Musahib Ali V. Union Of India Thru. Its Secy. Ministry Of Finance, Govt. Of India, New Delhi And Others

/191/2024

AI Insights

The case involves Musahib Ali, the manager of New Adil Educational Society, who challenged a notice and subsequent order issued by the Income Tax Officer, Allahabad, under Section 148A of the Income Tax Act, 1961. The notice was based on the reclassification of land sold by the petitioner as commercial property, which was initially treated as agricultural land. The petitioner argued that his response to the Show Cause Notice was not adequately considered by the Assessing Authority, leading to the filing of this writ petition. The court found that the reply was not considered in its entirety, leading to the setting aside of the order and remanding the matter for fresh consideration.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 691982 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 24-07-2024
• Assessment Year: misc
• Other Referred Cases: Raymond Woolen Mills Limited Vs. ITO, Wave Distilleries and Breweries Limited Vs. Union of India, Vivek Saran Agarwal Vs. Union of India
• Laws Referred To: Income Tax Act, 1961, Societies Registration Act, 1860, Indian Stamp Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KUSHAGRA DIKSHIT; RAVI KUMAR MISHRA
• Assessee Lawyers: AJAY PRATAP SINGH
• Keywords: Agricultural Land; Certiorari; Certiorari; Commercial land; Income Tax; Stamp Duty; Writ Tax; High Risk Portal
• Section: 148A(b); 148A(d); 148A; 47(a)

Judgement Text

"Neutral Citation No. - 2024:AHC-LKO:50019-DB Court No. - 3 Case :- WRIT TAX No. - 191 of 2024 Petitioner :- Musahib Ali Respondent :- Union Of India Thru. Its Secy. Ministry Of Finance, Govt. Of India , New Delhi And Others Counsel for Petitioner :- Ajay Pratap Singh Counsel for Respondent :- A.S.G.I.,C.S.C., Kushagra Dikshit Hon'ble Mrs. Sangeeta Chandra,J. Hon'ble Shree Prakash Singh,J. (1) Heard the learned counsel for the petitioner and Shri Neerav Chitravanshi, who appears on behalf of the Respondent nos.2 & 3 and Dr. Ravi Kumar Mishra, who appears on behalf of the Respondent no.1, Union of India, and the learned Standing counsel who appears on behalf of the State-respondents nos.4, 5 and 6. (2) This petition has been filed by the petitioner for the following main prayer:- \"1) To issue a writ, order or direction in the nature of Certiorari thereby quashing the impugned notice dated 23.04.2024 issued by the Opposite party no.3- Income Tax Officer, Allahabad, under Section 148A of the Income Tax Act, 1961 as well as the order under Section 148 A(d) of the Income Tax Act, 1961, contained as Annexure Nos.1 and 2 to the writ petition respectively.\" (3) It is the case of the petitioner that there is a Society by the name of New Adil Educational Society, established in Gram Panchayat Malaiyan, Post Office Malaiyan, Tehsil Sandila, District Hardoi, registered under the Societies Registration Act, 1860 which runs a School. The petitioner is the Manager of the School as well as of the Society. There were several Sale Deeds that were executed on 15.10.2019 and 09.01.2020 with regard to the land possessed by the petitioner Musahib Ali and one Munni Khatoon which land was transferred in the name of the Institution. A complaint was made by one Mohan Lal son of Kashi and the Sub-Registrar, Tehsil Sandila, District Hardoi, initiated the proceedings for deficiency in a Stamp Duty with respect to the aforesaid four Sale Deeds by an order dated 30.08.2022. The Sub-Registrar, Tehsil Sandila, District Hardoi, also uploaded the values of the land mentioned in the said Sale Deeds treating the same to be commercial land on the Portal of Income Tax Department under High Risk category. Eventually, the proceedings under Section 47-A of the Indian Stamp Act, were allowed in favour of the petitioner in three cases bearing Case No.3080 of 2022, Case No.3082 of 2022 and Case No.3083 of 2022. In Case No.3081 of 2022, the Revenue Authorities submitted a report that the land which had been sold off by the petitioner was agricultural land. (4) Only because the Sub-Registrar, Tehsil Sandila, District Hardoi, uploaded the value of the property on the High Risk Portal of the Income Tax Department treating the said land to be commercial in nature, notice was issued on 28.03.2024 by the Opposite party no.3 to the petitioner under Section 148A (b) of the Income Tax Act, 1961. The petitioner submitted his reply on 18.04.2024 mentioning the facts regarding initiation of proceedings under Section 47A by the Sub-Registrar which were decided in favour of the petitioner and the land in question was declared as agricultural land. A copy of the reply of the petitioner has been filed as Annexure-13 to the petition. (5) However, such reply has not been considered by the Assessing Authority while issuing notice and the final order has been issued, a copy of which has been filed as Annexure no.2 to the petition. (6) Learned counsel for the petitioner has placed reliance upon a statutory provisions of Section 148-A which are being quoted hereinbelow:- \"148A. Conducting inquiry, providing opportunity before issue of notice under Section 148. The Assessing Officer shall, before issuing any notice under Section 148-- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to Show Cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per Clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in Clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under Section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which time or extended time allowed to furnish a reply as per Clause (b) expires:\" (7) Learned counsel appearing on behalf of the respondents has stated before this Court that it is evident from the order dated 23.04.2024 filed as Annexure no.2 to the petition that the reply of the petitioner was considered. He has pointed out the Paragraph nos.3, 4, 5 & 6 of the order and a reference has been made to certain decisions of this Court passed in the case of Raymond Woolen Mills Limited Vs. ITO reported in 236 ITR 36, and Wave Distilleries and Breweries Limited Vs. Union of India decided on 01.04.2022. (8) We have gone through the order issued under Clause (d) of 148A of the Income Tax Act and we find from the same that although there is a mention in Paragraph-3 of the said order that a reply has been submitted by the Assessee to the Show Cause Notice but in the succeeding Paragraphs of the order, there is no consideration of such reply. (9) A reference has been made to the value of the Sale Deeds treating them to be commercial land which was later on found to be incorrect by the Sub-Registrar in proceedings under Section 47A of the Stamp Act. (10) We are of the considered opinion that once Show Cause Notice was issued and a reply sought from the Assessee, it cannot be treated as a formality and reply should have been considered in its totality before passing an order under Clause-d of Section 148A. (11) We have gone through the judgments cited by the learned counsel for the Revenue namely judgment rendered by the Hon'ble Supreme Court in the case of Raymond Woolen Mills Limited Vs. Income Tax Officer, Centre Circle XI, Range Bombay and others reported in (2008) 14 SCC 218 and the judgment of the Co-ordinate Bench of this Court in Vivek Saran Agarwal Vs. Union of India reported in (2023) 157 taxmann.com 80 (Allahabad), wherein the facts may have been completely different as there is no mention of the contents of the reply of the Show Cause Notice. (12) No doubt, Clause-d of the Section 148A only entitles the Revenue to reopen assessment and assessee will get full opportunity of hearing at the time of reassessment being carried out but this Court is of the opinion that after Show Cause Notice is issued and reply submitted by the Assessee, the said reply should be taken into account in its entirety while passing an order under Clause-d of Section 148A which has not been done in this case. (13) The order dated 23.04.2024 under Clause-d of Section 148A of Income Tax act is set aside. We are not interfering in the Show Cause Notice issued to the petitioner in which the petitioner has already submitted a reply. We remand the matter to the Assessing Authority to consider the reply of the petitioner to the Show Cause Notice afresh and then pass appropriate orders for reopening of assessment, if need be. (14) This writ petition stands allowed. Order Date :- 24.7.2024 N.PAL Digitally signed by :- NARESH PAL High Court of Judicature at Allahabad, Lucknow Bench "