AKASH GOPAL AGARWAL vs. THE INCOME TAX OFFICER

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WP/103922/2023HC KarnatakaKAHC02008042202326 September 2023Author: SACHIN SHANKAR MAGADUM6 pages
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What did the High Court hold?

The High Court allowed the writ petition and quashed the impugned notice issued under Section 148A(b), the order passed under Section 148A(d), the notice issued under Section 148, and the unsigned sanction order issued under Section 151. The Court reasoned that the assessee had placed material (confirmation deeds and sale deed) indicating that the disputed payment was made in 2013. The revenue failed to place any material to counter this claim. The Court held that since the disputed amount was less than Rs. 50,00,000/-, the period of limitation prescribed under Section 149(1)(a) of the Act is three years from the end of the relevant assessment year. Therefore, initiating proceedings based on a sale deed executed in 2019, when the payment was allegedly made in 2013, was barred by limitation. The Court found that the authorities would lose jurisdiction to issue notice under Section 148 if three years had lapsed from the end of the relevant assessment year, unless it fell under Clause (b) to Section 149, which was not the case here. The ratio decidendi is that if evidence clearly shows payment was made outside the limitation period, reassessment proceedings initiated beyond that period are invalid.

What were the facts?

The petitioner, Akash Gopal Agarwal, an individual assessee, filed a writ petition challenging notices and orders issued by the Income Tax Officer (Ward-1, Hubballi) and the Principal Commissioner of Income Tax, Hubli. These impugned actions pertain to Assessment Year 2019-20 and include a notice under Section 148A(b) dated March 27, 2023, an order under Section 148A(d) dated March 30, 2023, a notice under Section 148 dated March 30, 2023, and an unsigned sanction order under Section 151 dated March 30, 2023. The petitioner contends that the assessment year in question is hit by the limitation period prescribed under Section 149 of the Income Tax Act, as the disputed payment was allegedly made in 2013, despite the sale deed indicating 2019.

What were the issues?

1. Whether the notice issued under Section 148A(b) of the Income Tax Act, the order passed under Section 148A(d), the notice issued under Section 148, and the sanction order issued under Section 151 for Assessment Year 2019-20 are liable to be quashed on the grounds of limitation, as provided under Section 149 of the Act. Assessee's Contention: The assessee argues that the disputed payment was made in 2013, as evidenced by confirmation deeds and a sale deed (Annexures-C1, C2, and C3). Since the relevant assessment year is 2019-20, and the payment was made more than three years prior to the issuance of notices, the authorities have lost jurisdiction. The assessee relies on Section 149(1)(a) of the Act, stating that for amounts less than Rs. 50,00,000/-, the limitation period is three years from the end of the relevant assessment year. Revenue's Contention: The revenue's contention, as understood from the judgment, is that the relevant assessment year should be taken from the date of execution of the sale deed, which is 2019. No material was placed by the revenue to counter the assessee's claim that the payment was made in 2013.

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,Section 139(4)

AI-generated summary — verify with the full judgment below

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. 103922 OF 2023 (T-IT) BETWEEN: AKASH GOPAL AGARWAL, S/O. SRI GOPAL AGARWAL, AGED ABOUT 31 YEARS, H.NO. 28/31 AGARWAL KUNJ, SARVODAYA COLONY, GADAG-582103. PAN: AVXPA4485F. …PETITIONER (BY SRI. RAVISHANKAR S. V. ADV., AND SRI. SHASHANK S. HEGDE, ADV.)

AND: 1. THE INCOME TAX OFFICER, WARD-1, C.R. BUILDING, NAVANAGAR, HUBBALLI, DIST: DHARWAD-580025.

2.

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

MOHANKUMAR B SHELAR Digitally signed by MOHANKUMAR B SHELAR

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE NOTICE ISSUED UNDER SECTION 148A(B) THE ACT DATED 27/03/2023 BEARING DIN NO.ITBA/AST/F/148A(SCN)/2022-23/1051409843(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A1; ISSUE A WRIT CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE ORDER PASSED U/S 148A(D) DATED 30/03/2023 BEARING DIN AND DOCUMENT NO.ITBA/AST/F/148A/2022-23/1051683753(1) ISSUED BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A2; ISSUE A WRIT OF CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE NOTICE U/S 148 OF THE ACT DATED 30/03/2023 BEARING DIN NO.ITBA/AST/S/148 1/2022-23/1051684591(1) BY THE RESPONDENT NO.1 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A3; ISSUE A WRIT CERTIORARI OR DIRECTION IN THE NATURE OF A WRIT OF CERTIORARI QUASHING THE UNSIGNED SANCTION DATED 30/03/2023 ISSUED U/S 151 OF THE ACT BEARING DIN AND NOTICE NO.ITBA/AST/S/118/2022-23/1051682916(1) BY THE RESPONDENT NO.2 FOR THE ASSESSMENT YEAR 2019-20 HEREIN MARKED AS ANNEXURE-A4.

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

ORDER

Captioned petition is filed by the petitioner-assessee assailing the impugned notice issued under section 148A(b) of the Income Tax Act (for short "the Act") vide Annexure- A1, the order passed under section 148A(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 by the respondent-authorities. 2. The petitioner, 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.5,09,920/- for the assessment year 2014-15. He further claims that he has also filed income tax returns declaring total income of Rs.5,87,180/- for the assessment year 2019- 20. In this petition, the demand notice issued by respondent No.1 under Section 148(A)(d) of the Act is under challenge by the petitioner herein 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 are lapsed from the end of relevant assessment year unless the case falls under Clause-(b) to Section 149 of the Act. 3. It is the specific case of the petitioner that though the disputed income on sale transaction is of the year 2019, the payment in fact was made in 2013. This fact is substantiated by the petitioner-assessee by placing reliance on confirmation deed as well as sale deed, which are produced at Annexures-C1, C2 and C3. Annexure-C1 and C2 are confirmation deeds. 4. To counter the contents of sale deed, which prima facie indicates that this disputed payment was 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 deed, which is 2019, cannot be acceded to. If payments indicated in the sale deed 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 148A(b) of the Act vide Annexure-A1, the order passed under section 148A(d) of the Act vide Annexure-A2, the notice issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction 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) The writ petition is allowed. ii) The notice issued under section 148A(b) of the Act vide Annexure-A1, the order passed under section 148A(d) of the Act vide Annexure-A2, the notice issued under Section 148 of the Act vide Annexure-A3 and the unsigned sanction

issued under section 151 of the Act vide Annexure-A4 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.: 9

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