CHUNIBHAI HARIBHAI GAJERA vs. PRINCIPAL COMMISSIONER OF INCOME TAX 1

PDF · subscribers
SCA/5251/2022HC GujaratGJHC24015467202228 March 2022Bench: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR,HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI6 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court, while hearing the Special Civil Application, acknowledged that the Principal Commissioner of Income Tax had partially accepted the assessee's plea by reducing the demand from 20% to 10% of the total demand. The Court found no reason to interfere with this finding. However, regarding the second prayer for early disposal of the appeal, the Court found it to be meritorious. The Court noted that the assessee had pleaded before both the Assessing Authority and the Appellate Authority that their case was similar to another assessee who had received a similar benefit. Therefore, the appellate authority would need to examine this aspect on merits while adjudicating the appeal. The Court directed the 3rd respondent-appellate authority to hear, adjudicate, and dispose of the appeal expeditiously, at any rate, within three months from the date of the order. The petitioner was permitted direct service, and the Additional Solicitor General was directed to forward a copy of the order to the jurisdictional appellate authority for compliance.

What were the facts?

The assessee, Chunibhai Haribhai Gajera, filed his return of income for Assessment Year 2017-18 on 27.2.2018, declaring an income of Rs.2,83,40,520/-. The return was selected for scrutiny. During assessment, the Assessing Officer (AO) issued a show cause notice regarding the source of capital introduction, which the assessee claimed was a gift of Rs.10,93,00,000/- from Shri Girdharbhai Gajera. The AO, not accepting this as a gift, treated it as a cash credit under Section 68 of the Income Tax Act, 1961, and determined the assessment at Rs.13,76,40,520/-. The assessee appealed this order to the CIT(A) and also sought a stay. The AO directed payment of 20% of the demand. The assessee then applied for a stay of the entire demand before the Principal Commissioner of Income Tax (PCIT). Subsequently, an attachment notice was issued for recovery of the demand. The assessee filed a Special Civil Application before the High Court.

What were the issues?

1. Whether the High Court should grant a complete stay of the demand raised by the revenue, considering the assessee's contention that the gift received was through banking channels and that similar benefits were extended to other similarly placed assessees, and that the assessee has a strong case on merits before the appellate authority. 2. Whether the appellate authority should be directed to dispose of the appeal expeditiously, given that the attachment order would jeopardize the assessee's business. Assessee's arguments: The assessee argued that the gift was received through proper banking channels and should be accepted as a reasonable explanation. They contended that they have a good case on merits before the appellate authority and that similar benefits have been extended to other assessees in comparable situations. The assessee also argued that the attachment order would jeopardize their business and therefore sought a complete stay of the demand or, alternatively, an early disposal of the appeal. Revenue's arguments: The revenue opposed the prayer for a complete stay, contending that the order passed by the Principal Commissioner of Income Tax was in consonance with the facts of the case.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 156,Section 226(3),Section 246A

AI-generated summary — verify with the full judgment below

C/SCA/5251/2022 ORDER DATED: 28/03/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 5251 of 2022 ========================================================== CHUNIBHAI HARIBHAI GAJERA Versus PRINCIPAL COMMISSIONER OF INCOME TAX 1 ========================================================== Appearance: MR MANISH J SHAH(1320) for the Petitioner(s) No. 1 MR DEVANG VYAS, ADDITIONAL SOLICITOR GENERAL OF INDIA for the Respondent(s) No. 1,2,3 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

Date : 28/03/2022

ORAL ORDER (PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR) 1. Though the matter is listed for admission, by consent of learned advocates appearing for the parties, it is taken it for final disposal since this Special Civil Application can be disposed of at this stage as it lies in a narrow compass in the light of fair submission made by learned counsel appearing for petitioner. 2.

We have heard Mr. Manish J. Shah, learned counsel appearing for the petitioner and Mr. Devang Vyas, learned Additional Solicitor General of India, who has accepted notice Page 1 of 6

C/SCA/5251/2022 ORDER DATED: 28/03/2022 on behalf of respondents 1 to 3 and waived service of notice on them. 3.

Petitioner filed his return of income on 27.2.2018 for the Assessment Year 2017-18 declaring a total income of Rs.2,83,40,520/-. Return of income filed by the petitioner was selected for scrutiny assessment by issuing notice under Section No.143(2) of The Income Tax Act, 1961 (hereinafter referred to as ‘IT Act’ for short) with the flagged parameters of ‘increase in capital and details of assets and liabilities’. During the course of assessment proceedings, show cause notice came to be issued to the petitioner/assessee for explaining the source of capital introduction, which is claimed to have been sourced through receipt of gift of Rs.10,93,00,000/- from Shri Girdharbhai Gajera via proper channel. Not accepting the version putforth by the petitioner/assessee whereunder it was contended that it was a gift, the Assessing Officer vide order dated 16.12.2019 passed an assessment order under Section 143(3) of IT Act by holding said gift as a cash credit under Section 68 of the IT Act and determined the assessment at Rs.13,76,40,520/- as against the declared income of Rs.2,83,40,520/- and consequently, issued demand notice under Section 156 of the IT Act. Page 2 of 6

C/SCA/5251/2022 ORDER DATED: 28/03/2022 4.

Assessee being aggrieved by said order of assessment filed an appeal under Section 246A of IT Act before Commissioner of Income Tax (Appeals)-2, Surat. Alongside filing an appeal, an application for stay was also filed before the 2nd respondent namely, the Assessing Officer. However, 2nd respondent passed an order directing the assessee to pay 20% of the demand, on the ground that assessment order came to be passed after considering the information furnished by the assessee. Being aggrieved by the same, petitioner/assessee preferred an application for stay of entire demand on 25.1.2020 before 1st respondent against aforesaid order of Assessing Officer and urged the demand of Rs.11,87,82,252/- raised under the demand notice under Section 156 of the IT Act be stayed. In the meanwhile, petitioner/assessee is said to have received an attachment notice issued under Section 226(3) of IT Act by the Assessing Officer for recovery of demand as made in the demand notice on 15.2.2022. 5.

Petitioner/asseee contends that he was not aware of any order having been passed by 1st respondent much less on 20.2.2020 and he came to know only after going through the Page 3 of 6

C/SCA/5251/2022 ORDER DATED: 28/03/2022 income tax portal upon receiving the attachment order that an order came to be passed on 20.2.2020 directing the petitioner to pay 10% of the outstanding amount till 10.3.2020 and on making payment of that demand, recovery has been stayed upto 31.3.2020 or decision of high pitched committee, whichever was earlier. It is also stated that even the application for stay made before the 1st respondent is also pending. Hence, seeking for complete stay of the demand, petitioner is contending that under similar circumstances, similar benefit has been extended to similarly placed assessee and the amount received through bank channel by way of gift having been accepted as a reasonable explanation, same benefit ought to be extended to the petitioner as petitioner is having a good case on merits before the appellate authority. Hence, learned counsel appearing for petitioner has reiterated grounds urged in the petition and has prayed for entire demand being stayed. 6.

Per contra, Mr. Devang Vyas, learned Additional Solicitor General of India would oppose said prayer, by contending that order passed by the Principal Commissioner of Income Tax is in consonance with the facts obtained in the Page 4 of 6

C/SCA/5251/2022 ORDER DATED: 28/03/2022 present case and has prayed for rejection of the petition. 7.

Mr. Manish Shah, learned counsel appearing for the petitioner would contend by way of alternate submission that in the event this Court is not agreeable to grant an absolute stay of the demand as prayed for, atleast the appellate authority may be directed to dispose of the appeal within a time frame since the entire business of the petitioner would get jeopardised by virtue of the order of attachment. Hence, he prays for suitable directions being issued to the appellate authority. 8.

Having heard the learned advocates appearing for the parties and on perusal of the order passed by the 1st respondent, we are of the considered view that first respondent having taken into consideration the order passed by the Assessing Officer and explanation offered by the petitioner with regard to unexplained investment has partially accepted the plea of the assessee and as such, reduced the demand from 20% as determined by the Assessing Officer to 10% of the total demand. Said finding recorded by 1st respondent would not call for our interference. However, insofar as 2nd prayer is Page 5 of 6

C/SCA/5251/2022 ORDER DATED: 28/03/2022 concerned namely, for early disposal of the appeal, we are of the considered view that it merits acceptance since petitioner has pleaded both before the Assessing Authority as well as before the Appellate Authority that present assessee stands on the same footing of an assessee to whom the benefit has been extended and as such, appellate authority will have to examine the petitioner’s case on merits namely, the appellate authority would be required to examine this aspect also while adjudicating the appeal expeditiously and as such, we direct the 3rd respondent-appellate authority to hear, adjudicate and dispose of the appeal filed by e-filing Acknowledgement No.291721151150120 (date of filing 15.1.2020) filed against the assessment order dated 16.12.2019 (for the Assessment Year 2017-18) expeditiously and at any rate within an outer limit of three months from today. Petitioner is permitted direct service. Learned Additional Solicitor General of India, who is on advance notice, shall forward copy of this order to the jurisdictional appellate authority for compliance. (ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) RADHAKRISHNAN K.V. Page 6 of 6

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →