KIRAN DEVI NARSARIA V. CHIEF COMMISSIONER OF INCOME TAX

WPC/2076/2022

AI Insights

The case involves Kiran Devi Narsaria, the petitioner, who challenged an assessment order by the Income Tax Department concerning the assessment year 2015-16. The petitioner had declared a long-term capital gain from the sale of land, which was initially accepted without scrutiny. However, the case was reopened, and a notice under section 148 was issued, leading to an assessment order that included an unexplained cash deposit of Rs. 1,76,00,000 in a State Bank of India account, which the petitioner denied. The petitioner requested a personal hearing via video conferencing, which was confirmed but not provided before the assessment order was passed. The court found this to be a violation of the principles of natural justice and the statutory provisions of the Income Tax Act, leading to the quashing of the assessment order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747653 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 05-03-2024
• Assessment Year: misc
• Other Referred Cases: Naveen Jaiswal vs. Income-tax Department through National Faceless Assessment Centre
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R N SAHAY; ANURAG VIJAY
• Assessee Lawyers: PIYUSH PODDAR; MAHENDRA CHOUDHARY
• Keywords: Faceless assessment; Natural Justice; Reassessment; Unexplained cash deposit; Video conferencing
• Section: 147; 148; 142(1); 143(2); 271(1)(c); 69A; 144B

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 2076 of 2022 …….. Kiran Devi Narsaria ..… Petitioner Versus 1. Chief Commissioner of Income Tax having Office at Central Revenue Building, 5 Main Road, Ranchi. 2. Principal Commissioner of Income Tax having Office at Central Revenue Building, 5 Main Road, Ranchi. 3. National Faceless Assessment Centre, Delhi. 4. Deputy Commissioner of Income Tax having Office at Central Revenue Building, 5 Main Road, Ranchi. .....Respondents --------- CORAM: Hon’ble Mr. Justice Rongon Mukhopadhyay Hon’ble Mr. Justice Deepak Roshan --------- For the Petitioner : Mr. Piyush Poddar, Adv. : Mr. Mahendra Kr. Choudhary, Adv. : Mr. Piyush Poddar, Adv. For the Respondent : Mr. R. N. Sahay, Sr. SC : Mr. Anurag Vijay, A.C. to Sr. S.C. --------- 18/05.03.2024 Per Deepak Roshan J. The instant writ application has been preferred by the petitioner praying therein for quashing and setting aside the assessment order dated 29.03.2022 (Annexure- 12), passed u/s 147 read with section 144B of the Income Tax Act, 1961 (hereinafter to be referred as 'the Act), in pursuance to notice u/s 148 dated 31.03.2021 (Annexure-1), as the same has been passed in violation of Principle of Natural Justice and in utter disregard to the statutory provision as contained in Clause(vii) of sub- section 7 of section 144B of the IT Act, 1961 by not giving opportunity of personal hearing, by Video Conferencing. 2. The brief facts of the case, as would appear from the 2 writ application is that the petitioner is an individual, assessed to income tax and she filed her return of income for the AY 2015-16 on 14.11.2016, declaring taxable Total Income at Rs. 83,24,980/-, interalia, declaring taxable long term capital gain of Rs. 70,30,967/- on sale of Land at Bilaspur (M.P.) on total net consideration amounting to Rs. 5,17,90,167/-received by the petitioner, which was accepted and not taken under scrutiny. On 31.03.2021, a Notice u/s 148 was issued by DCIT/ACIT, Circle-1, Ranchi for reopening the case and required the petitioner to deliver a return in the prescribed form for the said assessment year. On 04.03.2021 CBDT issued Instructions vide F. No. 225/40/2021/ITA- II regarding selection of cases for issue of notice under Section 148 of the Income-tax Act, 1961. On 24.04.2021, in response to notice u/s 148, the Petitioner filed a return of income declaring Income of Rs. 83,24,980/-, as was declared in the aforesaid original return filed on 14.11.2013. On 24.06.2021, Notice u/s 143(2) r/w section 147 of the Act, was issued by the AO Respondent No. 3, wherein at Para No. 2 the reasons for reopening were recorded, which are as under: \"It has been gathered that during the AY 2015-16 relevant to the Financial Year 2014-15 the assessee has made as cash deposit of Rs. 1,76,00,000/- in his bank account maintained with State Bank of India. Details of such deposits remain unexplained.\" 3 On 08.02.2022, Notice under section 142(1) of the Act along with Annexure, was issued by National Faceless Assessment Centre, Delhi (Respondent No. 2) (in short NFAC), to the petitioner, requesting the Petitioner to furnish /provide the details/documents mentioned therein. On 17.02.2022, petitioner filed her objection/reply by e-filing at the Income Tax portal containing her written submission and the documents and details as required by the NFAC. On 07.03.2022, Notice u/s 142 (1) was issued by NFAC (Respondent No 3) to the Petitioner requiring her to furnish accounts and documents as specified in the Annexure to the said notice. On 21.03.2022, details and documents as required were furnished by the Petitioner. The IT portal allows uploading of only 10 documents at a time. The Petitioner complied the requirement of the said notice in 3 parts, along with its submission by e-filing on the IT portal, interalia, submitting that she had not deposited any such sum of Rs.1,76,00,000/-in SBI and moreover she does not have any operative account in SBI. On 25.03.2022, petitioner received a Show Cause Notice as to why the proposed variation should not be made, in respect of unexplained cash deposit u/s 69A 4 amounting to Rs. 1,76,00,000/- in the alleged bank account of SBI rejecting the claim on the ground of absence of corroborating documentary evidence, regarding her claim of sale of plot in order to explain cash deposit of Rs. 1,76,00,000/-. As per the petitioner, she had duly filed the copies of 7 nos. of Land purchase deeds and 8 nos. land sale deeds in her aforesaid compliance in 3 parts filed by e- filing at the Income tax portal on 21.03.2022 in respect of entire of sale of lands amounting to Rs. 5,17,90,167/-, as contained in (Annexure-8/1, 8/2 & 8/3). The said show cause notice dated 25.03.2022 at Para-C, also required to raise request for personal hearing by clicking \"Seek Video conferencing button\" available against the Show Cause Notice, if required after filing the written reply. On 28.03.2022, the petitioner filed her detailed objections against the aforesaid proposed variation before the NFAC (Respondent No.3). The petitioner also raised a Video Conferencing request on 28.03.2022, with a preferred date for VC on 30.03.2022 at the Income Tax portal of the Income Tax Department for personal hearing through Video Conferencing which was duly received by the Income Tax Department which is evident from the confirmatory e-mail received from 5 [e-mail]; which was sent to the petitioner on 28 March, 2022 at 15:56 i.e. the request was duly received by NFAC before 23:59 hours of 28.03.2022 as required in the aforesaid show cause notice dated 25.03.2022 (Annexure-9). However, on 29.03.2022 without giving any opportunity of personal hearing through Video Conferencing as requested by the Petitioner, immediately on the very next day, in utter disregard to the Principles of Natural Justice and the statutory provisions of Faceless assessment regarding providing of personal hearing to make oral submissions as per provisions of clause (vii) of sub-section (7) of section 144B of the IT Act, 1961 and without taking into consideration the submissions explanations / documents filed by the Petitioner with an open mind, an ex-parte assessment order u/s 147 read with section 144B of the Act was passed on 29.03.2022 and uploaded at the e-filing account of the Petitioner at the Income Tax portal, wherein the assessment order was finalized mainly on the lines of the aforesaid show cause notice dated 25.03.2022 (Annexure-9), making addition of unexplained cash deposit u/s 69A of the Act as discussed above amounting to Rs. 1,76,00,000/-, raising huge tax demand of Rs. 1,13,25,935/- against the Petitioner and also initiated 6 penalty proceedings of concealment u/s 271(1)(c). Annexure-1 & 21/1. 3. Learned Sr. Counsel for the petitioner submits that admittedly, the petitioner has not deposited any cash in any State Bank of India and moreover the Petitioner filed her objections (Annexure-10), clarifying that she does not have any operative account with State Bank of India, neither she has deposited any amount therein. The Faceless Assessment Centre (Respondent No. 3), without making any enquiry and without taking any cognizance of the above replies and the documents annexed therewith, filed by the petitioner, has issued the Show Cause Notice dated 25.03.2022 (Annexure-9), to show cause as to why the proposed variation / addition of Rs. 1,76,00,000/- be not made. Further, even though the request of the petitioner for VC was confirmed by the NFAC (Annexure-11); no opportunity of personal hearing was given. As a matter of fact, without giving any opportunity of personal hearing through VC, immediately on the very next day i.e. on 29.03.2022, in utter disregard to the principles of natural justice and, without taking into consideration the submission and documents filed by the petitioner in annexure-8, an ex-parte assessment order (Annexure-12), has been passed and uploaded at the e-filing account of 7 the petitioner. Learned Sr. Counsel reiterated that this is a glaring example of violation of Principles of Natural Justice. He further relied upon the decision in the case of Naveen Jaiswal vs. Income-tax Department through National Faceless Assessment Centre passed in W.P.(T). No. 675 of 2022 reported in 2022 SCC Online Jhar 189, under the similar facts and circumstances of admission of excuse of the department due to typographical error and oversight. 4. A counter affidavit has been filed on 11.01.2023, wherein at sub para No. (v) of paragraph No. 7 respondent No.1 has accepted the source of receipt of Rs. 1,76,00,000/- and stated that it is apparent that Smt. Kiran Devi Narsaria used as intermediary to sell her land and received the consideration in cash from this intermediary i.e. Rakesh Kumar Singh. Further, at sub para No. (vii) of paragraph No. 7, the Respondent No. 1 has taken an excuse that there was typographical mistake in recording the reasons. 5. Learned counsel for the revenue submits that a mere typographical error in this case does not alleviate the fact that the assessee, Smt. Kiran Devi Narsaria received cash amounting to Rs. 1,76,00,000/- and thus does not vitiate the proceedings. 8 6. Having heard learned counsel for the parties and after going through the impugned order and the averments made in the respective affidavits and the documents annexed therein; it transpires that the reasons recorded for re- opening, it has been simply stated as under:- \"It has been gathered that during the AY 2015-16 relevant to the Financial Year 2014-15 the assessee has made as cash deposit of Rs. 1,76,00,000/- in his bank account maintained with State Bank of India. Details of such deposits remain unexplained.\" From bare perusal of annexure-4 of the writ application it appears that the Petitioner's case was reopened only on the ground that the \"Assessee has made a cash deposit of Rs. 1,76,00,000/- in the bank account maintained with State Bank of India\" which is evident from perusal of the above reason for re-opening. In pursuance to the Notice u/s 142(1) of the assessing officer, the petitioner had complied with all the requirements and replied to all the queries and annexed relevant documents therein, vide her reply in three parts dated 21.03.2022. A perusal of the replies contained in Annexure-8, 8/1, 8/2 and 8/3 along with documents annexed therewith, it is apparent that the petitioner has not deposited any cash in any State Bank of India and moreover the Petitioner filed her objections clarifying that 9 she does not have any operative account with State Bank of India, neither she has deposited any amount therein. However, the Faceless Assessment Centre (Respondent No. 3), without making any enquiry and without taking any cognizance of the above replies and the documents annexed therewith, filed by the Petitioner, has issued the Show Cause Notice dated 25.03.2022 to show cause as to why the proposed variation / addition of Rs. 1,76,00,000/- be not made. The petitioner further filed detailed objections on 28.03.2022 and also raised a request on 28.03.2022 for personal hearing through Video Conferencing within the time allowed in the Show Cause Notice dated 25.03.2022, on the Income Tax portal of the IT Department, with a preferred date for Video Conferencing on 30.03.2022. At this stage, it is pertinent to indicate that the aforesaid request of the petitioner for VC was confirmed by the NFAC, and even then also no opportunity of personal hearing was given and without giving any opportunity of personal hearing through VC, immediately on the very next day i.e. on 29.03.2022, in utter disregard to the Principles of Natural Justice and, without taking into consideration the submission and documents filed by the petitioner in annexure-8, an ex-parte assessment order has been passed and uploaded at the e-filing account of the petitioner. 10 7. The Respondent No.1 in its Counter Affidavit filed before this Court on 11.01.2023, has, at sub para No. (v) of paragraph No. 7, accepted the source of receipt of Rs: 1,76,00,000/-as under: \"(v) It is apparent that Smt. Kiran Devi Narsaria used as intermediary to sell her land and received the consideration in cash from this intermediary i.e. Rakesh Kumar Singh.\" Further, at sub para No. (vii) of paragraph No. 7 of said CA, the Respondent No. 1 has taken an excuse that there was a typographical mistake in recording the reasons; the Respondent No.1 has himself accepted that the reasons, as recorded were not correct. Relevant para is extracted here under: (vii) \"However, it is stated that, in the reason recorded to reopen the case under section 148 of the Act, there was a typographical error in which it was recorded that the amount mentioned above were received in the bank account of Mrs. Kiran Devi Narsaria, maintained in State Bank of India.\" A mere typographical error in this case does not alleviate the fact that the assessee, Smt. Kiran Devi Narsaria cash amounting to Rs. 1,76,00,000/- and thus does not vitiate the proceedings. This Court in the case of Naveen Jaiswal (supra) 11 has dealt in detail the issue involved in this case i.e., regarding admission of excuse by the department due to typographical error and oversight. Relevant paragraph 6 & 7 are extracted herein below: - \"6. After going through the categorical observation made by the AO in its letter disclosing reason to believe (Annexure-3), it clearly transpires that the AO re- opened the assessment on the ground that the petitioner had purchased immovable property; the fact which is contrary to the record, inasmuch as, it was not a case of purchase of immovable property by the petitioner; rather the petitioner along with co sharers sold their ancestral land. This fact is further corroborated with the averments made in paragraph- 10 of the counter affidavit wherein the revenue had admitted that due to typographical error/oversight the sale of land has been typed as purchase of land. This is not permissible in the eye of law. It is well settled principles with regard to reassessment. A reassessment proceeding is to be adjudged on the basis of \"reason to believe\" disclosed to the Assessee and the said reasons cannot be supplemented by the revenue as the reasons have to speak for themselves. 7. The law is now no more res-integra that the reasons are required to be read as they were recorded by the 12 assessing officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded by the AO cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. Admittedly, in the instant case the AO has referred that the Assessee had purchased immovable property valued of Rs. 1,80,60,000/- on 9.3.2017; whereas the fact is divergent. As such, the notice issued for initiation of reassessment proceeding does not have any legs to stand in the eye of law.\" 8. In view of the aforesaid decision and in the facts and circumstances of this case, the impugned ex-parte assessment order passed u/s 147 read with section 144B of the Income Tax Act, 1961 dated 29.03.2022 and its demand notice cannot be sustained in the eye of law and the same is liable to be quashed especially in view of the fact that the reasons recorded for reopening as recorded in Annexure-4 was a typographical error, which has been 13 admitted by the Respondent No.1 in its affidavit, relevant part of which is quoted herein above. 9. Having regard to the aforesaid discussions and settled legal position, the Assessment Order dated 29.03.2022 (Annexure 12), passed u/s 147 read with section 144B of the Income Tax Act, 1961, in pursuance to notice u/s 148 dated 31.03.2021 and the notice u/s 148 issued on 31.03.2021 (Annexure 1), by the jurisdictional assessing officer (Respondent No.4), are hereby, quashed and set aside. However, the Revenue shall be at liberty to initiate a fresh proceeding for reassessment for wrongful claim of exemption by the petitioner in accordance with law. 10. As a result, the instant writ application stands allowed and pending I.A., if any, is also closed. (Rongon Mukhopadhyay, J.) (Deepak Roshan, J.) Fahim/-AFR- "