases: Union of India and others vs. Ashish Agarwal [(2023)1 SCC 617]
• Laws Referred To: Income Tax Act, 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P VANDANA
• Assessee Lawyers: VAISAKHI BABU; KARUKAPADATH VAHEEDA BABU; P U ARYA RAGHUNATH; T M AJWIN; P KARUKAPADATH WAZIM BABU; P SHIFANA KAISE
• Keywords: Income escape; Income Tax Return; Property sale; Show cause notice; Time bar
• Section: 148; 148A(b); 148A(d)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS WEDNESDAY, THE 2ND DAY OF AUGUST 2023 / 11TH SRAVANA, 1945 WP(C) NO. 21882 OF 2023 PETITIONER/S: FATHIMA NAJMUDHEEN, AGED 45 YEARS W/O. DR. NAJMUDHEEN, NALAKATH HOUSE, MUMTHAZ MAHAL, MARUTHAYOOR PO, PAVARATTY, THRISSUR- 680507 BY ADVS. VAISAKHI V. BABU KARUKAPADATH M.A.VAHEEDA BABU P.U.VINOD KUMAR ARYA RAGHUNATH T.M.MUHAMMED MUSTHAQ AJWIN P LALSON KARUKAPADATH WAZIM BABU P.LAKSHMI SHIFANA KAISE RESPONDENT/S: 1 UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN - 110004 2 THE INCOME TAX OFFICER, WARD 1 & TPS, INCOME TAX OFFICE, WEST NADA, GURUVAYOOR, PIN - 680101 BY ADV P.VANDANA OTHER PRESENT: sri jose joseph THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 21882 OF 2023 2 JUDGMENT The writ petition is filed assailing Exts.P4, P7 and P8 notices issued by the 2nd respondent. 2. The brief relevant facts for the determination of the writ petition are; (i) The petitioner is a home maker. She along with her four sisters had purchased a property covered by Ext.P1 sale deed. (ii) Later, the petitioner and the other co-owners sold the above property by Exts.P2 and P3 sale deeds. But, the petitioner failed to file her return of income for the assessment year 2016-2017. (iii) Much later, on 24.1.2023, the 2nd respondent issued Ext.P4 notice under Sec.148A(b) of the Income Tax Act, 1962 (in short, ‘Act’) to the petitioner alleging that her income has escaped for the assessment year 2016-2017 and calling her to show cause why action should not be taken against her under Sec.148 WP(C) NO. 21882 OF 2023 3 of the Act. (iv) Unfortunately, at the time of receipt of Ext.P4 notice, the petitioner did not have the copies of Exts.P2 and P3 sale deeds. Hence, she made an application before the Sub-Registrar, Perumbavoor, to obtain the certified copies of the above deeds. (v) Immediately thereafter, the petitioner submitted a request to the 2nd respondent, for enlargement of time to submit her reply to Ext.P4 notice. The petitioner was served with Ext.P6 reply, granting her time till 20.2.2023. (vi) As the petitioner did not receive the copies of Exts.P2 and P3 deeds, she was unable to submit the reply within the enlarged time period. The time granted by the 2nd respondent was inadequate. (vii) To the shock of the petitioner, the 2nd respondent passed Ext P7 order under Sec.148A (d) of the Act, finding that the WP(C) NO. 21882 OF 2023 4 petitioner had sold the property covered by Exts P2 and P3 deeds for Rs.2,44,20,000/- and earned an income of Rs.4,50,000/-, and issued ExtP8 notice calling upon the petitioner to file her return of income before 31.03.2023. (viii) The petitioner has already submitted Ext P9 objection to Ext P4 notice. The petitioner apprehends that the same will not be considered. The entire proceedings leading to Exts P4, P7 and P8 are illegal and arbitrary and are liable to be quashed. In an identical matter, this Court has passed Ext. P10 interim order. Hence, the writ petition. 3. Heard; Sri.Babu Karukapadath, the learned counsel appearing for the petitioner and Sri.Jose Joseph, the learned Standing Counsel appearing for the respondents. 4. Sri.Babu Karukapadath argued that the time period granted by the respondents to submit a response to Ext.P4 show cause notice was highly inadequate. WP(C) NO. 21882 OF 2023 5 Therefore, the petitioner had sought for enlargement of time till such time she received copies of Exts P2 and P3 because she was not fully conversant with the consideration and transaction. But, the 2nd respondent granted her not even a week’s time to submit her response. The demand made by the respondents is time barred. Moreover, the legal position pertaining to the amended Sections 147 to 151 of the Act was only at its fluid stage at the time of issuance of Ext P4 show cause notice. It is only recently that the Hon’ble Supreme Court in Union of India and others vs. Ashish Agarwal [(2023)1 SCC 617] has interpreted and crystalised the law on Sections 147 to 151 of the Act. The principles in the said judgment renders Ext.P4 unsustainable in law. The petitioner has already submitted Ext.P9 objection, after receiving the copies of Exts.P2 and P3 sale deeds. The petitioner may be given a fair and reasonable opportunity of being heard before Ext.P4 notice is finalised. Hence, Exts. P7 and P8 may be quashed. WP(C) NO. 21882 OF 2023 6 5. Sri.Jose Joseph resisted the above arguments and contended that the petitioner was given adequate opportunity to submit her reply to Ext.P4 notice. The reasons stated by the petitioner for enlargement of time are flimsy and naive. It is hard to believe that the petitioner does not possess the copies of Exts.P2 and P3 deeds. The petitioner is only trying to protract the inevitable. The 2nd respondent has rightly arrived at the conclusion that the petitioner had earned an income of Rs.4,50,000/-. This Court may not interfere with Exts.P4, P7 and P8. The writ petition is meritless and may be dismissed. 6. The 2nd respondent had sent Ext.P4 notice to the petitioner on 24.01.2023, directing her to show cause why she had not filed the return of income for the assessment year 2016-17, despite having the financial transaction narrated in Ext.P4 notice. The petitioner was called upon to submit her reply on or before 03.2.2023. It is discernible from Ext.P5 letter that, the petitioner had requested for further time to submit a reply, which WP(C) NO. 21882 OF 2023 7 was allowed by the 2nd respondent, by granting the petitioner time till 20.2.2023 to submit a reply to Ext.P4. 7. The petitioner’s assertion is that she was precluded from submitting an effective reply to Ext.P4 notice because she did not have the certified copies of Exts.P2 and P3 deeds. However, before she could submit her reply, the 2nd respondent has passed Ext.P7 order under Sec.148A(d) of the Act and held that the matter is a fit case to issue a notice under Sec.148 of the Act. 8. Notwithstanding the passing of Ext.P7 order and issuance of P8 notice, the petitioner has submitted Ext.P9 objection on 28.6.2023, ie., subsequent to Exts.P7 and P8, inter alia, contending that the demand put forth by the 2nd respondent is hopelessly timebarred, especially in the light of the law laid down in Ashish Agarwal (supra). The petitioner is certain that she is entitled to the benefit of the said judgment and the proceedings pursuant to Ext.P4 will not lie. 9. On an overall appreciation of the pleadings and materials on record and rival submission made across WP(C) NO. 21882 OF 2023 8 the Bar, I am of the definite view that the petitioner has to be granted a fair and reasonable opportunity to contest Ext.P4 on its merits, rather than on default. The explanation put forth by the petitioner, that she was unable to submit her reply for want of the copies of Exts.P2 and P3 deeds is found believable and is hence accepted. Thus, to provide the petitioner a fair and reasonable opportunity to contest Ext.P4 notice on its merits, I am of the view that Exts.P7 and P8 have to be quashed and the 2nd respondent is to be directed to re- consider Ext.P4 show cause notice, after adverting to Ext.P9 objection submitted by the petitioner and granting her an adequate opportunity of being heard, which in turn will do complete justice to both sides and cause no serious prejudice to no one. Resultantly, in exercise of the plenary powers of this Court under Article 226 of the Constitution of India, I dispose of the writ petition in the following manner: (i) Exts.P7 order and P8 letter are quashed. (ii) The 2nd respondent is directed to re-consider WP(C) NO. 21882 OF 2023 9 Ext.P4 show cause notice, after adverting to Ext.P8 objection, in accordance with law, after affording the petitioner an opportunity of being heard. (iii) It is made clear that this Court has not expressed anything on the merits of Ext.P4 notice or Ext.P9 objection submitted by the petitioner. Sd/- C.S.DIAS, JUDGE rkc/02.08.23 WP(C) NO. 21882 OF 2023 10 APPENDIX OF WP(C) 21882/2023 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE SALE DEED NO.1452 OF 2007 DATED 17/02/2007 REGISTERED BEFORE THE SUB REGISTRAR, PERUMBAVOOR BY WHICH THE PETITIONER ALONG WITH HER FOUR SISTERS (JOINT OWNERS) PURCHASED THE PROPERTY IN QUESTION Exhibit P2 A TRUE COPY OF THE SALE DEED NO.4292/1/2015 DATED 03/10/2015 BY WHICH AN EXTENT OF 38.10 ARES WAS SOLD BY THE PETITIONER AND 4 JOINT OWNERS, FOR A CONSIDERATION OF RS.1,15,00,000/- Exhibit P3 A TRUE COPY OF THE SALE DEED NO.4293/1/2015 DATED 03/10/2015 BY WHICH AN EXTENT OF 29.35 ARES WAS SOLD BY THE PETITIONER AND 4 JOINT OWNERS, FOR A CONSIDERATION OF RS.88,50,000/- Exhibit P4 A TRUE COPY OF THE NOTICE DATED 24/01/2023 UNDER SECTION 148A(B) OF THE INCOME TAX ACT, 1962 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P5 A TRUE COPY OF THE ADJOURNMENT REQUEST DATED NIL SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT ON 06/02/2023 Exhibit P6 A TRUE COPY OF THE INTIMATION DATED 06/02/2023 RECEIVED FROM THE 2ND RESPONDENT, BASED ON EXHIBIT P5 REQUEST, INSTRUCTING TO SUBMIT REPLY BEFORE 20/02/2023 Exhibit P7 A TRUE COPY OF THE ORDER ISSUED UNDER SECTION 148A(D) OF THE ACT ON 01/03/2023 Exhibit P8 A TRUE COPY OF THE NOTICE DATED 01/03/2023 ISSUED UNDER SECTION 148 OF THE ACT, CALLING FOR FILING A RETURN OF INCOME Exhibit P9 A TRUE COPY OF THE OBJECTION DATED WP(C) NO. 21882 OF 2023 11 28/06/2023 SUBMITTED BY THE PETITIONER BEFORE 2ND RESPONDENT BY SPEED POST (WITHOUT ANNEXURES) Exhibit P10 A TRUE COPY OF THE INTERIM ORDER DATED 19/06/2023 IN WP(C) NO.19881/2023 OF THIS HON'BLE COURT "