VIMAL SAGAR TIWARI vs. THE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX/INCOME - TAX OFFICER

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WP/14432/2024HC KarnatakaKAHC01026343202419 June 2024Bench: S SUNIL DUTT YADAV4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Karnataka, while hearing the writ petition, noted that the petitioner had made an investment and provided details regarding its source. The Court found that the Assessing Officer's conclusion at page 13 of the assessment order, stating the petitioner failed to provide documentary evidence, appeared cryptic and did not adequately address the petitioner's contentions. The Court also acknowledged the petitioner's argument regarding the inapplicability of Section 69A of the Act. Consequently, the Court decided to set aside the assessment order, demand notice, and penalty notice. The matter was remanded back to the Assessing Officer for fresh consideration, taking into account the petitioner's submissions and the documentary evidence. The petitioner was granted liberty to file further pleadings. All contentions were kept open.

What were the facts?

The petitioner, Vimal Sagar Tiwari, is challenging an assessment order dated March 25, 2024, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2022-2023. The petitioner had invested Rs. 1,64,74,587/- in Ribbit Capital Bullfrog Fund II during the Financial Year 2021-2022. The petitioner claims to have provided the source of this investment in replies to show cause and Section 142(1) notices. However, the Assessing Officer (AO) concluded that the petitioner failed to provide documentary evidence to prove the source and genuineness of the investment. The petitioner also challenges a demand notice and a notice under Section 274 read with Section 271AAC of the Act.

What were the issues?

1. Whether the Assessing Officer erred in rejecting the stated source of investment of Rs. 1,64,74,587/- in Ribbit Capital Bullfrog Fund II for AY 2022-23, despite the petitioner providing documentary evidence and details in response to statutory notices, thereby passing a cryptic order contrary to the material on record? 2. Whether Section 69A of the Income Tax Act, 1961, is applicable in this case, given that the investment was referred to in the return of income? Assessee's Contentions: The petitioner argues that the AO's conclusion regarding the failure to provide documentary evidence is contrary to the record, as all necessary documentation was provided. The petitioner contends that the order is cryptic and fails to consider their submissions. Furthermore, the petitioner argues that Section 69A is inapplicable because the investment was already disclosed in the return of income. Revenue's Contentions: The judgment does not record specific contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 142(1),Section 69A,Section 274,Section 271AAC

AI-generated summary — verify with the full judgment below

Before: SMT. TANMAYEE RAJKUMAR, ADV.)

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NC: 2024:KHC:21971 WP No. 14432 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 14432 OF 2024 (T-IT) BETWEEN: VIMAL SAGAR TIWARI AGED ABOUT 34 YEARS, RESIDING AT VILLA 39, PHASE 1, ADARSH PALM RETREAT VILLAS, BELLANDUR, BENGALURU - 560 103, KARNATAKA. …PETITIONER (BY SRI T. SURYANARAYAN SR. ADV. FOR SMT. TANMAYEE RAJKUMAR, ADV.) AND: 1. THE ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX/INCOME - TAX OFFICER NATIONAL FACELESS ASSESSMENT CENTRE, ASSESSMENT UNIT, ROOM NO. 401, 2ND FLOOR E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI - 110 003. 2. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE -1 (1) (1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. 3. PRINCIPAL COMMISSIONER OF INCOME TAX - 1, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU - 560 095. …RESPONDENTS (BY SRI DILIP M, JR. STANDING COUNSEL) Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:21971 WP No. 14432 of 2024

THIS WP IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDA PRAYING TO QUASHING THE ORDER DATED 25.3.24 BEARING NO. ITBA/AST/S143(3)/2023-24/1063341918(1) (ANNEXURE-K) PASSED BY THE R1 UNDER SECTION 143(3) READ WITH SECTION 144B OF THE ACT, FOR THE ASSESSMENT YEAR 2022-23.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER 1. Petitioner has challenged the order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short) for the Assessment Year 2022-2023 at Annexure - K as well as demand notice at Annexure - L and notice under Section 274 read with Section 271AAC of the Act at Annexure - M. 2. It is the case put forward by learned Senior counsel appearing on behalf of the petitioner that insofar as for the Financial Year 2021-2022, petitioner had made an investment in Ribbit Capital Bullfrog Fund II for an amount of Rs.1,64,74,587/- and the source of investment was provided for in the reply to the show cause notice as well as reply to notice under Section 142(1) of the Act. It is submitted that despite such reply, the conclusion arrived at, at page 13 of the assessment order is non-acceptance of such source of

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NC: 2024:KHC:21971 WP No. 14432 of 2024 investment by observing that the assessee has failed to provide documentary evidence to prove source of investment and establish as to whether it is genuine. It is submitted that these investments referred to are backed by documentary evidence all of which is a part of the record and accordingly, conclusion arrived at by the assessing officer is contrary to the material on record and order is passed in a cryptic manner. 3. It is also contended that reference to Section 69A of the Act would not arise as the said provision could be invoked only if there is no reference to the investment in the record and in the present case, the investment finds reference in the return itself. 4. After hearing the matter for some time and taking note of the nature of reply made and also the submission that the source of investment is also documented, case is made out for remanding the matter back for fresh consideration by taking note of the conclusion arrived at, at page No.13 which appears to be cryptic while not making any reference to the contentions as advanced by the petitioner as noticed above. The contention

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NC: 2024:KHC:21971 WP No. 14432 of 2024 regarding inapplicability of Section 69A of the Act is also to be reconsidered. 5. The order at Annexure - K as well as demand notice at Annexure - L and penalty notice at Annexure - M are set-aside. The matter is remanded back for fresh consideration in the light of the observations made above. The petitioner is at liberty to file further pleadings in support of their contentions raised herein. 6. All contentions are kept open. Accordingly, the petition is disposed off. Sd/- JUDGE DN

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