SUNILKUMAR AGARWAL S/O. SRI PRAHALADRAY B AGARWAL vs. THE INCOME TAX OFFICER

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WP/103927/2023HC KarnatakaKAHC02008045202326 September 2023Author: SACHIN SHANKAR MAGADUM6 pages
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What did the High Court hold?

The High Court allowed both writ petitions and quashed the impugned orders. The Court found that the petitioners had provided evidence, in the form of confirmation deeds and sale deeds, indicating that the payments related to the disputed transactions were made in 2013. The Court noted that the Revenue had not placed any material to counter this evidence. Applying Section 149(1)(A) of the Act, the Court held that since the payments were made in 2013, and the disputed amount was less than Rs. 50,00,000/-, the three-year period of limitation from the end of the relevant assessment year had expired. Therefore, the initiation of proceedings under Section 148A and Section 148 was barred. The Court rejected the revenue's contention that the assessment year should be determined from the date of the sale deeds (2019). The ratio decidendi is that if evidence clearly establishes payment in an earlier year, and the limitation period for that year has expired, reopening based on later documentation of the transaction is impermissible.

What were the facts?

The petitioners, Sri Aditya Anil Agarwal and Sri Sunilkumar Agarwal, filed writ petitions challenging orders and notices issued by the Income Tax Department. These included notices under Section 148A(b) and Section 148 of the Income Tax Act, orders under Section 148A(d), and unsigned sanction orders under Section 151. The assessment year in question is 2019-20. The petitioners claim that while sale deeds might indicate transactions in 2019, the actual payments for these transactions were made in 2013. They have provided confirmation deeds and sale deeds as evidence of these earlier payments. The Revenue intended to reopen assessments based on these sale transactions.

What were the issues?

1. Whether the notices issued under Section 148A(b) and Section 148 of the Income Tax Act, along with the consequential orders and sanction orders, are liable to be quashed on the grounds that the period of limitation prescribed under Section 149 of the Act has expired. Assessee's contention: The petitioners argue that the authorities have lost jurisdiction to issue notices under Section 148 as more than three years have elapsed from the end of the relevant assessment year. They assert that the payments in question were made in 2013, as evidenced by confirmation deeds and sale deeds, and therefore, the reopening is barred by Section 149(1)(A) of the Act, as the disputed amount is less than Rs. 50,00,000/-, making the three-year limitation period applicable. Revenue's contention: The revenue contended that the relevant assessment year should be taken from the date of execution of the sale deeds, which is 2019. The judgment does not explicitly record any other contentions from the revenue.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d),Section 148,Section 151,Section 149(1)(A),Section 149(1)

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Heard together (2 matters)

WP No. 103929 of 2023
WP No. 103927 of 2023

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

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 26TH DAY OF SEPTEMBER, 2023 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 103929 OF 2023 (T-IT) C/W WRIT PETITION NO. 103927 OF 2023

IN W.P.NO.103929/2023 BETWEEN:

SRI ADITYA ANIL AGARWAL, S/O. LATE ANIL P. AGARWAL, AGED ABOUT 29 YEARS, H.NO. 28/31 AGARWAL KUNJ, SARVODAYA COLONY, GADAG-582103. PAN: AHYPA5521D. …PETITIONER (BY SRI RAVI SHANKAR S.V., ADV. & SRI SHASHANK S. HEGDE, ADV.)

AND: 1. THE INCOME TAX OFFICER, WARD-1, AAYAKAR KARYALAYA, EAR HATALGERI, NAKA, GADAG-BETAGERI, GADAG-582101.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, HUBLI, C.R. BUILDING, NAVANAGAR, HUBBALLI-580025. …RESPONDENTS (BY SRI Y.V. RAVIRAJ, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE AN AD- INTERIM ORDER STAY THE OPERATION OF THE ORDER PASSED

MOHANKUMAR B SHELAR Digitally signed by MOHANKUMAR B SHELAR

UNDER SECTION 148A(B) OF THE ACT DATED 08/03/2023 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2022-23/1050505705(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A1 AND SUCH OTHER RELIEFS.

IN W.P.NO.103927/2023 BETWEEN:

SRI SUNILKUMAR AGARWAL, S/O. SRI PRAHALADRAY B. AGARWAL, AGED ABOUT 53 YEARS, H.NO. 28/31 AGARWAL KUNJ, SARVODAYA COLONY, GADAG-582103. PAN: ABXPA6991. …PETITIONER (BY SRI RAVI SHANKAR S.V., ADV. & SRI SHASHANK S. HEGDE, ADV.)

AND: 1. THE INCOME TAX OFFICER, WARD-1, AAYAKAR KARYALAYA, EAR HATALGERI, NAKA, GADAG-BETAGERI, GADAG-582101.

THE PRINCIPAL COMMISSIONER OF INCOME TAX, THE OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, HUBLI, C.R. BUILDING, NAVANAGAR, HUBBALLI-580025, DHARWAD DISTRICT. …RESPONDENTS (BY SRI Y.V. RAVIRAJ, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE AN AD- INTERIM ORDER STAY THE OPERATION OF THE NOTICE ISSUED UNDER SECTION 148A(B) OF THE ACT DATED 08/03/2023 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2022-23/1050292986(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A1 AND SUCH OTHER RELIEFS.

THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

Captioned petitions are filed by the petitioners- assessees assailing the impugned orders issued under section 148A(b) of the Income Tax Act (for short "the Act") vide Annexure-A1, the orders passed under section 148A(d) of the Act vide Annexure-A2, the notices issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction orders issued under section 151 of the Act vide Annexure-A4 by the respondent-authorities. The petitioner in W.P.No.103929/2023, who is an individual, earning income from salary, income from house property and other sources, claims that he has filed income tax returns under Section 139(4) of the Act declaring total income of Rs.2,08,000/- for the assessment year 2014-15. He further claims that he has also filed income tax returns declaring total income of Rs.6,80,120/- for the assessment year 2019-20.

3.

The petitioner in W.P.No.103927/2023, who is also an individual, earning income from salary, income from house property and other sources, claims that he has filed income tax returns under Section 139(4) of the Act declaring total income of Rs.3,49,480/- for the assessment year 2014- 15. He further claims that he has also filed income tax returns declaring total income of Rs.5,58,040/- for the assessment year 2019-20. 4. In these petitions, the demand notice issued by respondent No.1 under Section 148 (A)(d) of the Act is under challenge by the petitioners on the ground that the authorities would lose jurisdiction and no notice under Section 148 of the Act can be issued for relevant assessment year if three years have lapsed from the end of relevant assessment year unless the case falls under Clause-(b) to Section 149 of the Act. 5. It is the specific case of the petitioners that though the disputed incomes on sale transactions are of the year 2019, the payment in fact was made in 2013. This fact is substantiated by the petitioners-assessees by placing

reliance on confirmation deeds as well as sale deeds, which are produced at Annexures-C1, C2 and C3. Annexure-C1 and C2 are confirmation deeds. 6. To counter the contents of sale deeds, which prima facie indicate that these disputed payments were made in 2013 itself, no material is placed by the respondent- Authority, which would warrant investigation. The payments in respect of which the authorities now intend to hold an enquiry and reopen the assessment is squarely hit by Section 149(1)(A) of the Act. It is also not in dispute that the disputed amount being less than Rs.50,00,000/-, the period of limitation prescribed is three years from the end of relevant assessment year. The contention of authorities that the relevant assessment year has to be taken from the date of execution of sale deeds, which is 2019, cannot be acceded to. If payments indicated in the sale deeds are made in the year 2013 itself, no proceedings can be initiated as there is a time limit for issuance of notice under Section 149(1) of the Act. In that view of the matter, the notice issued under section 148(A)(b) of the Act vide Annexure-A1, the order

passed under section 148(d) of the Act vide Annexure-A2, the notice issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction order issued under section 151 of the Act vide Annexure-A4 deserve to be quashed. For the foregoing reasons, I proceed to pass the following: ORDER i) Both the writ petitions are allowed. ii) The impugned orders issued under section 148A(b) of the Income Tax Act (for short "the Act") vide Annexure-A1, the orders passed under section 148A(d) of the Act vide Annexure-A2, the notices issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction orders issued under section 151 of the Act vide Annexure-A4 by the respondent-authorities in both the petitions are hereby quashed. iii) In view of disposal of the petition, pending interlocutory applications, if any, do not survive for consideration and are disposed of accordingly.

Sd/- JUDGE

YAN, List No.: 1 Sl No.: 10

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