SMT PUNAM SINGH V. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX

WPC/4891/2022

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Smt. Punam Singh challenged the jurisdiction of the Income Tax Officer, Ward-2(1), Jamshedpur, regarding notices issued under Sections 148 and 148A of the Income Tax Act, 1961, for the assessment year 2015-16. The petitioner argued that the notices were issued without proper preliminary inquiry and that she had no income chargeable to tax for the relevant assessment year. The respondents contended that the petitioner, being a joint owner of an immovable property sold for Rs. 53 lacs, was liable for capital gains tax. The court examined the procedural validity of the notices and the substantive claim of tax liability on capital gains, ultimately dismissing the petition and allowing the reassessment proceedings to continue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748088 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 29-03-2023
• Assessment Year: misc
• Other Referred Cases: GKN Driveshaft (India) Ltd. Vs. ITO, Divya Capital One (P) Ltd. Vs. Assistant Commissioner of Income-tax, Red Chilli International Sales Vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: R N SAHAY; ANURAG VIJAY
• Assessee Lawyers: AJAY JHAR; VIJAY JHA; AMAN RAJA
• Keywords: Capital Gains; Income Tax; Jurisdiction; Notice Quashing; Reassessment
• Section: 147; 148; 148A(b); 148A(d); 45

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 4891 of 2022 …….. Smt. Punam Singh …. …. Petitioner Versus 1. The Principal Chief Commissioner of Income Tax, Bihar and Jharkhand. 2. Income Tax Officer, Ward-2 (1), 2 Bagmati Road, Northern Town, Jamshedpur …. ….Respondents --------- CORAM : HON’BLE MR. JUSTICE APARESH KUMAR SINGH HON’BLE MR. JUSTICE DEEPAK ROSHAN --------- For the Petitioner : Mr. Ajay Kumar Jhar, adv. Mr. Vijay Shankar Jha, Adv. Mr. Aman Raja, Adv. For the Respondents : Mr. R. N. Sahay, Sr. SC Mr. Anurag Vijay, Adv. --------- 09/29.03.2023 Heard learned counsel for the parties. 2. Petitioner has questioned the jurisdiction of respondent No.2 in initiating the proceeding under Section 148 of the Income Tax Act, 1961 vide notice dated 6.04.2022. However, at the same time petitioner has sought quashing of the notice dated 23.03.2022 (Annexure-1) under Section 148A(b) of the Income Tax Act introduced by Finance Act, 2021 on the plea that in the absence of any income chargeable to tax that has escaped assessment the notice itself is illegal. The petitioner has also sought quashing of the order passed under Section 148A (d) by respondent No.2 disposing of the objection by the petitioner (Annexure-3). 3. In short the petitioner’s case is that she is an individual without any source of income for the relevant assessment year 2015-16. Therefore, the notice under Section 148A(b) dated 23.3.2022 on the ground that the income of Rs.53 lacs was found to be chargeable to tax within the meaning of Section 147 of the Act for the relevant assessment year against the sale of immovable property is bad in law. 4. Learned counsel for the petitioner has also assailed the order passed under Section 148A(d) as being cryptic and devoid of any reason. Learned counsel submits that the assessing officer has not 2 conducted proper preliminary enquiry before issuing the notice under Section 148A(b) as such, he lacked jurisdiction. It is also submitted that after coming into force of the Faceless Scheme issuance of manual notice by the assessing officer under Section 148 of the Act is bad in law. Learned counsel for the petitioner has placed reliance upon the following decisions. (i) GKN Driveshaft (India) Ltd. Vs. ITO (2003) 259 ITR, para-3. (ii) Divya Capital One (P) Ltd. Vs. Assistant Commissioner of Income-tax (2022) 139 Taxmann. Com 461 (Delhi) para-7, 14 &17. (iii) Red Chilli International Sales Vs. Income Tax Officer (2023) 146 taxmann.com 224(SC) para-2. It is submitted that the initiation of proceeding under Section 148 of the Income Tax Act goes to the root of jurisdiction of the assessing officer and is bad in law. Petitioner would be subjected to unnecessary harassment if the jurisdictional issue is not decided at this stage in the writ proceeding. 5. Learned counsel for the respondent has interalia relied upon the contents of the counter affidavit and submitted that the petitioner was a joint owner of an immoveable property with her husband which they sold for a consideration of Rs.53 lacs without filing any returns. It is submitted that issue involved in this case is the capital gains earned by the petitioner. Reliance is placed upon Section 45 of the Income Tax Act, 1961. It is submitted that in case any profit or gain arises from the transfer of a capital assets effected in the previous year by sale as otherwise provided in the enumerated provisions of the Income Tax Act under Section 45 (1), the same would be chargeable to income tax under the head “capital gains” and shall be deemed to be the income of the previous year in which the transfer took place. Learned counsel for the respondent submits that the assessing officer upon receipt of the information relating to non-filing of return and explanation for capital gains flagged under the risk management system of the CBDT and pushed to the code of assessing officer issued the notice under Section 3 148A(b) upon the petitioner. The assessing officer has acted duly following all established rules and procedure in this regard under Section 148A of the Act and also disposed of the objection of the petitioner-noticee in terms of the Section 148A(d) by order dated 6.04.2022 (Annexure-3) by clearly recording that the reply furnished by the petitioner shows that the property was jointly owned with the husband but it was not clear as to how she cannot be liable to pay capital gains. 6. Based on the materials available on record, the A.O has reason to believe that income to the tune of Rs.53lacs has escaped assessment within the meaning of Section 147 of the I.T. Act. Therefore, it was a fit case for issuance of notice under Section 148 of the Income Tax Act, 1961 for the AY 2015-16. Such notice was issued on 6.04.2022. It is submitted that the petitioner is participating in the reassessment proceedings, no jurisdictional grounds are made out to interfere at the stage of writ proceeding. It is further submitted that the reassessment proceedings should be carried out under the Faceless Scheme. Therefore the decisions relied upon by the petitioner do not aid assistance to her case. We have considered the submission of the learned counsel for the parties and taken note of the pleading from record. At this stage the factual assertion on the part of the parties need not be gone into in details as they relate to the merit of the explanation of the petitioner which is to be responded by her to the statutory notice under Section 148 of the Act. Section 45(1) reads as under:- 45. Capital gains.-(1) Any profits or gains arising from the transfer of a capital asset effected in previous year shall, save as otherwise provided in be chargeable to income-tax under the head “Capital gains”, and shall be deemed to be the income of the previous year in which the transfer took place. It is not in dispute that the immovable property was jointly owned by the petitioner with her husband and was sold for a consideration of Rs.53 lacs in the year 2014-15. The petitioner did not file anyreturn of income as accordingly to her she is an individual 4 lady without any source of income during the relevant assessment year. Be that as it may the basis for issuance of the notice under Section 148A(b) upon the petitioner is the information received from the risk management system under CBDT and pushed to the assessing officer through ITBA system which flagged non-filing of return and liability to pay tax against the capital gains on the part of the petitioner. The petitioner has duly responded to the notice. Her reply has been considered and dealt with by the order passed under Section 148A(d) of the Act dated 6.4.2022 (Annexure-3) to the writ petition. The petitioner has not been able to make it clear as to how after sale of the immovable property jointly owned with her husband she is not liable to pay the capital gains tax. Whether the petitioner is liable to pay capital gains tax in lieu of sale of the property jointly owned with her husband is to be considered in the reassessment proceedings. However, we are satisfied that the rejection of the objection under Section 148A(d) by the Assessing Officer was not without any reasons. The reassessment proceeding are underway. Petitioner has an opportunity to explain as to why she is not liable to pay capital gains tax. Learned counsel for the respondent has clarified that the reassessment proceedings are to be held under the Faceless Scheme. 7. It is pertinent to note that as per the ratio of the decision in the case of Divya Capital One (P) Ltd,. the requirement of recording of ‘reasons to believe’ before initiating a proceeding under Section 147 of the Act stands fulfilled in the present case based on the information obtained from the risk management system through the ITBA by the assessing officer. The procedure prescribed under the amended Section 148A having been duly carried out by the assessing officer. We do not find any lack of jurisdiction on part of the A.O in issuing the notice under Section 148 of the Act upon the petitioner. Petitioner has also placed reliance upon the case of Red Chilli International Sales rendered by the Apex Court. A perusal of the para-2 of the said judgment shows that the Apex Court was of the 5 opinion that in the facts of the said case High Court ought to have examined whether the jurisdictional precondition for issuance of notice under Section 148 of the Income Tax Act, 1961 was satisfied or not and the writ petition should not have been dismissed on the ground of alternative remedy. 8. In the present case, as per the facts and circumstances discussed above, we are satisfied that the jurisdictional precondition has been satisfied by the assessing officer before issuing notice under Section 148 of the Act. As such, decision in the case of Red Chilli International Sales does not come to the aid of the petitioner. On the basis of the aforesaid discussions and the reasons recorded herein above, we are of the considered view that no grounds for interference are made out in the impugned notice/order under Section 148A(b) (Annexure-1) and under Section 148A(d) (Annexure-3) and the notice dated 06.04.2022 issued under Section 148 of the Act (Annexure-4) . Accordingly the writ petition is dismissed. (Aparesh Kumar Singh, J.) (Deepak Roshan, J.) Fahim/Amardeep/ "