SUNILKUMAR AGARWAL S/O. SRI PRAHALADRAY B AGARWAL V. THE INCOME TAX OFFICER

WP/103927/2023

AI Insights

The case involves two writ petitions filed by Sri Aditya Anil Agarwal and Sri Sunilkumar Agarwal against the Income Tax Officer and the Principal Commissioner of Income Tax, challenging the validity of notices and orders issued under sections 148A(b), 148A(d), 148, and 151 of the Income Tax Act for the assessment year 2019-20. The petitioners argued that the transactions in question, although recorded in 2019, were completed in 2013, well within the three-year limit for reopening assessments for amounts less than Rs. 50,00,000. The court examined the evidence presented, including sale and confirmation deeds, and found that the authorities had not provided sufficient material to justify the reopening of the assessments beyond the prescribed time limit.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 686052 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-09-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: RAVI S V; SHASHANK HEGDE
• Keywords: Assessment Year; Income Tax; Jurisdiction; Limitation; Notice; Quashed
• Section: 148; 139(4); 151; 148A(b); 148A(d); 149(1)(a); 226; 227

Judgement Text

" - 1 - NC: 2023:KHC-D:11323 WP No. 103929 of 2023 C/W WP No. 103927 of 2023 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 26TH DAY OF SEPTEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 103929 OF 2023 (T-IT) C/W WRIT PETITION NO. 103927 OF 2023 IN W.P.NO.103929/2023 BETWEEN: SRI ADITYA ANIL AGARWAL, S/O. LATE ANIL P. AGARWAL, AGED ABOUT 29 YEARS, H.NO. 28/31 AGARWAL KUNJ, SARVODAYA COLONY, GADAG-582103. PAN: AHYPA5521D. …PETITIONER (BY SRI RAVI SHANKAR S.V., ADV. & SRI SHASHANK S. HEGDE, ADV.) AND: 1. THE INCOME TAX OFFICER, WARD-1, AAYAKAR KARYALAYA, EAR HATALGERI, NAKA, GADAG-BETAGERI, GADAG-582101. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX, THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, HUBLI, C.R. BUILDING, NAVANAGAR, HUBBALLI-580025. …RESPONDENTS (BY SRI Y.V. RAVIRAJ, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE AN AD- INTERIM ORDER STAY THE OPERATION OF THE ORDER PASSED MOHANKUMAR B SHELAR Digitally signed by MOHANKUMAR B SHELAR - 2 - NC: 2023:KHC-D:11323 WP No. 103929 of 2023 C/W WP No. 103927 of 2023 UNDER SECTION 148A(B) OF THE ACT DATED 08/03/2023 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2022-23/1050505705(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A1 AND SUCH OTHER RELIEFS. IN W.P.NO.103927/2023 BETWEEN: SRI SUNILKUMAR AGARWAL, S/O. SRI PRAHALADRAY B. AGARWAL, AGED ABOUT 53 YEARS, H.NO. 28/31 AGARWAL KUNJ, SARVODAYA COLONY, GADAG-582103. PAN: ABXPA6991. …PETITIONER (BY SRI RAVI SHANKAR S.V., ADV. & SRI SHASHANK S. HEGDE, ADV.) AND: 1. THE INCOME TAX OFFICER, WARD-1, AAYAKAR KARYALAYA, EAR HATALGERI, NAKA, GADAG-BETAGERI, GADAG-582101. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX, THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, HUBLI, C.R. BUILDING, NAVANAGAR, HUBBALLI-580025, DHARWAD DISTRICT. …RESPONDENTS (BY SRI Y.V. RAVIRAJ, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE AN AD- INTERIM ORDER STAY THE OPERATION OF THE NOTICE ISSUED UNDER SECTION 148A(B) OF THE ACT DATED 08/03/2023 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2022-23/1050292986(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A1 AND SUCH OTHER RELIEFS. - 3 - NC: 2023:KHC-D:11323 WP No. 103929 of 2023 C/W WP No. 103927 of 2023 THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Captioned petitions are filed by the petitioners- assessees assailing the impugned orders issued under section 148A(b) of the Income Tax Act (for short \"the Act\") vide Annexure-A1, the orders passed under section 148A(d) of the Act vide Annexure-A2, the notices issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction orders issued under section 151 of the Act vide Annexure-A4 by the respondent-authorities. 2. The petitioner in W.P.No.103929/2023, who is an individual, earning income from salary, income from house property and other sources, claims that he has filed income tax returns under Section 139(4) of the Act declaring total income of Rs.2,08,000/- for the assessment year 2014-15. He further claims that he has also filed income tax returns declaring total income of Rs.6,80,120/- for the assessment year 2019-20. - 4 - NC: 2023:KHC-D:11323 WP No. 103929 of 2023 C/W WP No. 103927 of 2023 3. The petitioner in W.P.No.103927/2023, who is also an individual, earning income from salary, income from house property and other sources, claims that he has filed income tax returns under Section 139(4) of the Act declaring total income of Rs.3,49,480/- for the assessment year 2014- 15. He further claims that he has also filed income tax returns declaring total income of Rs.5,58,040/- for the assessment year 2019-20. 4. In these petitions, the demand notice issued by respondent No.1 under Section 148 (A)(d) of the Act is under challenge by the petitioners on the ground that the authorities would lose jurisdiction and no notice under Section 148 of the Act can be issued for relevant assessment year if three years have lapsed from the end of relevant assessment year unless the case falls under Clause-(b) to Section 149 of the Act. 5. It is the specific case of the petitioners that though the disputed incomes on sale transactions are of the year 2019, the payment in fact was made in 2013. This fact is substantiated by the petitioners-assessees by placing - 5 - NC: 2023:KHC-D:11323 WP No. 103929 of 2023 C/W WP No. 103927 of 2023 reliance on confirmation deeds as well as sale deeds, which are produced at Annexures-C1, C2 and C3. Annexure-C1 and C2 are confirmation deeds. 6. To counter the contents of sale deeds, which prima facie indicate that these disputed payments were made in 2013 itself, no material is placed by the respondent- Authority, which would warrant investigation. The payments in respect of which the authorities now intend to hold an enquiry and reopen the assessment is squarely hit by Section 149(1)(A) of the Act. It is also not in dispute that the disputed amount being less than Rs.50,00,000/-, the period of limitation prescribed is three years from the end of relevant assessment year. The contention of authorities that the relevant assessment year has to be taken from the date of execution of sale deeds, which is 2019, cannot be acceded to. If payments indicated in the sale deeds are made in the year 2013 itself, no proceedings can be initiated as there is a time limit for issuance of notice under Section 149(1) of the Act. In that view of the matter, the notice issued under section 148(A)(b) of the Act vide Annexure-A1, the order - 6 - NC: 2023:KHC-D:11323 WP No. 103929 of 2023 C/W WP No. 103927 of 2023 passed under section 148(d) of the Act vide Annexure-A2, the notice issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction order issued under section 151 of the Act vide Annexure-A4 deserve to be quashed. For the foregoing reasons, I proceed to pass the following: ORDER i) Both the writ petitions are allowed. ii) The impugned orders issued under section 148A(b) of the Income Tax Act (for short \"the Act\") vide Annexure-A1, the orders passed under section 148A(d) of the Act vide Annexure-A2, the notices issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction orders issued under section 151 of the Act vide Annexure-A4 by the respondent-authorities in both the petitions are hereby quashed. iii) In view of disposal of the petition, pending interlocutory applications, if any, do not survive for consideration and are disposed of accordingly. Sd/- JUDGE YAN, List No.: 1 Sl No.: 10 "