MS KAVITHA JAIN V. THE DEPUTY COMMISSIONER OF INCOME TAX

WP/24214/2021

AI Insights

In this writ petition, Ms. Kavitha Jain challenged the notice issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2017-18, which sought to reassess her income based on a statement made by her husband. The statement, recorded during a survey, alleged that Ms. Jain had suppressed income of Rs. 20 Lakhs. However, her husband later retracted this statement. The court examined the materials and found that the sole reason for reopening the assessment was the retracted statement, leading to the conclusion that there was no justifiable reason to proceed under Section 148.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 754192 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-02-2022
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Dr.N.Thippa Setty (2010) 230 CTR 265 (Karnataka)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: VIKRAM HUILGOL; BALRAM RAO
• Keywords: Income suppression; Re-assessment; Retraction of statement; Writ of Certiorari
• Section: 147; 148; 131; 133A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF FEBRUARY 2022 BEFORE THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV WRIT PETITION No.24214/2021 (T-IT) BETWEEN: MS. KAVITHA JAIN WIFE OF SRI PUSHPARAJ JAIN AGED ABOUT 39 YEARS, NO.6-6/22, NEAR EDEN SPORTS CLUB, EDEN GARDEN, NANTHOOR, MANGALURU - 575 005. … PETITIONER (BY SRI VIKRAM HUILGOL, SENIOR ADVOCATE A/W SRI BALRAM R. RAO, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MANGALORE - 575 001. 2. INCOME TAX OFFICER, WARD 2(1), MANGALORE - 575 001. … RESPONDENTS (BY SRI K.V. ARAVIND, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF CONSTITUTION OF INDIA, PRAYING TO QUASH THE NOTICE PASSED U/S 148 OF THE ACT DATED 31.03.2021 FOR THE ASSESSMENT YEAR 2017-18 IN DIN AND LETTER VIDE ANNEXURE-E AND ETC. 2 THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has sought for issuance of writ of certiorari to quash the notice passed under Section 148 of the Income Tax Act,1961 (\"the Act\", for short) dated 31.03.2021 for the assessment year 2017-18 issued by the second respondent. 2. The petitioner has sought for issuance of writ of certiorari to quash the order rejecting the objections. The petitioner has also challenged the invocation of Section 147 of the Act. 3. The learned Senior Counsel appearing for the petitioner submits that the notice under Section 148 came to be issued seeking to re-assess the income of the petitioner and that the petitioner has sought for necessary reasons for initiating Section 148 proceedings after having filed the return. 3 4. It is pointed out that objections were filed as regards to the reasons for re-opening the proceedings and the said objections have been rejected at Annexure-'N'. 5. It is pointed out that the statement of the husband of the petitioner on 02.02.2017 has been relied upon by the Department which is the basis for their 148 notice. In the statement of 02.02.2017, the husband of the petitioner is stated to have declared suppression of income of the petitioner of Rs.20 Lakhs for the financial year 2016-17. 6. It is further submitted that the said statement has been retracted by the husband of the petitioner on 08.08.2018, copy of which is enclosed at Annexure-'C'. Accordingly, it is submitted that there are no justifiable reasons for re-opening the assessment by resort to Section 148. 7. Reliance is placed on the judgment of this court in the case of Commissioner of Income Tax v. 4 Dr.N.Thippa Setty reported in (2010) 230 CTR 265 (Karnataka). 8. The learned counsel for revenue has produced the records. 9. Perused the materials relating to the reason for re-opening the assessment in the case of the petitioner at Para 6 under the caption \"Basis of forming reasons to believe and details of escapement of income\" which would reveal that the sole reason for initiating the proceedings is the statement made by the husband of the petitioner and there is no other reason that comes out from the record. 10. The observation at Para 6 of the said report is extracted below: \"Sri.Pushparaj Jain, Husband of the Assessee in the course of statement u/s131 recorded during Survey u/s 133A, has in his capacity as Managing Director of the Company declared an additional income of Rs.20,00,000/- in the hands of Smt.Kavitha Jain, the Assessee, 5 for the A.Y.2017-18. The Assessee had not declared the additional income of Rs.20,00,000/- attributed to the above declaration in her Return of Income filed for the AY 2017-18. Hence, there is escapement of income to the extent of Rs.20,00,000/- for the AY 2017-18. Hence, I have reason to believe that income of the Assessee of Rs.20,00,000/- chargeable to tax has escaped assessment within the meaning of explanation of Section (b) of Section 147 of the Income Tax Act, 1961.\" 11. It is to be noticed that for the purpose of re-opening the assessment in terms of Section 148, the only reason is the statement of the husband of the petitioner which admittedly has been retracted. 12. This court while dealing with similar question has observed under similar circumstances that retraction of the statement had resulted in absence of any material to warrant re-opening of the case against the assessee. 6 13. As there is no material available on record for initiating the proceedings under Section 148, the impugned order at Annexure-'N' is set aside and consequently the notice at Annexure-'E' is set aside. Sd/- JUDGE Np/- "