DR NYATHAPPA GUNDAPPA ANAND vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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WP/12903/2022HC KarnatakaKAHC01029008202230 June 2022Bench: M.I.ARUN5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Assessing Officer committed an error by not taking into consideration the details produced by the petitioner while claiming the benefit under Section 54(f) of the Income Tax Act. The court noted that the petitioner had declared Rs. 3,44,00,000/- instead of Rs. 3,50,00,000/-, and the escaped income was admittedly Rs. 6,00,000/-. The Assessing Officer's failure to consider the petitioner's claim under Section 54(f) for Rs. 3,17,17,040/- and instead treating the entire sale consideration as escaped assessment was not disputed. Consequently, the impugned assessment order, demand notice, and penalty notice were set aside. The matter was remanded back to the Assessing Officer for fresh consideration, with a direction to pass appropriate orders after hearing the petitioner, without being influenced by any observations made in the order. All contentions were left open.

What were the facts?

The petitioner, Dr. Nyathappa Gundappa Anand, an individual and non-resident Indian, filed a writ petition challenging an assessment order dated May 18, 2022, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, for Assessment Year 2014-15. The petitioner had sold immovable property and received consideration of Rs. 3,50,00,000/-. However, in his return, he mistakenly declared it as Rs. 3,44,00,000/-, resulting in Rs. 6,00,000/- escaping assessment. The Revenue re-opened the assessment. The impugned order treated the entire Rs. 3,50,00,000/- as escaped income, leading to a demand notice and penalty notice being issued.

What were the issues?

1. Whether the assessment order dated 18.05.2022 passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, for Assessment Year 2014-15, which treated the entire sale consideration of Rs. 3,50,00,000/- as escaped assessment, is valid, considering the admitted escaped income was Rs. 6,00,000/-? Assessee's contention: The petitioner argued that the escaped income was only Rs. 6,00,000/-, not the entire sale consideration of Rs. 3,50,00,000/-. The assessment order erroneously levied total tax and interest of Rs. 2,10,90,692/-. The petitioner claimed benefit under Section 54(f) for Rs. 3,17,17,040/-. The Assessing Officer failed to consider the details produced for this claim. Revenue's contention: The Revenue admitted that the undeclared income was Rs. 6,00,000/-. However, it argued that the petitioner was not entitled to any deduction under Section 54(f) of the Income Tax Act and justified the impugned order treating the entire Rs. 3,50,00,000/- as escaped assessment. The Revenue prayed for the dismissal of the writ petition.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 54(f),Section 274,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 30TH DAY OF JUNE, 2022

BEFORE

THE HON'BLE MR. JUSTICE M.I.ARUN

W.P. NO.12903 OF 2022(T-IT)

BETWEEN:

DR. NYATHAPPA GUNDAPPA ANAND, REP. BY HIS GPA HOLDER, SRI. N.G. KRISHNAMURTHY, S/O LATE SRI N GUNDAPPA, AGED ABOUT 48 YEARS, RESIDING AT 204 HABITAT MAYFLOWER, 36/A, 1ST MAIN ROAD, ST BED LAYOUT, KORAMANGALA, BENGALURU-560 034.

… PETITIONER (BY SRI. VENKATESH K.PANI, ADVOCATE AND SRI. ANNAMALAI S, ADVOCATE)

AND:

1.

THE DEPUTY COMMISSIONER OF

INCOME TAX (INTERNATIONAL TAXATION),

CIRCLE1(1), BMTC BUILDING,

80 FEET ROAD, 6TH BLOCK,

NEAR KHB GAMES VILLAGE,

KORAMANGALA, BENGALURU-560 095.

2.

THE JOINT COMMISSIONER OF

INCOME TAX(OSD), INTL TAX CIRCLE-1(1),

BMTC BUILDING, 80 FEET ROAD,

6TH BLOCK, NEAR KHB GAMES VILLAGE,

KORAMANGALA, BENGALURU -560 095.

... RESPONDENTS (BY SRI.K.V. ARAVIND, ADVOCATE)

2 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER DATED 18.05.2022 PASSED UNDER SECTION 143(3) R/W 147 OF THE ACT FOR THE ASSESSMENT YEAR 2014-15 BY THE R-1 BEARING DIN NO.ITBA/AST/M/147/2022- 23/1043067229(1) HEREIN MARKED AS ANNEXURE-A1 AND ETC.,

THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING, THIS DAY THE COURT MADE THE FOLLOWING:

ORDER

The case of the petitioner is that he is an individual and a non-resident Indian. He has filed the return of income for the assessment year 2014-15. For the said assessment year he had received consideration of Rs.3,50,00,000/- from the sale of immovable property. However, in his returns, by mistake it is shown as 3,44,00,000/-. The said error was discovered by the Revenue and assessment was re-opened and the impugned order vide Annexure - A1 to the writ petition has been passed. Thereafter, the demand notice vide Annexure - A2 to the writ petition and penalty notice vide Annexure -A3 to the writ petition have been issued. It is the contention of the petitioner that he has declared the income of Rs.3,44,00,000/- instead of Rs.3,50,00,000/- and the sale consideration that had

3 escaped the assessment was only to a tune of Rs.6,00,000/-. Whereas the impugned assessment order at Annexure - A1 to the writ petition treats the entire sale consideration of Rs.3,50,00,000/- as consideration which has escaped the assessment and that Revenue has erroneously levied the total tax and interest payable of Rs.2,10,90,692/-. On the said ground, the impugned orders are sought to be set aside.

2.

Learned counsel for the Revenue admits that the income that has not been declared by the assessee is to tune of Rs.6,00,000/- but he submits that the petitioner is not entitled to any deduction under provision of Section 54(f) of the Income Tax Act and justifies the impugned order which treats the entire Rs.3,50,00,000/- as the consideration which has escaped assessment and prays for dismissal of the writ petition.

3.

Admittedly, the petitioner has received a consideration of Rs.3,50,00,000/- by sale of immovable property. He has declared the consideration at Rs.3,44,00,000/- and consideration of Rs. 6,00,000/-

4 has escaped assessment. The petitioner has claimed benefit under Section 54(f) of the Income Tax Act, for Rs. 3,17,17, 040/- . Respondent No.1 while passing the final assessment order at Annexure - A1 has not taken into consideration the details produced by the petitioner while claiming benefit under Section 54(f) of the Act and has passed the assessment order for the entire amount of Rs.3,50,00,000/-. This error committed by Assessing Officer is not disputed.

4.

For the said reason, the said impugned order is liable to be set aside and the matter requires to be remanded back to the authorities for fresh consideration. Consequently, the demand notice at Annexure -A2 and the penalty notice at Annexure - A3 also requires to be set aside.

5.

Hence, the following: ORDER i. Final assessment order dated 18.05.2022 bearing DIN No.ITBA/AST/M/147/2022- 23/103067229(1) passed by respondent No.1 vide Annexure - A1 to the writ petition is hereby set aside.

5 ii. Consequently, demand notice dated 18.05.2022 passed by respondent No.1 vide Annexure -A2 to the writ petition is hereby set aside.

iii. The notice issued under Section 274 read with Section 271 (1)(c) of the Act bearing DIN No.ITBA/PNL/S/271(1)(c)/2022- 23/1043083630(1) issued by the respondent No.1 vide Annexure - A3 to the writ petition is hereby set aside.

iv. The matter stands remanded back to respondent No.1 for fresh consideration with a direction to pass appropriate orders after hearing the petitioner without being influenced by any of the observations made above.

v. All contentions left open.

Accordingly, the writ petition stands disposed of.

Sd/- JUDGE

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