SHRI VEER TEJA REAL ESTATE AND DEVELOPERS PVT. LTD. V. INCOME TAX OFFICER

CW/4453/2023

AI Insights

The case involves Shri Veer Teja Real Estate And Developers Pvt. Ltd., which filed a writ petition against the Income Tax Officer, Principal Commissioner of Income Tax-3, Jaipur, and the Union of India through the Finance Secretary, challenging the re-assessment proceedings initiated for the assessment year 2016-17. The petitioner contested that the notice and subsequent order were based on erroneous facts, specifically that the petitioner had sold a property and failed to disclose the transaction, which was not the case as the petitioner had actually purchased the property. The court examined the validity of the notice and order under Sections 148A(b) and 148A(d) of the Income Tax Act, respectively, and found procedural and factual inaccuracies in the actions taken by the tax authorities.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 765754 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 18-03-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANDEEP PATHAK
• Assessee Lawyers: ASHISH SHARMA
• Keywords: Capital Gain; Income Tax; Property transaction; Re-assessment; Unexplained Long Term Capital Gain
• Section: 147; 148; 148A(b); 148A(d)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 4453/2023 Shri Veer Teja Real Estate And Developers Pvt. Ltd., Having Its Registered Office Address At Near Police Station Chaksu, District Jaipur-303901 Through Its Director Shri Rajesh Kumar Chaudhary. ----Petitioner Versus 1. Income Tax Officer, Ward 7(2), Siddnath Bhawan, Lalkothi, Jaipur- 302015. 2. Principal Commissioner Of Income Tax-3, Jaipur. 3. Union Of India, Through Finance Secretary, Ministry Of Finance (Department Of Revenue), Central Board Of Direct Taxes, North Block, New Delhi 110002. ----Respondents For Petitioner(s) : Mr. Ashish Sharma For Respondent(s) : Mr. Sandeep Pathak HON'BLE MR. JUSTICE PANKAJ BHANDARI HON'BLE MRS. JUSTICE SHUBHA MEHTA Order 18/03/2024 1. Petitioner has preferred this civil writ petition interalia praying therein for setting aside the impugned order passed under Section 148A(d) of Income Tax Act, 1961(hereinafter referred as ‘Act’) and notice issued under Section 148 of the Act dated 27.07.2022 for initiation of re-assessment proceedings in respect of assessment year 2016-17. 2. It is contended by counsel for the petitioner that notice was issued to the petitioner on 31.05.2022 under Section 148A(b) of the Act on the basis of information that income chargeable to tax (2 of 4) [CW-4453/2023] has escaped assessment alongwith notice in Annx.A, which disclosed the details of the relevant information and material which was relied upon for initiating re-assessment. Annxexure-A reads as under:- “In this connection, it is stated that information regarding transactions carried out by you is available with the department for F.Y. 2015- 16 relevant to A.Y. 2016-17. As per information available on record, you have sold an immovable property on 13.07.2017 situated at village Mahachandrpura, Badli, Chaksu for total consideration of Rs.2,84,000/-(DLC value taken by the sub-registrar by at Rs.2,84,000/-) but failed to disclose the said transaction as you neither made any compliance of the notices issued by the department nor filed any written submission in regard to above transaction.” 3. It is also contended by counsel for the petitioner that the basis on which the notice was given was that petitioner has sold immovable property on 31.07.2015 of Rs.2.84 crore and that he has not shown capital gain assessment on sale of such property and that the same is required to be taxed as unexplained long term capital gain. It is further contended that petitioner assessee submitted reply and informed the authorities that notice is on wrong facts, in fact petitioner had purchased the property and in that case he is not required to pay tax on capital gain. The respondent vide order dated 27.07.2022 found the objection raised by the assessee as not tenable and merely because the assessee company is involved in real estate business, concluded that assessee has no proper explanation with respect to above mentioned escapement of income in assessment year 2016-17, thus, came to the conclusion that it is a fit case of issuance of (3 of 4) [CW-4453/2023] notice under Section 148 of the Act. It is further contended that authorities have gone beyond terms of the notice given under Section 148(A)(b) of the Act and have committed grave illegality in passing the impugned order under Section 148(A)(d) of the Act. It is further contended that in the order passed under Section 148(A)(d) of the Act, the Officer has mentioned that further verification and examination is required as the petitioner is in real estate business and on this basis came to the conclusion that no proper explanation has been given. It is argued that notice under Section 148A(b) or proceedings under Section 148 of the Act can only be initiated where income has escaped assessment. 4. Counsel appearing for Union of India has agreed that notice under Section 148-A(b) of the Act mentioned with regard to sale of some property by the petitioner, however, in fact petitioner had purchased immovable property of Rs.2.84 crore. It is argued that since there was high value purchase of Rs.2.84 crore, it was required to be verified by the authorities and no error has been committed by the authorities. 5. We have considered the contentions. 6. Present is a clear case where authorities have issued notice under Section 148(A)(b) of the Act without verifying the factum of sale or purchase. In Annx-A attached to the notice, it is mentioned that petitioner has sold property of Rs.2.84 crore and has not paid capital gain tax in his income tax assessment and on the basis of this notice, the authorities proceeded and even when the petitioner submitted reply bringing to the notice of the authorities that he has purchased the property and has not sold the property and is therefore not liable to pay capital gain tax, still the (4 of 4) [CW-4453/2023] authorities, ignoring the reply mentioned in the impugned order that they are not satisfied with the reply, submitted by the petitioner and concluded that the matter required to be re- assessed and that income chargeable to tax to the tune of Rs.2.84 crores has escaped the assessment within meaning of provision of Section 147 of the Income Tax Act. 7. We are of the considered view that authorities have acted de hors the Act and provisions contained under Section 148 of the Act. The authorities have proceeded on wrong footing and have conducted inquiry with regard to sale of land whereas, actually it was purchase of land. The impugned order dated 27.07.2022 passed under Section 148(A)(d) of the Act and the notice under Section 148 of Act dated 27.07.2022 being based on wrong facts cannot be sustained and it is a case where assessee has been harassed by the Income Tax Department, hence, we deem it proper to allow the civil writ petition. 8. Civil Writ Petition is accordingly, allowed. The impugned order dated 27.07.2022 passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act dated 27.07.2022 are set aside and quashed. (SHUBHA MEHTA),J -(PANKAJ BHANDARI),J HEENA/09 "