Pushpa Yadav V. Income Tax Officer and National Faceless Assessment Centre Delhi

WTAX/564/2022

AI Insights

The case revolves around a writ petition filed by Pushpa Yadav challenging the notice issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2016-17. The notice was based on information from a search at M/s Celebrations City Projects (P) Ltd., indicating substantial cash transactions by the petitioner for purchasing units in Red Mall, Ghaziabad. The petitioner argued that the proceedings should have been initiated under Section 153C, not Section 148. The court examined the legality of the notice and the subsequent reassessment, concluding that the actions taken by the Income Tax Department were within legal bounds and supported by sufficient evidence of income escapement.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 796163 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 12-04-2022
• Assessment Year: misc
• Other Referred Cases: AGR Investment Ltd. Vs. Addl.CIT&Anr. (Delhi) 333 ITR 146, Shalimar Buildcon (P) Ltd. V/s. ITO ITAT (Jaipur), 136 TTJ 701
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A S G I; GAURAV MAHAJAN; GOPAL VERMA
• Assessee Lawyers: MAHENDRA PRATAP; ANURAG YADAV
• Keywords: Cash transaction; Certiorari; Certiorari; Escapement of income; Income Tax; Jurisdiction; Re-opening of assessment
• Section: 147; 148; 153C; 151

Judgement Text

"1 A.F.R. Court No. - 3 Case :- WRIT TAX No. - 564 of 2022 Petitioner :- Pushpa Yadav Respondent :- Income Tax Officer And 2 Others Counsel for Petitioner :- Mahendra Pratap,Anurag Yadav,Sr. Advocate Counsel for Respondent :- A.S.G.I.,Gaurav Mahajan,Gopal Verma Hon'ble Surya Prakash Kesarwani,J. Hon'ble Jayant Banerji,J. 1. Heard Shri R.R. Agarwal, learned Senior Advocate assisted by Shri Mahendra Pratap and Shri Anurag Yadav, learned counsel for the petitioner, Shri Krishna Agarwal, learned counsel for the respondent nos.1 and 2/Income Tax Department and Shri Gopal Verma, learned counsel for the respondent no.3. 2. This writ petition has been filed praying for the following reliefs:- \"(i) Issue a writ, order or direction in the nature of certiorari quashing the order dated 03.02.2022 passed by the National Faceless Assessment Centre Delhi respondent no.2 rejecting the objection of the petitioner to the reasons recorded for re-opening of the assessment for A.Y. 2016-17 (Annexure-5 to the writ petition). (ii) Issue a writ, order or direction in the nature of certiorari quashing the notice issued under section 148 of the Income Tax Act for A.Y. 2016-17 dated 32.03.2021 issued by the Income Tax Officer (1), Ward 2(2)(1) Ghaziabad, respondent no.1 (Annexure- 2 to the writ petition).\" 3. Learned Senior Advocate for the petitioner submits that the impugned notice dated 30.03.2021 under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act, 1961') has been issued to the petitioner by the respondent no.1 on the basis of certain information received on account of the search conducted in the premises of M/s Celebrations City Projects (P) Ltd. Therefore, at best, the proceedings against the petitioner-assessee may be initiated in 2 accordance with the provisions of Section 153C of the Act, 1961 which starts with non-obstante clause. He, therefore, submits that the impugned notice under Section 148 of the Act, 1961 and the impugned order dated 03.02.2022 rejecting the objection of the petitioner, are wholly unsustainable and deserve to be quashed and the entire proceeding under Section 148 is without jurisdiction. 4. Learned counsel for the respondents have supported the impugned notice and the order. 5. We have carefully considered the submissions of learned counsels for the parties and perused the records of the writ petition. 6. Reason supplied by the assessing authority to the petitioner for initiating proceedings under Section 147/148 of the Act, 1961, is reproduced below:- “It was informed by DDIT (Inv.)-1(3), Ghaziabad vide letter dated 26.03.2021 dated during the enquiry proceedings, it was found that that assessee has made cash amount of Rs. 1,18,84,000/- for purchase of units/shops/space etc. in Red Mall, Ghaziabad to M/s Celebration City Projects Pvt Ltd. during the F.Y. 2015-16. On perusal of the record it is seen that the assessee has filed ITR for A.Y. 2016-17 on 28.07.2016 declaring income of Rs.7,32,670/-. As per record the case has not been assessed u/s 143(3) of the Income Tax Act, 1961. I have perused the record in light of the above information and through independent verification of return of the assessee with the perusal of the statement recorded on oath came to independent conclusion that the assessee has made huge cash of Rs.1,18,84,000/- for purchase of units/shop etc, in Red Mall to M/s Celebration City Projects Pvt Ltd. during the F.Y. 2015-16 1.e. A.Y. 2016-17. Hence, there is reason to believe that there is escapement of income from the returned income of the assessee. I have reason to believe that there is escapement of more than Rs. 1,18,84,000/- and further additional income and any other income which can come in the the knowledge subsequently in the course of proceedings u/s 147(b), therefore the issue of notice u/s 148 of the income tax act, 1961 is necessary in this case. Hence, the case of Smit Pushpa Yadav is being proposed for approval under the provision of section 151(1) of the I.T. Act, 1961.” (emphasis supplied) 3 7. While rejecting the objection of the petitioner by the impugned order dated 03.02.2022, the respondent no.1 has observed in paragraphs 2, 5.2.2 and 5.3.2. as under:- “2. In the case of the assessee, information has been received from the DDIT (Inv)-(1)(3) by letter dated 26/3/2021 that during the course of enquiry, it was found that the assessee has made payment by cash of an amount of Rs.1,18,84,000/-, for purchase of units/shops/space in the Red Mall, Ghaziabad to the seller M/s Celebration City Projects P Ltd. during the F.Y 2015-16. The A.O has stated that as per details available, the assessee has filed ITR for A.Y 2016-17 on 28/07/2016 declaring income of Rs.7,32,670/-, which was processed u/s 143(1) of the Act. The A.O has perused the available records of the assessee in the light of the information received from the Investigation Wing and through independent verification of the return of the assessee with the perusal of the statement recorded on oath, came to the conclusion that the assessee has made the cash payment of Rs.1,18,84,000/- for purchase of units/shops in Red Mall to the seller M/s Celebration City Projects P Ltd. during the FY 2015-16. The A.O has therefore, analysed the information with the return of income filed by the assessee for the relevant period, the source of cash deposits was not disclosed in the return of income filed, which is chargeable to tax as discussed in paragraph above and the assessee was assessable under the Act. In view of the above facts, the A.O had reason to believe that the assessee has not disclosed fully and truly all material facts for the year under consideration and the said cash deposits of Rs 22,85,000/- is the income of the assessee that has escaped assessment within the meaning of sec. 147 of the Income Tax Act, 1961. Accordingly, the assessment was re-opened by issue of notice u/s.148 of the I.T. Act dated 30/3/2021, after taking required approval from the competent authority in the Department as per the provisions of section 151 of the Income Tax Act, 1961. …........ 5.2.2. The arguments of the assessee are unfounded. In the reasons recorded by the A.O, the A.O has clearly specified that he has analysed the information with the return of income filed by the assessee for the relevant period and found that the source of cash deposits was not disclosed in the return of income filed. In view of the above facts, the A.O had reason to believe that the assessee has not disclosed fully and truly all material facts for the year under consideration and the said cash payment of Rs.1,18,84,000/- made by the assessee is the income of the assessee that has escaped assessment within the meaning of sec. 147 of the Income Tax Act, 1961. …...... 4 5.3.2 5.The assessees's contention is entirely incorrect. In the assessee's case, there is reliable information from the Investigation Wing gathered during the course of search and survey operations in the case of M/s Celebration City Projects P Ltd. that payment in cash has been received from the assessee for sale of units/shop rooms from M/s Celebration City Projects P Ltd. The enquiry report received from the Investigation Wing from the DDIT (Inv). (1)(3) by letter dated 26/3/2021 giving the details of the transaction was analysed with the return of income filed by the assessee. The A.O then arrived at an independent opinion of income having escaped assessment within the meaning of section 147 of the I.T. Act in the case of the assessee. There are broadly two limitations on the power of the revenue to reopen assessments - (i) there must be some tangible material based on which the reopening is being undertaken which leads to a reason to believe that there has been escapement of income and (ii) the reopening should not be a \"mere change of opinion. Furthermsore, information from the Investigation Wing, can be basis for issue of notice u/s.148, as held in the following judicial rulings - 1. AGR Investment Ltd. Vs. Addl.CIT&Anr. (Delhi) 333 ITR 146. 2. Shalimar Buildcon (P) Ltd. V/s. ITO ITAT (Jaipur), 136 TTJ 701. (emphasis supplied) 8. Section 153C(1) of the Act, 1961 reads as under :- \"153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A: 5 Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub- section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub- section (1) of section 153A except in case where any assessment or reassessment has abated.” 9. From the reason recorded by the assessing authority, it is evident that the assessing authority was having some information from the DDT (Inv.)-1(3), Ghaziabad vide letter dated 26.03.2021. He independently verified the information received from the return of income of the assessee and also perused the statement recorded on oath and then he came to an independent conclusion that the assessee had made huge cash of Rs.1,18,84,000/- for purchase of units/shop etc. in Red Mall to M/s Celebrations City Projects (P) Ltd. during the Financial Year 2015-16. The reason to believe recorded by the assessing authority is not on the basis of any books of account or document seized by Income Tax Authorities in the search conducted on M/s Celebrations City Projects (P) Ltd. 10. Even if it is presumed that copies of certain statements on oath recorded during the course of search by the Investigating Wing, were forwarded to the respondent no.1 alongwith the report, it cannot be said to be either the books of account or document seized so as to fall it within the ambit of clause (b) of sub-section (1) of Section 153C of the Act, 1961. 11. Perusal of the reason recorded by the assessing authority as aforequoted reveals that the assessing authority has proceeded on the basis of certain information received from the Investigating Wing and 6 after independent verification, he came to the conclusion that the assessee had made huge cash of Rs.1,18,84,000/-, which caused him to issue notice to the petitioner under Section 148 of the Act, 1961. It is also admitted case of the petitioner that no assessment was made by the assessing authority for the Assessment Year 2016-17. As per Explanation 2(b) appended to Section 147 of the Act, 1961, if a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the assessing officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; then it shall be deemed to be a case where income chargeable to tax has escaped assessment. 12. In view of the above discussions, we find that neither the impugned notice issued by the respondent no.1 under Section 148 of the Act, 1961 suffers from any illegality nor the impugned order rejecting the objection of the petitioner suffers from any infirmity, which, under the circumstances, cannot be interfered with. 13. For all the reasons aforestated, we find that the writ petition has no substance and is, therefore, dismissed. 14. It shall be open for the assessing authority to proceed with the reassessment proceedings in accordance with law, without being influenced by any of the observations made in the body of this judgment. Order Date :- 12.4.2022 SK Digitally signed by SUSHEEL KUMAR Date: 2022.04.13 15:44:35 IST Reason: Location: High Court of Judicature at Allahabad "