OM PARKASH vs. INCOME TAX OFFICER WARD 68(5) DELHI

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W.P.(C)/6901/2023HC DelhiDLHC01019638202322 May 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA4 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court disposed of the writ petition with specific directions. The Court noted that the matter involved elements of both fact and law, requiring examination by the appellate authority. Specifically, the fact that the cost of acquisition was taken as 'nil' was highlighted as an aspect requiring intercession by the Assessing Officer. The Court granted the petitioner six weeks to prefer an appeal with the Commissioner of Income Tax (Appeals). During this period, no precipitate action would be taken against the petitioner. The petitioner was also directed to file an application for stay with the concerned authority within ten days, and the concerned officer was directed to dispose of the stay application within ten days of its filing. The AO was instructed to bear in mind the broad contentions raised, particularly the aspect that the entire sale consideration was brought to tax, while deciding the stay application. The Court also clarified that if the petitioner was aggrieved by the outcome of the stay application, they would have liberty to take recourse to an appropriate remedy.

What were the facts?

The petitioner, Om Parkash, filed a writ petition before the Delhi High Court concerning Assessment Year 2014-15. This was the second round of litigation, as a previous writ petition (W.P.(C) No.13119/2022) was withdrawn with liberty to urge contentions before the Assessing Officer (AO). Following this, an assessment order dated March 29, 2023, was passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The petitioner alleged several flaws in this order, including the absence of a notice under Section 143(2), the taxation of the entire sale consideration of agricultural land without adjusting the cost of acquisition, and the denial of the benefit under Section 54B. The revenue's counsel acknowledged that the entire sale consideration could not have been taxed and suggested these issues could be resolved in appeal.

What were the issues?

1. Whether the assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, is flawed due to the non-issuance of a notice under Section 143(2) of the Act prior to its passing? (Question of law and fact) 2. Whether the entire sale consideration of agricultural land was erroneously brought to tax without adjusting the cost of acquisition, and consequently, whether the benefit under Section 54B of the Act was wrongly denied? (Question of law and fact) Assessee's Contentions: - No notice under Section 143(2) was issued before passing the assessment order. - The entire sale consideration of agricultural land was taxed without adjusting the cost of acquisition. - The benefit of Section 54B was not granted. Revenue's Contentions: - The petitioner did not furnish relevant details to the AO to establish that the subject land was rural agricultural land. - However, the revenue conceded that the entire sale consideration could not have been brought to tax and these aspects could be sorted out in an appeal.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 143(2),Section 54B

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C)No.6901/2023
W.P.(C) No.13119/2022

Read from the judgment's own cause title. This page is filed under one of them.

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$~54 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Decision delivered on: 22.05.2023 + W.P.(C) 6901/2023 & CM Nos.26898-99/2023

OM PARKASH

..... Petitioner

Through: Mr Sultan Singh Khatri, Adv.

versus

INCOME TAX OFFICER WARD 68(5) DELHI ..... Respondent Through: Mr Aseem Chawla, Sr Standing Counsel with Ms Pratishtha Choudhary and Mr Aditya Gupta, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA [Physical Hearing/Hybrid Hearing (as per request)]

RAJIV SHAKDHER, J. (ORAL): CM No.26899/2023 1. Allowed, subject to just exceptions. W.P.(C) 6901/2023& CM No.26898/2023[Application filed on behalf of the petitioner seeking interim relief] 2. Issue notice. 2.1 Mr Aseem Chawla, learned senior standing counsel, accepts notice on behalf of the respondent/revenue. 3. Mr Chawla says, that in view of the directions that we propose to pass, he does not wish to file a counter-affidavit, and that he will argue the matter based on the record presently available with the Court. Digitally Signed By:ATUL JAIN Signing Date:28.05.2023 20:35:17 Signature Not Verified

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3.1 Therefore, with the consent of learned counsel for the parties, the matter is taken up for hearing and final disposal, at this stage itself. 4. This writ petition concerns Assessment Year (AY) 2014-15. 5. This is the second round of litigation in this Court for the petitioner. The petitioner had, in the first round, filed a writ action i.e., W.P.(C) No.13119/2022, which was withdrawn with liberty to urge all contentions and submissions before the Assessing Officer (AO). The said order was passed on 09.09.2022. 6. Pursuant to the aforesaid circumstance, an assessment order dated 29.03.2023 has been passed. 7. Mr Sultan Singh Khatri, who appears on behalf of the petitioner, says that there are several flaws in the impugned assessment order, which has been passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [in short, “Act”]. 7.1 According to Mr Khatri, inter alia, the assessment order is impregnated with the following errors: (i) First, no notice under Section 143(2) of the Act was issued prior to passing the assessment order. (ii) Second, the entire sale consideration on account of sale of agricultural land has been assessed to tax. There has been no adjustment for cost of acquisition. (iii) Third, the benefit of Section 54B of the Act has not been granted. 8. Mr Chawla submits, that the petitioner did not furnish relevant details to the AO, to establish that the subject land was rural agricultural land.

Digitally Signed By:ATUL JAIN Signing Date:28.05.2023 20:35:17 Signature Not Verified

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9.

Mr Chawla, however, cannot but accept, that the entire sale consideration could not have been brought to tax. 9.1 It is Mr Chawla‟s contention, that these aspects can be sorted out in an appeal, which the petitioner can take recourse to. 10. The record shows, that the present proceedings involve an element of both fact and law, which may require some examination qua facts, in particular, by the appellate authority. However, the fact that the cost of acquisition has been taken as „nil‟ is an aspect which may require intercession by the AO, while ascertaining as to whether stay qua demand should be granted. 10.1 Therefore, the instant writ petition is disposed of with the following directions: (i) The petitioner is granted six (6)weeks to prefer an appeal with the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”]. (ii) In the interregnum, no precipitate action will be taken against the petitioner. (iii) The petitioner will file an application for stay with the concerned authority, within ten [10] days from today. (iv) The concerned officer will dispose of the application for stay within ten [10] days of the same being filed. The AO will inter alia, bear in mind, the broad contentions raised before us, and in particular, the aspect that the entire sale consideration has been brought to tax. 11. Needless to add, if the petitioner is aggrieved by the outcome in the application for stay, he would have liberty to take recourse to an appropriate remedy, albeit, as per law.

Digitally Signed By:ATUL JAIN Signing Date:28.05.2023 20:35:17 Signature Not Verified

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12.

The writ petition is disposed of in the aforesaid terms. 13. Consequently, pending application shall stand closed. 14. Parties will act based on the digitally signed copy of the order.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

MAY 22, 2023

Click here to check corrigendum, if any

Digitally Signed By:ATUL JAIN Signing Date:28.05.2023 20:35:17 Signature Not Verified

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