VINOD CHAND KHANNA vs. ASSISTANT COMMISSIONER OF INCOME TAX

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W.P.(C)/15851/2024HC DelhiDLHC01079426202414 November 2024Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court set aside the impugned notices dated 30.08.2024 issued under Section 148 of the Act and the orders dated 30.08.2024 passed under Section 148A(d) of the Act. The Court remanded the matter to the Assessing Officer (AO) for fresh consideration. The AO was directed to treat the contents of the petitions as the petitioners' response to the notices issued under Section 148A(b) and pass a fresh order. The Court noted that prima facie, by virtue of Section 56(2)(vii) (though the AO's notice referred to 56(2)(x)(b)), the difference between the circle rate value and the purchase consideration might not be includible in income in transactions between relatives. The Revenue suggested remand due to a perceived lack of requisite material for an informed decision by the AO.

What were the facts?

The petitioners, Vinod Chand Khanna, Meena Bery, and Vinay Chand Khanna, challenged notices dated 30.08.2024 under Section 148 of the Income Tax Act, 1961, for reopening assessments for AY 2018-19. The Assessing Officer (AO) had issued notices under Section 148A(b) of the Act based on the petitioners purchasing shares of a property from their sibling's widow for consideration lower than the circle rate. The AO proposed to tax the difference as income under Section 56(2)(x)(b). The petitioners contended that Section 56(2)(x)(b) is inapplicable to transactions between relatives. The AO, however, did not appreciate this contention when passing orders under Section 148A(d) on 30.08.2024.

What were the issues?

1. Whether the provisions of Section 56(2)(x)(b) of the Income Tax Act, 1961, are applicable to the purchase of property shares between relatives, where the purchase consideration is lower than the circle rate? Assessee's contention: The petitioners argued that Section 56(2)(x)(b) of the Act would not be applicable to the transaction as it was between relatives. Revenue's contention: The Revenue, through its counsel, stated that it did not appear the AO had the requisite material to make an informed decision regarding the applicability of the provision and suggested remanding the matter for fresh consideration.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 148A(b),Section 148A(d),Section 56(2)(x)(b),Section 56(2)(vii)

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

W.P.(C) 15851/2024
W.P.(C) 15857/2024
W.P.(C) 15861/2024

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

$~83, 85 & 86 * IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 15851/2024 CM APPL. 66553/2024 CM APPL. 66554/2024(Exemption)

VINOD CHAND KHANNA

ASSISTANT COMMISSIONER OF INCOME TAX

Mr. Sunil Agarwal, SSC, Mr. Shivansh B. Pandya, JSC, Mr. Viplav Acharya, JSC and Mr. Utkarsh Tiwari, Adv.

W.P.(C) 15857/2024 CM APPL. 66575/2024 CM APPL. 66576/2024(Exemption)

MEENA BERY

INCOME TAX OFFICER

Mr. Abhishek Maratha, SSC, Mr. Parth Semwal, JSC, Mr. Apoorv Agarwal, JSC, Ms. Nupur Sharma, Mr. Gaurav Singh, Mr. Bhanukaran Singh Jodha, Ms. Muskaan Goel, Mr. Himansh Gaur and Mr. Yamit Jetley, Advs.

W.P.(C) 15861/2024 CM APPL. 66585/2024 CM APPL. 66586/2024(Exemption)

VINAY CHAND KHANNA

INCOME TAX OFFICER

Mr. Abhishek Maratha, SSC, Mr. Parth Semwal, JSC, Mr. Apoorv Agarwal, JSC, Ms. Nupur Sharma, Mr. Gaurav Singh, Mr. Bhanukaran Singh Jodha, Ms. Muskaan Goel, Mr. Himansh Gaur and Mr. Yamit Jetley, Advs.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

O R D E R %

14.11.2024 1. Issue notice. 2. The learned counsel appearing for the respondent accepts notice. 3. The petitioners in the present petitions challenge the notices dated 30.08.2024 under Section 148 of the Income Tax Act, 1961 (hereafter the Act) issued to them respectively for reopening of the assessment pertaining to the assessment year (AY) 2018-19. All the three petitioners had purchased shares of the property in question from the widow of their fourth sibling. Apparently, the purchase consideration paid was lower than the circle rate. It is on the aforesaid basis that the Assessing Officer (hereafter the AO) had issued notices dated 17.08.2024 under Section 148A(b) of the Act, seeking to tax the difference between the actual purchase consideration and the circle rate value of the property as income under Section 56(2)(x)(b) of the Act. 4. It is the petitioners’ case that the said provision would not be applicable since the transaction was inter se relatives.

5.

However, it appears that the said contention was not appreciated by the AO when orders dated 30.08.2024 under Section 148A(d) of the Act were passed in these cases. 6. Prima facie, by virtue of Section 56(2)(vii) of the Act, the difference between the circle rate value of the property and the purchase consideration could not be added in case of a transaction between the relatives. 7. Mr. Maratha, the learned counsel appearing for the Revenue states that it does not appear that the AO had the requisite material before it to take an informed decision in this regard. He suggests that the matter be remanded to the AO to consider it afresh. The said course commends to this Court. 8. Accordingly, the impugned notices dated 30.08.2024 issued under Section 148 of the Act and the orders dated 30.08.2024 passed under Section 148A(d) of the Act are set aside and the matter is remanded to the AO to consider it afresh. The AO shall consider the contents of the present petition as a response of the petitioners to the respective notices issued under Section 148A(b) of the Act and pass a fresh order. 9. Petitions are disposed of in the aforesaid terms. Pending applications, if any, also stand disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J NOVEMBER 14, 2024 A

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