Naveen Kumar Jaiswal V. Income-tax Department through its National Faceless Assessment Centre and Additional/Joint/Deputy/Assistant Commissioner of Income tax/Income-tax Officer, National Faceless Assessment Centre and Income-tax Officer, Ward 2(1), Ranchi

WPC/675/2022

AI Insights

The case involves Naveen Kumar Jaiswal, who filed a writ application against the Income-tax Department's reassessment notice for the Assessment Year 2017-18. The reassessment was based on allegations that the petitioner had purchased immovable property and failed to disclose certain transactions. However, the petitioner argued that he had sold ancestral agricultural land, not purchased property, and had disclosed all relevant transactions in his tax returns. The court examined the reasons for reassessment provided by the Income-tax Department and found them to be based on a typographical error, leading to the quashing of the reassessment notice and proceedings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 796100 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 22-03-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAHUL LAMBA
• Assessee Lawyers: KUMAR VAIBAV
• Keywords: Escaped assessment; Exempt income; Income Tax; Purchase of Immovable Property; Reassessment notice; Sale of agricultural land; Typographical error
• Section: 148; 142(1); 10; 50C; 151(2)

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T). No. 675 of 2022 --- Naveen Kumar Jaiswal, son of late Prabhu Shankar Jaiswal, resident of Ranchi Distillery, Peace Road, Lalpur, P.O. and P.S. Lalpur Ranchi --- --- Petitioner Versus 1. Income-tax Department through its National Faceless Assessment Centre, having its office at P.O, P.S. and District Delhi. 2. Additional/Joint/Deputy/Assistant Commissioner of Income tax/Income-tax Officer, National Faceless Assessment Centre, having its office at P.O, P.S. and District Delhi. 3. Income-tax Officer, Ward 2(1), Ranchi having its office at Central Revenue Building, Main Road, Ranchi, P.O, GPO, P.S. Lower Bazar, District Ranchi. --- --- Respondents --- CORAM: Hon’ble Mr. Justice Aparesh Kumar Singh Hon’ble Mr. Justice Deepak Roshan --- For the Petitioner : Mr. Kumar Vaibav, Advocate For the Respondents : Mr. Rahul Lamba, Advocate --- Reserved on: 15/03/2022 Pronounced on: 22/03/2022 --- Deepak Roshan, J: The instant writ application has been preferred by the petitioner praying therein for quashing of the order dated 10.02.2022 (Annexure-7); whereby the objection preferred by the petitioner to the reassessment notice for the AY 2017-18 has been rejected by holding that the Assessing Officer had sufficient reasons to re-open the case and also for quashing of the entire proceeding for reassessment of the petitioner pertaining to the AY 2017-18 including the notice under Section 148 of the Income Tax Act, 1961 (“Act” for the short) dated 30.03.2021 (Annexure-3) and notice dated 03.12.2021 (Annexure-5). 2. The brief facts as disclosed in the instant writ application is that the petitioner had filed his revised return of income disclosing sale of ancestral agricultural land made by him in the AY 2017-18, income arising wherefrom is exempt from income-tax. In the computation of income, TCS amount of Rs.19,064/- collected for purchase of vehicle made by the petitioner was also reflected. On 30.03.2021, petitioner was served with a notice under Section 148 of the Act alleging therein that the income chargeable to tax has escaped assessment. On 03.06.2021, the petitioner requested the revenue to provide reasons for issuance of reassessment notice. Pursuant thereto; the reasons for re-opening was provided to the petitioner from which transpires that the petitioner did not disclose the purchase of immovable property for a sum of 2 Rs.1,80,60,000/- and secondly for non-disclosure of sale of vehicle exceeding Rs.19,06,400/-. On 03.12.2021 notice under Section 142(1) of the Act was issued calling for information pertaining to reassessment proceeding to which the petitioner filed its objection to the reasons for re-opening by uploading the same on the online portal on 11.12.2021. On 10.02.2022 the objection preferred by the petitioner to reassessment were rejected by the revenue. 3. Mr. Kumar Vaibav, learned counsel for the petitioner submits that the Assessee did not purchased any immovable property during the relevant assessment year; rather he along with the co-owners have sold a property vide sale deed which was ancestral agricultural land and the same was sold for a consideration of Rs.1,80,60,000/- , out of which petitioner’s share which was received by him through banking channel was of Rs.22,57,500/- and the same was disclosed in the income tax return of the petitioner for the AY 2017-18. He further submits that the reasons for reopening was thus incorrect and without any basis. Learned counsel contended that it is a settled law that reasons must speak for themselves and any subsequent attempt to supply the omission at the stage of an order disposing of the objections raised by the Assessee or providing them in the counter affidavit is impermissible. Learned counsel draws attention of this Court towards the rejection letter dated 10.02.2022 whereby objection preferred by the petitioner was rejected and submits that at paragraph-7, the AO had categorically stated that he has reason to re-open the case under Section 148 since the Assessee had during the year under consideration purchased immovable property valued of Rs.1,80,60,000/-. He reiterated that as a matter of fact the petitioner did not purchased any property; rather petitioner together with other co-owners through a registered sale deed sold the property which was ancestral property and his share received by him through banking channel was of Rs.22,57,500/-. As such the very reason that the petitioner had purchased a property is error apparent on record; as such the very initiation of proceeding is vitiated. Learned counsel further draws attention of this Court towards the counter affidavit and submits that the respondents at paragraph No.10 had admitted that due to typographical error and oversight, the sale transaction undertaken by the petitioner was referred to as the purchase transaction. As such the revenue has admitted that the reason to believe is not in accordance with law. Relying upon the aforesaid fact and submission, he prays for 3 quashing of the reassessment of notice and the entire proceeding being without jurisdiction. 4. Mr. Rahul Lamba, learned counsel for the respondents defending the revenue inter-alia submits that on perusal of the computation of income filed in the instant petition, it would appear that the petitioner during the relevant year has shown sale of agricultural land and has claimed exemption from income tax for such sale of land under Section 10 of the Act. It is important to consider that it is clear from Schedule –A of the sale deed dated 22.03.2017 (Annexure-2 to the writ petition) that the nature of the land sold by the petitioner is residential land and not agricultural land as falsely claimed by the petitioner in its computation of income and also in the instant writ petition. Learned counsel further submits that the petitioner had made false statement on oath before this Court specifically at paragraph-8 of the instant petition that the land sold by the petitioner is an agricultural land. However, the land sold is residential land and not agricultural land. Such conduct of the petitioner disentitles him to get any relief from this Court under the writ jurisdiction. He further submits that the petitioner for the purpose of income tax has shown the value of such land at Rs.1,80,60,000/-; However, the Govt. rate of the said land for stamp duty is Rs.2,70,54,000/- and as per Section 50C of the Act, a person has to pay income tax considering the rate prescribed by the Govt. for stamp duty and not at the rate which is provided in the sale deed, accordingly, the petitioner was liable to pay income tax on the value of Rs.2,70,54,000/- as per 50C of the Act, but the petitioner has falsely claimed the said income as exempt income from the sale of agricultural land. Relying upon the aforesaid facts he contended that it is absolutely clear that the petitioner through his aforesaid conduct has escaped his income from Income-tax as he had not made full and true disclosures to the respondent department. Learned counsel lastly submits that only due to typographical error the petitioner should not get benefit, inasmuch as, admittedly there was sale of property which was a residential property, however the same was reflected in the income tax return as an agricultural land and thus the petitioner’s income has escaped assessment. 5. Having heard learned counsel for the parties and after going through the documents available on record, it appears that the petitioner after getting the notice under Section 148 of the Act (Annexure-3), filed an objection (Annexure-6) taking all grounds that there is no escaped assessment. Pursuant 4 thereto; objection preferred by the petitioner was rejected (Annexure-7) holding therein at paragraph-7 as under:- “7. The AO has concrete reasons to reopen the case under Section 148. It is observed that the assessee had during the year under consideration purchased immovable property valued of Rs.1,80,60,000/- on 09.03.2017. Sl. No. Date of payment Amount Mode 1 09.03.2017 1,80,60,000/- - Hence, it is correct that approval under section 151(2) of the Income Tax Act, 1961 has been rightly granted to issue notice under Section 148 of the Income Tax Act, 1961 for the AY2017- 18 relevant to FY-2016-17. The AO has sufficient reasons and concrete reasons to re-open the case and issue notice under Section 148 of the Income Tax Act, 1961.” 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 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; 5 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. However, this Court is conscious about the fact that from Schedule –A of the sale deed dated 22.03.2017 (Annexure-2 to the writ petition) it appears that the nature of the land sold by the petitioner and co- sharers was a residential land and not agricultural land as claimed by the petitioner in its computation of income and also in the instant writ petition. This fact is also admitted by the petitioner, inasmuch as, the petitioner himself in para-10 of its rejoinder affidavit had submitted that it can be case of the revenue that the petitioner wrongly claimed exemption but it cannot be any case of non-disclosure of any true or material facts by the Assessee. In other words the revenue can initiate a fresh proceeding on the basis of the materials available on record for claiming wrong exemption by the petitioner. 9. In view of the aforesaid discussions and the settled proposition of law, the impugned notice dated 30.03.2021 (Annexure-3), notice dated 03.12.2021 (Annexure-5) as well as order dated 10.02.2022 (Annexure-7) 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 in accordance with law. 10. With the aforesaid observations and directions, the instant writ application is allowed. (Aparesh Kumar Singh, J) I agree (Aparesh Kumar Singh, J) (Deepak Roshan, J) Jharkhand High Court, Ranchi Dated 22nd March 2022 fahim/N.A.F.R "