BULA SINGH, S/O SHRI MALA SINGH vs. INCOME TAX OFFICER

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CW/17872/2019HC RajasthanRJHC02093750201916 May 2024Author: PANKAJ BHANDARI,SHUBHA MEHTA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the dispute centered on whether the property sold was agricultural land or a capital asset. If it was agricultural land, no capital gains tax was payable; if it was a capital asset, tax was payable. The Court noted that a notice under Section 133(6) was issued to the petitioner, to which no reply was given. Subsequently, upon issuance of the Section 148 notice, the petitioner filed objections, which were properly dealt with by the Assessing Officer. The Court found that the Department had reasons to believe income had escaped assessment and had proceeded in accordance with the law by issuing notices under Section 133(6) and then Section 148. Therefore, no error was found in the order disposing of the objections or in the issuance of the Section 148 notice. The Court dismissed the writ petition, but clarified that the petitioner could raise all objections before the Assessing Authority, and the observations made would not impede the petitioner.

What were the facts?

The petitioner, Bula Singh (since deceased, represented by his legal heirs), filed a writ petition challenging notices issued under Section 148 and Section 142(1) of the Income Tax Act, 1961, and an order disposing of his objections. The petitioner, an agriculturist, had filed his return which was accepted. Subsequently, the Income Tax Department issued a notice indicating that a sale deed pertained to a capital asset and capital gains tax had not been paid. The petitioner contended that since his assessment was already done, a fresh notice was unwarranted, and he had not received a notice under Section 133(6). The Revenue argued that they had reason to believe income had escaped assessment, a notice under Section 133(6) was issued, and the petitioner's objections to the Section 148 notice were dealt with.

What were the issues?

1. Whether the notice under Section 148 dated 22.03.2019 and the notice under Section 142(1) dated 19.08.2019 are illegal, null and void, and arbitrary, turning on the provisions of Section 148 and Section 142(1) of the Income Tax Act, 1961. 2. Whether the order dated 26/09/2019 disposing of the petitioner's objections against the Section 148 notice is liable to be quashed and set aside, concerning the procedural fairness in reassessment proceedings. Assessee's Contentions: - The petitioner is an agriculturist and his return was accepted. - There was no reason for issuing a fresh notice as assessment was already done. - No notice under Section 133(6) was received. - The proceedings are barred by law. Revenue's Contentions: - The Department had reason to believe income escaped assessment. - A notice under Section 133(6) was issued, but no reply was received. - Objections to the Section 148 notice were filed and disposed of. - The land sold was a capital asset as it was within three Kms of the radius of Village Udaipur. - Reliance was placed on Assistant Commissioner of Income Tax vs Rajesh Jhaveri Stock Brokers Pvt. Ltd. and GKN Driveshafts(India) Ltd. Vs Income Tax Officer and Ors.

Which sections of the Income-tax Act were involved?

Section 148,Section 142(1),Section 133(6),Section 147,Section 143(3),Section 143(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 17872/2019 Bula Singh, S/o Shri Mala Singh, H. No.72, Village Udaipur, Tehsil Tijara, District Alwar(since deceased-17.7.2023), through Legal Heirs:- 1/1 Gujar Singh, son of Late Shri Bula Singh, r/o H. No.72, Village Udaipur, Tehsil Tijara, District Alwar, Rajasthan 301018 1/2 Surendra Kaur, Son of Late Shri Bula Singh, resident of 293, Rewari Daruhera, Haryana 1/3 Harjendra Kaur, Daughter of Late Shri Bula Singh, resident of Badarpur, South Delhi 1/4 Kartaro Bai Daughter of Late Shri Bula Singh, resident of Village Bubkahera Tehsil Tijara, District Alwar 1/5 Bira Bai, daughter of Late Shri Bula Singh, resident of 95, Khanda Singh ki Dhani, Bubkahera Tehsil Tijara, District Alwar 1/6 Jito Bai, W/o Late Shri Bula Singh, resident of H.No.72, Village Udaipur, Tehsil Tijara, District Alwar, Rajasthan 301018 ----Petitioner Versus 1. Income Tax Officer, Ward- Bhiwadi 2. Principal Commissioner Of Income Tax, Alwar 3. Joint Commissioner Of Income Tax, Range-II, Alwar ----Respondents For Petitioner(s) : Mr. Anant Kasliwal, Sr. Adv. with Ms. Charu Pareek For Respondent(s) : Mr. Anuroop Singhi with Mr. N.S. Bhati & Mr. Aditya Khandelwal HON'BLE MR. JUSTICE PANKAJ BHANDARI HON'BLE MRS. JUSTICE SHUBHA MEHTA

Order 16/05/2024

1.

The matter comes upon application(2/2024) for taking legal heirs of the petitioner on record.

(2 of 5) [CW-17872/2019]

2.

For the grounds mentioned in the application(2/2024), the same is allowed.

3.

Amended cause title has already been filed and the same is taken on record.

4.

With the consent of parties, the matter is taken up for final hearing today.

5.

Petitioner has preferred this civil writ petition inter-alia claiming the following reliefs:- “(a) the notice under Section 148 dated 22.03.2019(Annexure-6), the Notice under Section 142(1) dated 19.08.2019(Annexure-9) be declared as being illegal, null and void and void- ab-initio and per se arbitrary; (b) order dated 26/09/2019 passed by respondent No.1 for disposing off the objections filed by the petitioner against notice under Section 148 be quashed and set aside; (c) the respondents be restrained from carrying out any further proceedings in consequence of the Notice under Section 148(Annexure-6), during the pendency of this writ petition; (d) costs of the Writ Petition may kindly be awarded in favour of the petitioner.”

6.

It is contended by counsel for the petitioner that petitioner is an agriculturist who had filed his return and the return was accepted, thereafter, a notice was issued to him wherein it was mentioned that sale deed was pertaining to a capital asset and that the petitioner has not paid capital gain tax. A notice was issued to submit the reply. It is also contended that since the assessment was done, there was no reason for issuing a fresh notice. It is further contended that no notice under Section 133(6) of Income Tax Act(hereinafter referred as ‘Act’) was received by the petitioner and that the proceedings are barred by law.

(3 of 5) [CW-17872/2019]

7.

Brokers Pvt. Ltd.; AIR 2007 Supreme Court 2163, the relevant part of which reads as under:- “16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to

(4 of 5) [CW-17872/2019] administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO 1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Ltd.. [1996 (217) ITR 597 (SC)] Raymond Woollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)].

18.

So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued.”

9.

Reliance has been placed upon GKN Driveshafts(India) Ltd. Vs Income Tax Officer and Ors.; 2003(1) SCC 72. 10. We have considered the contentions.

11.

It is true that petitioner has filed his income tax return. The only dispute is that as to whether property is an agricultural land or a capital asset. If the property is treated as agricultural land, the petitioner would not be liable to pay tax on capital gain, however, if the property is a capital asset, capital gain tax is payable. A notice was issued under Section 133(6) of the Act to the petitioner, to which no reply was given by him. Thereafter, on issuance of notice under Section 148 of the Act, petitioner has

(5 of 5) [CW-17872/2019] furnished an objection, which was properly dealt with by the Officer.

12.

In view of the fact that the Department has reasons to believe that income has escaped assessment and has proceeded in accordance with law and a notice was issued under Section 133(6) of the Act, thereafter, notice was issued under Section 148 of the Act, we do not find any error in the impugned order vide which objections raised by the assessee against the issuance of notice under Section 148 of the Act was disposed of and there is no error in issuance of notice under Section 148 of the Act. Consequently, we do not find any force in the present writ petition and the same is accordingly, dismissed.

13.

Pending applications, if any, stands disposed.

14.

However, petitioner can raise all objections before the Assessing Authority and the observations made herein would not come in way of petitioner. (SHUBHA MEHTA),J (PANKAJ BHANDARI),J HEENA/31

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