BINA AGARWAL vs. UNION OF INDIA AND ORS

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WPO/2446/2022HC CalcuttaWBCHCO004602202205 September 2022Bench: HON'BLE JUSTICE MD. NIZAMUDDIN3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the impugned orders passed under Section 148A(b) of the Income Tax Act, 1961, were passed in total non-application of mind and were therefore bad and not sustainable in law. The Court found it strange that the same amount of money relating to the same transaction in a particular assessment year could be subjected to reassessment proceedings in a series of subsequent assessment years. Furthermore, the Court noted that the impugned orders were self-contradictory, recording the amount as fictitious profit in equity/derivative trading in one part and as an unexplained investment in shares in another. The Court reasoned that if the amount was indeed an unexplained investment, it should have been taxed in the relevant year it pertained to. Consequently, the Court quashed all the impugned orders under Section 148A(d) and all subsequent proceedings. The writ petitions were disposed of by allowing them.

What were the facts?

The petitioner, Bina Agarwal, has filed four writ petitions challenging orders dated July 25, 2022 (AY 2017-18), July 28, 2022 (AY 2015-16), July 26, 2022 (AY 2014-15), and July 21, 2022 (AY 2016-17). These orders were passed under Section 148A(b) of the Income Tax Act, 1961. The petitioner argues these orders are arbitrary, illegal, and passed without application of mind. The core of the challenge is that the same amount of Rs. 61,24,800/-, relating to the same transaction, was declared unexplained in AY 2013-14. This earlier order for AY 2013-14 was quashed by this Court on August 26, 2022, in WPO 2448 of 2022, as being barred by limitation. The petitioner questions how the same amount can be subjected to reassessment in multiple subsequent assessment years.

What were the issues?

1. Whether the impugned orders dated 25th July, 2022, 28th July, 2022, 26th July, 2022, and 21st July, 2022, passed under Section 148A(b) of the Income Tax Act, 1961, are arbitrary, illegal, and passed without application of mind, particularly concerning the same transaction and amount previously dealt with and quashed for another assessment year. Assessee's Contentions: The petitioner argues that the impugned orders are bad in law as they relate to the same transaction and amount of Rs. 61,24,800/- which was previously declared as unexplained money in AY 2013-14. This earlier order for AY 2013-14 was quashed by the High Court in WPO 2448 of 2022 due to being barred by limitation. The petitioner further contends that the orders are self-contradictory, first stating the amount as fictitious profit in equity/derivative trading and then as unexplained investment in shares, and questions why separate reassessment proceedings can be initiated for the same amount across multiple assessment years. Revenue's Contentions: The judgment does not record specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d)

AI-generated summary — verify with the full judgment below

OD – 3, 7,9,11 ORDER SHEET WPO/2446/2022 WPO/2453/2022 WPO/2455/2022 WPO/2457/2022 IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURISDICTION ORIGINAL SIDE BINA AGARWAL VS UNION OF INDIA AND ORS. BEFORE: The Hon'ble JUSTICE MD. NIZAMUDDIN Date : 5th September, 2022. Appearance: Mr. A.K. Upadhyay, Adv. …For the Petitioner Mr. S. Roy Chowdhury, Adv. Mr. Soumen Bhattarcharjee, Adv. …For the respondents The Court : Heard learned counsel appearing for the parties. By these writ petitions, petitioners have challenged the impugned orders dated 25th July, 2022, relating to assessment year 2017-18, 28th July, 2022, relating to assessment year 2015-16, 26th July, 2022, relating to assessment year 2014-15 and 21st July, 2022, relating to assessment year 2016-17 respectively under Section 148A(b) of the Income Tax Act, 1961 on the ground that the same are arbitrary, illegal and in total non-application of mind since all these orders are on the very same figure amounting to Rs. 61,24,800/- in all the aforesaid assessment years and relate to the very same transaction which was declared by the assessing officer as unexplained money in the hands of the assessee in assessment year 2013-14 which already by an order of this Court dated 26th August, 2022 in WPO 2448 of 2022 has been quashed on the ground being barred by limitation. It is

2 very strange that how the very same amount of money relating to the very same particular transaction in a particular assessment year can be subjected to reassessment proceeding matter in series of the aforesaid assessment years. In addition the impugned orders are self contradictory to the assessing officer’s own finding since first it records that the said amount is fictitious profit in equity/derivative trading while in the same order he has recorded that the said amount is an investment in share and remains unexplained in the hands of the assessee and had it been so it could have taxed the same in the said relevant year in which according to the respondent assessee if it was unexplained. How in all these assessment years involved in these writ petitions on the very same amount separate assessment proceedings can be initiated. In view of the facts and circumstances of the case as recorded above and submissions of the parties, I am of the considered view that the impugned assessment proceedings are in total non-application of mind and are bad and not sustainable in law. In view of the discussion and findings made above, all the aforesaid impugned orders under Section 148A(d) of the Act and subsequent proceedings are quashed and accordingly the writ petitions being WPO 2446 of 2022, WPO 2453 of 2022, WPO 2455 of 2022 and WPO 2457 of 2022 are disposed of by allowing the same. (MD. NIZAMUDDIN, J.) TR/

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