Vahida P. I V. Union of India and The Income Tax Officer, Ward 2(1)

WP(C)/22190/2023

AI Insights

The case involves Vahida P. I, the petitioner, who challenged the notices and orders issued by the Income Tax Officer regarding her failure to file an income tax return for the assessment year 2016-2017 after selling property. The petitioner argued that she was not given sufficient time to respond to the initial notice (Ext P4) because she did not have copies of the sale deeds (Exts P2 and P3) at the time of the notice. After obtaining these documents, she requested an extension to respond, which was granted but still insufficient, leading to her inability to comply within the new deadline. The court considered the recent Supreme Court judgment in Union of India vs. Ashish Agarwal, which clarified the legal position on the relevant sections of the Income Tax Act, and found in favor of the petitioner, quashing the subsequent orders and directing a re-evaluation of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 802004 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-07-2023
• Assessment Year: misc
• Other Referred Cases: Union of India and others vs. Ashish Agarwal [(2023)1 SCC 617]
• Laws Referred To: Income Tax Act, 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: VAISAKHI BABU; M A BABU; P U KUMAR ARYA; T M AJWIN; P KARUKAPADATH; WAZIM P LAKSHMI AYSHA; E M KAISE
• Keywords: Income escape; Income Tax Return; Property sale; Show cause notice; Time barred demand
• Section: 148; 148A(b); 148A(d)

Judgement Text

"1 WP(C) No.22190 of 2023 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS TUESDAY, THE 11TH DAY OF JULY 2023 / 20TH ASHADHA, 1945 WP(C) NO. 22190 OF 2023 PETITIONER/S: VAHIDA P. I,AGED 43 YEARS W/O. MUHAMMED SHAMEER P. K., PADIYATH PUTHENKATTIL, ERIYAD VILLAGE, KODUNGALLOOR TALUK, PIN - 680664 BY ADVS. VAISAKHI V. BABU KARUKAPADATH M.A.VAHEEDA BABU P.U.VINOD KUMAR ARYA RAGHUNATH T.M.MUHAMMED MUSTHAQ AJWIN P LALSON KARUKAPADATH WAZIM BABU P.LAKSHMI AYSHA E.M. SHIFANA KAISE RESPONDENT/S: 1 UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN - 110004 2 THE INCOME TAX OFFICER, WARD 2(1), AAYAKAR BHAVAN, INCOME TAX OFFICE, SHAKTHANTHAPURAM NAGAR, THRISSUR, PIN - 680001 Sri Jose Joseph THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 WP(C) No.22190 of 2023 C.S DIAS,J. --------------------------- WP(C) No.22190 of 2023 ----------------------------- Dated this the 11th day of July, 2023 . JUDGMENT The writ petition is filed assailing Exts P4 notice, P6 order and P7 notice issued by the second respondent. 2. The brief relevant facts for the determination of the writ petition are; (i) The petitioner is a home maker. She along with her four sisters had purchased a property covered by Ext P1 sale deed. (ii) Later, the petitioner and the other co-owners sold the above property by Exts P2 and P3 sale deeds. But, the petitioner failed to file her return of income for the assessment year 2016-2017. 3 WP(C) No.22190 of 2023 (iii) Much later, on 30.1.2023, the second respondent issued Ext P4 notice under Sec.148A(b) of the Income Tax Act, 1962 (in short, ‘Act’) to the petitioner alleging that her income has escaped for the assessment year 2016-2017 and calling her to show cause why action should not be taken against him under Sec.148 of the Act. (iv) Unfortunately, at the time of receipt of Ext P4 notice, the petitioner did not have the copies of Exts P2 and P3 sale deeds. Hence, she made an application before the Sub-Registrar, Perumbavoor, to obtain the certified copies of the above deeds. (v) Immediately thereafter, the petitioner submitted a request to the second respondent, for enlargement of time to submit her reply to Ext P4 notice. The petitioner 4 WP(C) No.22190 of 2023 was served with Ext P5 reply, granting her time till 27.2.2023. (vi) As the petitioner did not receive the copies of Exts P2 and P3 deeds, she was unable to submit the reply within the enlarged time period. The time granted by the second respondent was inadequate. (vii) To the shock of the petitioner, the second respondent passed Ext P6 order under Sec.148A (d) of the Act, finding that the petitioner had sold the property covered by Exts P2 and P3 deeds for Rs.2,44,20,000/- and earned an income of Rs.4,50,000/-, and issued Ext P7 notice calling upon the petitioner to file her return of income before 21.4.2023. (viii) The petitioner has already submitted Ext P8 objection to Ext P4 notice. The petitioner apprehends 5 WP(C) No.22190 of 2023 that the same will not be considered. The entire proceedings leading to Exts P4, P6 and P7 are illegal and arbitrary and are liable to be quashed. In an identical matter, this Court has passed Ext P9 interim order. Hence, the writ petition. 3. Heard; Sri.Babu Karukapadath, the learned counsel appearing for the petitioner and Sri.Jose Joseph, the learned Standing Counsel appearing for the respondents. 4. Sri.Babu Karukapadath argued that the time period granted by the respondents to submit a response to Ext P4 show cause notice was highly inadequate. Therefore, the petitioner had sought for enlargement of time till such time she received copies of Exts P2 and P3 because she was not fully conversant with the 6 WP(C) No.22190 of 2023 consideration and transaction. But, the second respondent granted her not even a week’s time to submit her response. The demand made by the respondents is time barred. Moreover, the legal position pertaining to the amended Sections 147 to 151 of the Act was only at its fluid stage at the time of issuance of Ext P4 show cause notice. It is only recently that the Hon’ble Supreme Court in Union of India and others vs. Ashish Agarwal [(2023)1 SCC 617] has interpreted and crystalised the law on Sections 147 to 151 of the Act. The principles in the said judgment renders Ext P4 unsustainable in law. The petitioner has already submitted Ext P8 objection, after receiving the copies of Exts P2 and P3 sale deeds. The petitioner may be given a fair and reasonable opportunity of being heard before 7 WP(C) No.22190 of 2023 Ext P4 notice is finalised. Hence, Exts P6 and P7 may be quashed. 5. Sri.Jose Joseph resisted the above arguments and contended that the petitioner was given adequate opportunity to submit her reply to Ext P4 notice. The reasons stated by the petitioner for enlargement of time are flimsy and naive. It is hard to believe that the petitioner does not possess the copies of Exts P2 and P3 deeds. The petitioner is only trying to protract the inevitable. The second respondent has rightly arrived at the conclusion that the petitioner had earned an income of Rs.4,50,000/-. This Court may not interfere with Exts P4, P6 and P7. The writ petition is meritless and may be dismissed. 8 WP(C) No.22190 of 2023 6. The second respondent had sent Ext P4 notice to the petitioner on 30.1.2023, directing her to show cause why she had not filed the return of income for the assessment year 2016-17, despite having the financial transaction narrated in Ext P4 notice. The petitioner was called upon to submit her reply on or before 10.2.2023. It is discernible from Ext P5 letter that, the petitioner had requested for further time to submit a reply, which was allowed by the second respondent, by granting the petitioner time till 27.2.2023 to submit a reply to Ext P4. 7. The petitioner’s assertion is that she was precluded from submitting an effective reply to Ext P4 notice because she did not have the certified copies of Exts P2 and P3 deeds. However, before she could 9 WP(C) No.22190 of 2023 submit her reply, the second respondent has passed Ext P6 order under Sec.148A(d) of the Act and held that the matter is a fit case to issue a notice under Sec.148 of the Act. 7. Notwithstanding the passing of Ext P6 order and issuance of P7 notice, the petitioner has submitted Ext P8 objection on 28.6.2023, ie., subsequent to Exts P6 and P7, inter alia, contending that the demand put forth by the second respondent is hopelessly time- barred, especially in the light of the law laid down in Ashish Agarwal (supra). The petitioner is certain that she is entitled to the benefit of the said judgment and the proceedings pursuant to Ext P4 will not lie. 9. On an overall appreciation of the pleadings and materials on record and rival submission made across 10 WP(C) No.22190 of 2023 the Bar, I am of the definite view that the petitioner has to be granted a fair and reasonable opportunity to contest Ext P4 on its merits, rather than on default. The explanation put forth by the petitioner, that she was unable to submit her reply for the want of the copies of Exts P2 and P3 deeds is found believable and is hence accepted. Thus, to provide the petitioner a fair and reasonable opportunity to contest Ext P4 notice on its merits, I am of the view that Exts P6 and P7 have to be quashed and the second respondent is to be directed to re-consider Ext P4 show cause notice, after adverting to Ext P8 objection submitted by the petitioner and granting her an adequate opportunity of being heard, which in turn will do complete justice to both sides and cause no serious prejudice to no one. 11 WP(C) No.22190 of 2023 Resultantly, in exercise of the plenary powers of this Court under Article 226 of the Constitution of India, I dispose of the writ petition in the following manner: (i) Exts P6 order and P7 letter are quashed. (ii) The second respondent is directed to re-consider Ext P4 show cause notice, after adverting to Ext P8 objection, in accordance with law, after affording the petitioner an opportunity of being heard. (iii) It is made clear that this Court has not expressed anything on the merits of Ext P4 notice or Ext P8 objection submitted by the petitioner. SD/- sks/15.7.2023 C.S.DIAS, JUDGE 12 WP(C) No.22190 of 2023 APPENDIX OF WP(C) 22190/2023 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE SALE DEED NO.1452 OF 2007 DATED 17/02/2007 REGISTERED BEFORE THE SUB REGISTRAR, PERUMBAVOOR BY WHICH THE PETITIONER ALONG WITH HER FOUR SISTERS (JOINT OWNERS) PURCHASED THE PROPERTY IN QUESTION Exhibit P2 A TRUE COPY OF THE SALE DEED NO.4292/1/2015 DATED 03/10/2015 BY WHICH AN EXTENT OF 38.10 ARES WAS SOLD BY THE PETITIONER AND 4 JOINT OWNERS, FOR A CONSIDERATION OF RS.1,15,00,000/- Exhibit P3 A TRUE COPY OF THE SALE DEED NO.4293/1/2015 DATED 03/10/2015 BY WHICH AN EXTENT OF 29.35 ARES WAS SOLD BY THE PETITIONER AND 4 JOINT OWNERS, FOR A CONSIDERATION OF RS.88,50,000/- Exhibit P4 A TRUE COPY OF THE NOTICE DATED 30/01/2023 UNDER SECTION 148A(B) OF THE INCOME TAX ACT, 1962 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P5 A TRUE COPY OF THE INTIMATION DATED 21/02/2023 RECEIVED FROM THE 2ND RESPONDENT, BASED ON THE REQUEST OF THE PETITIONER, INSTRUCTING HER TO SUBMIT REPLY BEFORE 27/02/2023 Exhibit P6 A TRUE COPY OF THE ORDER ISSUED UNDER SECTION 148A(D) OF THE ACT ON 21/03/2023 Exhibit P7 A TRUE COPY OF THE NOTICE DATED 21/03/2023 ISSUED UNDER SECTION 148 OF THE ACT, CALLING FOR FILING A RETURN OF INCOME IN THE PRESCRIBED FORM FOR THE ASSESSMENT YEAR 2016-17 WITHIN 30 DAYS Exhibit P8 A TRUE COPY OF THE OBJECTION DATED 28/06/2023 SUBMITTED BY THE PETITIONER BEFORE 2ND RESPONDENT BY SPEED POST (WITHOUT ANNEXURES) Exhibit P9 A TRUE COPY OF THE INTERIM ORDER DATED 19/06/2023 IN WP(C) NO.19881/2023 OF THIS HON'BLE COURT "