Karnataka High Court
Smt. Vidya Virupakshappa Harlapur vs The Income Tax Officer Ward 1 on 27 May, 2024
Author: Pradeep Singh Yerur
Bench: Pradeep Singh Yerur
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WP No. 100110 of 2022
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 27TH DAY OF MAY, 2024
BEFORE
THE HON'BLE MR JUSTICE PRADEEP SINGH YERUR
WRIT PETITION NO.100110 OF 2022 (T-IT)
BETWEEN:
SMT. VIDYA VIRUPAKSHAPPA HARLAPUR,
AGE: 49 YEARS, OCC. LIC AGENT,
R/O: ANUGRAHA, HOUSE NO.13,
M VANASIRI NAGAR, SECTOR-9,
SATTUR, DHARWAD-580009.
... PETITIONER
(BY SRI SANGRAM S. KULKARNI, ADVOCATE)
AND:
THE INCOME TAX OFFICER WARD 1(1),
HUBLI-580025,
OFFICE OF THE INCOME TAX,
NAVANAGAR, HUBLI,
DIST. DHARWAD.
... RESPONDENT
(BY SRI M. THIRUMALESH, ADVOCATE)
Digitally signed
by
MOHANKUMAR
B SHELAR
Location: HIGH
MOHANKUMAR COURT OF
B SHELAR KARNATAKA
DHARWAD
BENCH
Date:
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
2024.05.31
15:02:07 +0530
OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF
CERTIORARI AND QUASH THE IMPUGNED NOTICE VIDE NO.ITBA/
AST/S/148/2021-22/1033896939(1) DATED 30/06/2021 ISSUED BY
THE RESPONDENT INCOME TAX OFFICER WARD 1(1) HUBLI VIDE
ANNEXURE-B AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN
'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
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WP No. 100110 of 2022
ORDER
Heard learned counsel Sri Sangram S. Kulkarni
appearing for petitioner and learned counsel Sri M.
Thirumalesh, appearing for respondent.
2. Petitioner is an income tax assessee, who has been
filing her income tax returns regularly. She has questioned
the impugned notice vide No.ITBA/AST/S/148/2021-
22/1033896939(1), dated 30.06.2021 issued by the
respondent-Income Tax Officer, Ward No.1(1), Hubli vide
Annexure-B.
3. It is the case of petitioner that during the
assessment year 2015-16 she had sold plot measuring 1000
square meters on 05.11.2014 for valuable sale consideration
of Rs.25,00,000/-. Petitioner filed her returns of income on
23.08.2015. Pursuant to which, respondent issued notice
under Section 148 of the Income Tax Act, 1961 (for short
'the IT Act') on 30.06.2021 proposing to re-assess the
income of the petitioner for the assessment year 2015-16 on
the ground that the assessment for the year 2015-16 has
escaped assessment within the meaning of Section 147 of
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the IT Act, accordingly petitioner was asked to file returns in
the prescribed form within 30 days for the said assessment
year.
4. Petitioner addressed a letter to the respondent as
per Section 148A of the IT Act which came into effect from
01.04.2021 contending that there should be an opportunity
afforded to the assessee to show cause as to why notice
under Section 148 of the IT Act should not be issued.
5. Respondent issued notice under Section 142(1) of
the IT Act on 22.09.2021. It is contended that the said
notice was given without providing reasons for reopening of
the assessment in gross violation of the guidelines issued by
the Hon'ble Apex Court in the case of GKN Driveshafts
(India) Ltd., vs. Income Tax Officer and Others,
reported in AIR 2003(1) SCC 72. On receipt of said notice
from the Department, the petitioner addressed her reply
which came to be acknowledged by the respondent despite
which on 11.11.2021, the respondent uploaded reasons for
reopening of the assessment on its portal. It is the case of
petitioner that despite the returns having been filed in
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response to the notice issued, respondent has failed to
consider the provisions of the IT Act as amended under
Section 148A of the IT Act and therefore the notice issued is
illegal, perverse, arbitrary and so also the learned counsel
contended that the petitioner will not fall within the bracket
of Sections 148 and 148A of the IT Act for the reason that
the amount is less than Rs.50,00,000/- therefore the notice
issued is bad in law.
6. Learned counsel Sri M.Thirumalesh representing the
respondent contends that notice is issued in accordance with
law, the same came to be issued as the market value shown
for sale of the property was Rs.53,47,000/- for stamp duty
purpose, but the sale consideration was shown as
Rs.25,00,000/- and the same is not disputed either by the
seller or by the purchaser. It is also contended that notice
under Section 148 of the IT Act came to be issued on
30.06.2021. The approval of the competent authority that is
Chief Commissioner of Income Tax, Bengaluru-1, notice
under Section 142(1), dated 22.09.2021 was issued for
calling the petitioner for filing of returns of income, to which
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the petitioner had replied that she has already filed the
returns for the assessment year 2015-16.
7. The learned counsel further contends that the writ
petition itself is not maintainable as statutory remedy is
available for reddressal of grievances. It is also contended
that there is no procedural lapse to the re-assessment is
concerned. No case has been made out by the petitioner for
violation of any principles of natural justice or non-providing
of fair opportunity. Therefore, he contends that notice issued
is perfectly in accordance with law and the guidelines laid
down by the Hon'ble Apex Court in the Judgments stated
therein in the statement of objections relied by the
respondent. It is not in dispute that the Hon'ble Apex Court
has reiterated that the notice issued under Section 148 of
the IT Act would be read as Section 148A of the IT Act in the
case of Union of India and Others vs. Ashish Agarwal,
reported in (2023) 1 SCC 617 the Hon'ble Apex Court has
substituted and modified the common judgment and order
passed by the High Court of Judicature at Allahabad in
WT.No.524/2021 and other allied tax appeals to read Section
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148 of the IT Act as Section 148A of the IT Act. It is relevant
to extract Section 148, 148(A) and 149(B)(iii) which read as
under :
"148. Issue of notice where income has
escaped assessment.
Before making the assessment, reassessment
or recomputation under section 147, and subject to
the provisions of section 148A, the Assessing Officer
shall serve on the assessee a notice, along with a
copy of the order passed, if required, under clause
(d) of section 148A, requiring him to furnish within
such period, as may be specified in such notice, a
return of his income or the income of any other
person in respect of which he is assessable under
this Act during the previous year corresponding to
the relevant assessment year, in the prescribed form
and verified in the prescribed manner and setting
forth such other particulars as may be prescribed;
and the provisions of this Act shall, so far as may be,
apply accordingly as if such return were a return
required to be furnished under section 139:
Provided that no notice under this section shall be
issued unless there is information with the Assessing
Officer which suggests that the income chargeable to
tax has escaped assessment in the case of the
assessee for the relevant assessment year and the
Assessing Officer has obtained prior approval of the
specified authority to issue such notice:
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[Provided further that no such approval shall be
required where the Assessing Officer, with the prior
approval of the specified authority, has passed an
order under clause (d) of section 148A to the effect
that it is a fit case to issue a notice under this
section.]
Explanation 1.--For the purposes of this section and
section 148A, the information with the Assessing
Officer which suggests that the income chargeable to
tax has escaped assessment means,--
(i) any information [***] in the case of the assessee
for the relevant assessment year in accordance
with the risk management strategy formulated
by the Board from time to time;
[(ii) any audit objection to the effect that the
assessment in the case of the assessee for the
relevant assessment year has not been made in
accordance with the provisions of this Act; or
(iii) any information received under an agreement
referred to in section 90 or section 90A of the
Act; or
(iv) any information made available to the Assessing
Officer under the scheme notified under section
135A; or
(v) any information which requires action in
consequence of the order of a Tribunal or a
Court.]
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Explanation 2.--For the purposes of this section,
where,--
(i) a search is initiated under section 132 or books
of account, other documents or any assets are
requisitioned under section 132A, on or after the
1st day of April, 2021, in the case of the
assessee; or
(ii) a survey is conducted under section 133A, other
than under sub-section (2A) [***] of that
section, on or after the 1st day of April, 2021, in
the case of the assessee; or
(iii) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or
Commissioner, that any money, bullion,
jewellery or other valuable article or thing,
seized or requisitioned under section 132 or
section 132A in case of any other person on or
after the 1st day of April, 2021, belongs to the
assessee; or
(iv) the Assessing Officer is satisfied, with the prior
approval of Principal Commissioner or
Commissioner, that any books of account or
documents, seized or requisitioned under
section 132 or section 132A in case of any other
person on or after the 1st day of April, 2021,
pertains or pertain to, or any information
contained therein, relate to, the assessee,
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the Assessing Officer shall be deemed to have
information which suggests that the income
chargeable to tax has escaped assessment in the
case of the assessee [where] the search is initiated
or books of account, other documents or any assets
are requisitioned or survey is conducted in the case
of the assessee or money, bullion, jewellery or other
valuable article or thing or books of account or
documents are seized or requisitioned in case of any
other person.
Explanation 3.--For the purposes of this section,
specified authority means the specified authority
referred to in section 151.]
Conducting inquiry, providing opportunity
before issue of notice under section 148.
148A. The Assessing Officer shall, before issuing any
notice under section 148,--
(a) conduct any enquiry, if required, with the prior
approval of specified authority, with respect to
the information which suggests that the income
chargeable to tax has escaped assessment;
(b) provide an opportunity of being heard to the
assessee, [***] by serving upon him a notice to
show cause within such time, as may be specified
in the notice, being not less than seven days and
but not exceeding thirty days from the date on
which such notice is issued, or such time, as may
be extended by him on the basis of an application
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in this behalf, as to why a notice under section
148 should not be issued on the basis of
information which suggests that income
chargeable to tax has escaped assessment in his
case for the relevant assessment year and results
of enquiry conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any,
in response to the show-cause notice referred to
in clause (b);
(d) decide, on the basis of material available on
record including reply of the assessee, whether or
not it is a fit case to issue a notice under section
148, by passing an order, with the prior approval
of specified authority, within one month from the
end of the month in which the reply referred to in
clause (c) is received by him, or where no such
reply is furnished, within one month from the end
of the month in which time or extended time
allowed to furnish a reply as per clause (b)
expires:
Provided that the provisions of this section shall not
apply in a case where,--
(a) a search is initiated under section 132 or books of
account, other documents or any assets are
requisitioned under section 132A in the case of
the assessee on or after the 1st day of April,
2021; or
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(b) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or
Commissioner that any money, bullion,
jewellery or other valuable article or thing,
seized in a search under section 132 or
requisitioned under section 132A, in the case of
any other person on or after the 1st day of April,
2021, belongs to the assessee; or
(c) the Assessing Officer is satisfied, with the prior
approval of the Principal Commissioner or
Commissioner that any books of account or
documents, seized in a search under section 132
or requisitioned under section 132A, in case of
any other person on or after the 1st day of April,
2021, pertains or pertain to, or any information
contained therein, 2[relate to, the assessee; or
(d) the Assessing Officer has received any
information under the scheme notified under
section 135A pertaining to income chargeable to
tax escaping assessment for any assessment
year in the case of the assessee.]
Explanation.--For the purposes of this section,
specified authority means the specified authority
referred to in section 151.]
[Time limit for notice.
149. (1) No notice under section 148 shall be
issued for the relevant assessment year,-
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(a) x x x x x
(b) x x x x x
(i) x x x x x
(ii) x x x x x
(iii) an entry or entries in the books of account,
which has escaped assessment amounts to or is
likely to amount to fifty lakh rupees or more;]"
8. It is not in dispute that in the present case, the
taxable income is less than Rs.50,00,000/-. In the document
issued by the respondent at Annexure-F, the Department has
provided reasoning for initiation of re-opening of the
assessment for taxation stating that "the stamp duty
valuation of the immovable property and the provisions of
Section 50C of the IT Act clearly attracts in this case for
determining capital gains. This clearly shows that there arose
income from capital gains and the same has not been
disclosed in the ITR filed by the assessee. The total income
arising out of the transaction is Rs.28,47,000/- for the
purpose of determining the capital gain which has escaped
assessment". However, on careful perusal of Section
149(1)(b)(iii) which is stated supra, it clearly states that no
notice under Section 148 of the IT Act shall be issued for the
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relevant assessment year which has escaped assessment
amount which is Rs.50,00,000/- or more. Therefore, the
present case would not fall within the category for issuance
of notice under Section 149 of the IT Act accordingly, even
notice under Section 148 of the IT Act would not sustain.
Even according to the respondent, escaped assessment is
Rs.28,47,000/- which would not fall within the meaning of
Section 149(1)(b). Under the circumstances, the petitioner
has made out a valid ground for this Court to interfere with
notice issued by the respondent. Accordingly, the petition
deserves to be allowed. Hence, I pass the following :
ORDER
(i) Writ petition is allowed.
(ii) Writ of certiorari is issued by
quashing the notice dated 30.06.2021 vide
No.ITBA/AST/ S/148/2021-22/
1033896939(1) issued by the Income Tax
Officer, Ward 1(1), Hubli at Annexure-B.
Sd/-
JUDGE
