AJAY SURENDRABHAI PATEL vs. INCOME TAX OFFICER WARD 2(1)(1)

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SCA/18430/2021HC GujaratGJHC24065950202114 December 2021Bench: HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI,HONOURABLE MS. JUSTICE NISHA M. THAKORE4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the merits of the case. The learned advocate for the petitioner stated that the petition was not pressed. Consequently, the petition was disposed of as not pressed. The Court explicitly noted that it had not chosen to enter into the merits of the case. The petitioner was granted liberty to take recourse to legal remedies available under the law. No specific finding was given on the validity of the notice, reasons, or objection order, nor on the compliance with Sections 148(2) and 151.

What were the facts?

The petitioner, Ajay Surendrabhai Patel, filed a Special Civil Application before the Gujarat High Court challenging an order passed by the Income Tax Officer, Ward 2(1)(1) under Section 147 of the Income Tax Act, 1961, for Assessment Year 2017-2018. The petitioner sought to declare the notice under Section 148 dated March 31, 2021, the reasons recorded dated April 20, 2021, and the objection order dated November 23, 2021, as invalid. The reasons for reopening indicated that the assessee had purchased a unit in a KBG Project of NODPL and made an on-money payment of Rs. 56,52,000/-, which was not commensurate with the declared income, suggesting investment from undisclosed sources. The petitioner had raised objections to these reasons. The High Court had previously called for the original case record.

What were the issues?

1. Whether the notice under Section 148 dated March 31, 2021, the reasons recorded dated April 20, 2021, and the objection order dated November 23, 2021, are invalid and bad in law, considering the provisions of Section 147 of the Income Tax Act, 1961? 2. Whether the proceedings are null and void due to non-compliance with the provisions of Section 148(2) and Section 151 of the Income Tax Act, 1961? The Assessee contended that the Assessing Officer was required to provide reasons recorded and dispose of objections in writing, and to link documents and evidence to the petitioner when rejecting objections. The Assessee relied on the decision of the Apex Court in GKN Driveshafts (India) Ltd. vs. D.C.I.T. The Revenue's specific contentions were not explicitly recorded in the provided text, beyond the reasons for reopening.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148(2),Section 151,Section 142(1)

AI-generated summary — verify with the full judgment below

C/SCA/18430/2021 ORDER DATED: 14/12/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 18430 of 2021 ========================================================== AJAY SURENDRABHAI PATEL Versus INCOME TAX OFFICER WARD 2(1)(1) ========================================================== Appearance: MR KETAN H SHAH(2705) for the Petitioner(s) No. 1 MR. AMAN K SHAH(9992) for the Petitioner(s) No. 1 LD.SR.ADV.MR.M.B.BHATT for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 14/12/2021

ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. This Court on 07.12.2021 by passing the following order had called for the original case record by requesting learned senior advocate, Mr.Manish Bhatt. “1. The petitioner is before this Court under Article 226 of the Constitution of India challenging the order passed by the respondent under Section 147 of the Income Tax Act, 1961 dated 31.03.2021 for the Assessment Year 2017-2018 with the following prayers: “7… (a) declare that the notice u/s 148 dated 31.03.2021, Annexure-’A’ and the reasons recorded dated Page 1 of 4

C/SCA/18430/2021 ORDER DATED: 14/12/2021 20.04.2021 Annexure-’C’ and the objection order dated 23.11.2021 Annexure-’I’ as invalid and bad in law on facts and also on law. (b) That without prejudice the proceedings is null and void since there is no such compliance made to the provision of Section 148 (2) and also Section 151. (c) pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice under Section 148 dated 31.03.2021 Annexure- ‘A’, reasons recorded dated 20.04.2021 Annexure - ‘C’, notice under Section 142(1) dated 17.11.2021 Annexure-’F’ and the objection order dated 23.11.2021 Annexure-’I’. (d) any other and further relief deemed just and proper be granted in the interest of justice; (e) to provide for the cost of this petition.” 2. It appears that the notice under Section 143(2) read with Section 147 of the Income Tax Act, 1961 dated 20.04.2021 provides the reasons recorded for reopening, which are as follow: “As per the information received from the credible sources and preliminary investigation clearly reveal that Page 2 of 4

C/SCA/18430/2021 ORDER DATED: 14/12/2021 the assessee has purchased a Unit/Villa in KBG Project of NODPL and assessee has made payment of Rs.56,52,000/-as On-Money. Since the Income as declared in ITR does not commensurate with the value of transaction, it is clear that the investment has been made from undisclosed sources. Failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment, the income of the assessee has escaped assessment to the tune of Rs.56,52,000/- for the AY 2017-2018 within the meaning of Section 147 of the Income-tax Act, 1961.” This has been replied to by the petitioner raising the objections against these reasons on 29.04.2021 along the line of the decision of the Apex Court rendered in case of GKN Driveshafts (India) Ltd. vs. D.C.I.T., reported in (2003) 259 ITR 19 (SC). 3. It is urged that the Assessing Officer is required to provide the reasons recorded and disposed of objection in writing, if any raised by the Assessee petitioner. He has also requested for the documents and evidence is to link with the petitioner himself while rejecting the objections on 23.11.2021. 3. Before we proceed further, we would like to examine the original case records. We have requested the office of the learned senior advocate, Mr.M.R.Bhatt to call for the papers and assist the cause. Page 3 of 4

C/SCA/18430/2021 ORDER DATED: 14/12/2021 4. Let the matter appear on 10.12.2021.” The papers have been brought before this Court pursuant to the said order and we have had an occasion to peruse the same. 2. At this stage, learned advocate, Mr.Ketan Shah does not press for this petition. 3. Present petition stands disposed of as not pressed. The Court has not chosen to enter into the merits of the case. The petitioner shall be at liberty to take legal recourse available for him under the law. (SONIA GOKANI, J) (NISHA M. THAKORE,J) M.M.MIRZA Page 4 of 4

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