MOHAMED NAZIR KUNJI MOIDEEN, vs. UNION OF INDIA,

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 19TH DAY OF OCTOBER 2023 / 27TH ASWINA, 1945 WP(C) NO. 22117 OF 2023 PETITIONER/S: MOHAMED NAZIR KUNJI MOIDEEN, AGED 64 YEARS S/O. LATE KUNJI MOIDEEN, 1 METRO MEDICALS, KBEES COMPLEX, KODUNGALLUR, THRISSUR., 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 INCOME TAX OFFICER (INTERNATIONAL TAXATION), CENTRAL REVENUE BUILDING, IS PRESS ROAD, KOCHI-682018., PIN - 682018 3 DISPUTE RESOLUTION PANEL-2, INCOME TAX DEPARTMENT, 4TH FLOOR, KENDRIYA SADAN, SANTHOSAPURAM, 2ND BLOCK, KORAMANGALA, BENGALURU, KARNATAKA, PIN - 560 034., PIN - 560034 ADV.JOSE JOSEPH -SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) No.22117of 2023 2 JUDGMENT Dated this the 19th day of October, 2023 1. The present writ petition has been filed by the petitioner challenging Ext.P12 notice and Ext.P16 draft assessment order passed under Section 144C(1) of the Income Tax Act (in short ‘the Act’). 2. The petitioner in his return of income filed under Section 139(1) claimed exemption from payment of capital gain tax on proceeds of sale of the properties. The petitioner allegedly bought a residential property along with his wife. The return of income was accepted and Ext.P11 final assessment order dated 27.12.2017 was passed under Section 143 for the assessment year 2015-16. 3. The assessment order dated 27.12.2017 sought to be reopened under Section 147 of the Income Tax Act. The petitioner was issued a notice under Section 148 of the Income Tax Act on 22.10.2021. In response to the said notice under Section 148, the petitioner had filed return of his

WP(C) No.22117of 2023 3 income for the assessment year 2015-16. After examining the return filed in response to the said notice dated 22.10.2021, certain discrepancies were noted and the petitioner was asked to submit evidence which he could rely on in support of his return of income and personal hearing was granted to him on 08.11.2021 at 8.00AM. Thereafter, procedure under Section 148 of the Act was followed and an order under Section 148A(d) of the Act was passed on 28.07.2022 suggesting that the income chargeable to tax had escaped assessment within the meaning of Section 147 of the Act. The petitioner was thereafter issued notice under Section 148 on 28.07.2022, proposing to assess or reassess such income which had escaped assessment for the year 2015-16 and required to furnish within 30 days from the service of the notice, in the prescribed form the return for the assessment year 2015-16. The said notice was issued after obtaining prior approval from the Principal Chief

WP(C) No.22117of 2023 4 Commissioner of Income Tax, Delhi, which was accorded on 27.07.2022. 4. Thereafter, Ext.P15 show cause notice dated 03.05.2023 was issued to the petitioner and after considering the reply submitted by the petitioner, the assessment was proposed to be completed as mentioned in the said show cause notice. The petitioner was provided with an opportunity for filing objection to the proposed addition as mentioned therein on or before 11.05.2023. 5. The learned counsel for the petitioner submits that the said show cause notice was not received by him by any mode i.e. either electronic mode or physical mode. This Court is not convinced with the said submission. Since, the writ petition is being decided on the question of maintainability of this writ petition, therefore, this Court is refraining from rendering a finding on the said contention of the learned counsel for the petitioner regarding service of the said notice dated 03.05.2023.

WP(C) No.22117of 2023 5 6. It appears that the petitioner has not filed any reply to the said show cause notice, and thereafter, before Ext.P16 assessment order came to be passed and the claim of the petitioner for exemption from payment of capital gains on disposal of the property, which was valued at Rs.85,00,000/-, was allowed, only to an extent of 50% i.e, Rs.42,50,000/- on the ground that the property was in the joint name of the petitioner and his wife. It was also stated that in the absence of documentary evidence, such as bill, voucher and books of account in support of cost of improvement of Rs.52,32,374/- the same expenditure could not be considered. The petitioner’s assessed income was Rs.69,35,454/- for the said assessment year. It was also stated that demand notice would be issued separately and penalty proceedings under Section 271(C.) to be initiated. Against the said order, the petitioner has approached the Dispute Resolution Panel (DRP) under Section 144C(1) of the Act. A final decision has to be

WP(C) No.22117of 2023 6 taken by the DRP. Learned counsel for the petitioner submits that there is complete bar for reopening the assessment beyond the period of 4 years. 7. It is not in dispute that for the relevant assessment year, the assessment could have been reopened under Section 148 within 6 years from the last date of finalisation of the assessment, in case in an order passed under Section 148A(d), the assessing authority has been in the opinion that the assessee has not disclosed the true and correct facts and the income chargeable to tax has escaped assessment. The order passed under Section 148A(b) has not been produced in the writ petition. 8. Therefore, I do not find much substance that the assessment order in case of the petitioner for the assessment year 2015-16 which has got completed under Section 143(3) of the Income Tax Act could not have been reopened beyond the limitation period of 4 years as prescribed under Section 149. For reopening assessment beyond 4 years,the condition is that the

WP(C) No.22117of 2023 7 income of the assessee has escaped assessment because of non disclosure of true and correct facts or concealment of the facts, and in such a situation the provisions under Section 148A of the Act are attracted along with Section 148. Therefore, I am of the view that the contention of the petitioner’s counsel that the show cause notice dated 22.04.2021 is barred by limitation does not seems to be correct on a scrutiny of the facts . Moreover, the petitioner has filed an application before the Disputes Resolution Panel and he may raise all grounds which are available to him. When the statutory remedy has been availed by the petitioner, there is no question of entertaining the present writ petition. Thus, I find no ground to keep this writ petition pending on the file of this Court. The Disputes Resolution Panel is directed to finalise the proceedings in accordance with law, expeditiously. The Disputes Resolution Panel shall, however, examine the issue independently, without being influenced by any of the observations made herein above.

WP(C) No.22117of 2023 8 Needless to say that the questions raised in the petition are to be decided by the Disputes Resolution Panel and therefore, this Court would not like to render a finding on the questions raised in the petition as the same are to be decided by the Disputes Resolution Panel. It will be open to the petitioner to take all the objections and grounds and submit evidence and documents in support of his contentions before the Disputes Resolution Panel. Sd/- DINESH KUMAR SINGH JUDGE AP

WP(C) No.22117of 2023 9 APPENDIX OF WP(C) 22117/2023 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE SALE DEED/PURCHASE DEED NO.3808/2006 DATED 15.09.2006 Exhibit P2 A TRUE COPY OF THE SALE DEED/PURCHASE DEED NO.3207/2006 DATED 04.08.2006 Exhibit P3 A TRUE COPY OF THE SALE DEED/PURCHASE DEED NO.3120/1/2007 DATED 02.07.2007 Exhibit P4 A TRUE COPY OF THE BANK STATEMENTS AND TRANSACTION SUMMARY OF THE PETITIONER SHOWING PERIODICAL WITHDRAWALS DATED NIL Exhibit P5 A TRUE COPY OF SATELLITE PICTURES OF THE LAND FOR THE YEAR 2007 WHEN THE PROPERTY WAS PURCHASED Exhibit P6 A TRUE COPY OF SATELLITE PICTURES OF THE LAND FOR THE YEAR 2014, WHEN THE PROPERTY WAS SOLD SHOWING THE EXTENT OF IMPROVEMENT CARRIED OUT IN THE PROPERTY Exhibit P7 A TRUE COPY OF THE SALE DEED NO.3887/2014 DATED 18.10.2014 Exhibit P8 A TRUE COPY OF THE SALE DEED NO.3845/2014 DATED 16.10.2014 Exhibit P9 A TRUE COPY OF THE SALE DEED NO.3889/2014 DATED 18.10.2014 Exhibit P10 A TRUE COPY OF THE VALUATION REPORT DATED NIL MADE BY CERTIFIED ENGINEER USING THE CENTRAL PUBLIC WORKS DEPARTMENT RATES PREVALENT DURING FROM THE YEAR 2007 TO 2014, WHEN THE IMPROVEMENT WORKS WERE CARRIED OUT BY THE PETITIONER Exhibit P11 A TRUE COPY OF THE ASSESSMENT ORDER DATED 27.12.2017 ISSUED AFTER SCRUTINY OF THE RETURN FILED BY THE PETITIONER WITH 'NIL' DEMAND Exhibit P12 A TRUE COPY OF THE SHOW CAUSE NOTICE ISSUED BY THE 2ND RESPONDENT UNDER SECTION 143(2) R/W SECTION 147 OF THE ACT, TO THE PETITIONER ON 22.10.2021 Exhibit P13 A TRUE COPY OF THE NOTICE ISSUED ON 28.07.2022 UNDER SECTION 148 OF THE ACT, CALLING FOR THE PETITIONER TO FILE RETURN OF INCOME Exhibit P14 A TRUE COPY OF THE INTIMATION LETTER ISSUED ON 28.07.2022 INTIMATING THE DOCUMENT

WP(C) No.22117of 2023 10 IDENTIFICATION NUMBER OF EXHIBIT P12 SECTION148 NOTICE Exhibit P15 A TRUE COPY OF THE SHOW CAUSE NOTICE PUBLISHED IN THE PORTAL BY THE 2ND RESPONDENT ON 03.05.2023, PROPOSING TO COMPLETE THE RE-ASSESSMENT INTERALIA, BY DISALLOWING THE COST OF IMPROVEMENT EXEMPTION CLAIMED BY THE PETITIONER UNDER SECTION 54F, WHICH CAME TO THE NOTICE OF THE PETITIONER ONLY LATER Exhibit P16 A TRUE COPY OF THE DRAFT ASSESSMENT ORDER ISSUED UNDER SECTION 144C OF THE ACT BY THE 3RD RESPONDENT ON 31.05.2023 Exhibit P17 A TRUE COPY OF THE OBJECTION DATED 26.06.2023 FILED (WITHOUT ANNEXURES) BY THE PETITIONER ON 30.06.2023 BEFORE THE 3RD RESPONDENT AGAINST EXHIBIT P16 DRAFT ASSESSMENT ORDER ALONG WITH ITS RECEIPT Exhibit P18 A TRUE COPY OF THE INSURANCE CLAIM RECEIVED BY THE PETITIONER FOR DAMAGE TO THE OFFICE WHERE THE DOCUMENTS WERE KEPT, DUE TO FLOOD Exhibit P19 A TRUE COPY OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN CIT V RAVINDER KUMAR ARORA (2012) 342 ITR 38 (DELHI) Exhibit P20 A TRUE COPY OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN CIT V KAMAL WAHAL (2013) 351 ITR 4 (DELHI) RESPONDENTS EXHIBITS : NIL