Uttarakhand High Court
Himanshu Kukreja vs The Principal Commissioner Of ... on 27 July, 2022
IN THE HIGH COURT OF UTTARAKHAND AT
NAINITAL
THE CHIEF JUSTICE SHRI VIPIN SANGHI
AND
JUSTICE SHRI RAMESH CHANDRA KHULBE
Income Tax Appeal No.48 OF 2022
27TH JULY, 2022
Himanshu Kukreja ...... Appellant.
Vs.
The Principal Commissioner of Income Tax, Central Circle,
Dehradun
......Respondent
Presence: -
Shri Pulak Raj Mullick, learned counsel for the appellant.
Shri H.M. Bhatia, learned counsel for the respondent.
JUDGMENT: (Per Shri Vipin Sanghi, Chief Justice)
The present appeal is directed against the order
dated 25.03.2022 passed by the Income Tax Appellate
Tribunal, Dehradun Bench, Dehradun in ITA
No.11/DDN/2021 for the assessment year 2016-17 and
SA No.02/DDN/2021 for the assessment year 2016-17.
2. The Tribunal has rejected the said appeal
preferred by the assessee / appellant under Section 263
of the Income Tax Act wherein the appellant had assailed
the order passed by the learned PCIT, Dehradun relating
to the assessment year 2016-17.
3. The assessee, who is an individual, filed his
income tax return on 31.12.2016 showing total income of
Rs.10,02,000/-. The assessee has shown income from
running hostel. The assesee's case was selected for
scrutiny to examine the issue whether invested income
relating to properties were duly disclosed. Accordingly, a
notice under Section 143(2) of the I.T. Act was served on
the assessee through e-filing portal on 18.09.2017. The
AO also issued notice under Section 142(1) of the I.T. Act
along with a questionnaire dated 09.02.2018 and
19.07.2018 which were duly served on the assessee. After
considering the reply filed by the assessee, the AO
completed the assessment accepting the returned income
of Rs.10,02,000/-.
4. Subsequently, the learned PCIT perused the
record and noted and, was of the view, that the order
passed by the AO was erroneous and prejudicial to the
interest of the revenue, since, the AO has not examined
the issue with regard to the source of investment made
by the assessee to the tune of Rs.8,64,15,000/- whereby
the assessee had purchased properties in his name.
5. It was claimed by the assessee verbally before
the Assessing Officer that the said payment was made
from the bank account of Kulwant Kaur Kukreja
Educational Society. He claimed that the land had been
purchased on behalf of the society. The AO has allowed
this stand of the assessee without calling for any record.
The property purchased by the assessee, claimed to have
been purchased for the aforesaid society, was not
transferred in the name of the society and remained the
property of the assessee.
6. The PCIT was of the view that the AO has not
called for, and examined the record, as well as the
violation of the provisions of Section 13(1) (c) of the
Income Tax Act, which prohibits any trust/society from
diverting its income directly or indirectly for the benefit of
any person referred to in Sub-Section (3).
7. Consequently, the PCIT issued show-cause
notice to the assessee to explain as to why the order
passed by the AO should not be revised under Section
263 of the I.T. Act, since the order appears to be
erroneous and prejudicial to the interest of the revenue.
The PCIT considered the explanation furnished by the
assessee but rejected the same. The assessment order
passed by the AO was cancelled with direction to pass a
fresh order after affording proper opportunity of being
heard to the assessee.
8. The reasons adopted by the PCIT have been
extracted in the impugned order, which reads as follows:-
"4. The assessee's submission has been carefully
examined. It is noticed that the assessee has not provided any
justification against violation of the provision of section 13(1)
of I.T. Act which prohibits any trust/society from diverting its
income directly or indirectly for the benefit of any person
referred to in Sub-Section (3). Further, the assessee has not
submitted the bank statements of either himself or the society
to specify the nature of transaction made for the purchase of
property and the source thereof. Moreover, the assessee has
neither submitted any document stating that the property has
been subsequently transferred to the society nor any statement
of the current ownership of the property and status thereof in
support of his claim that the property belongs to the society.
During the assessment proceedings, the A.O. had not enquired
into or called for any documentary evidence relevant to the
above issues.
5. After careful consideration of the facts and
circumstances of the case, I hold that the assessment order
passed by the Assessing Officer u/s 143(3) of the Income Tax
Act, 1961 dated 18.07.2017 is erroneous and also prejudicial to
the interest of revenue in view of the facts narrated in para-2
hereinbefore. Accordingly, the assessment order dated
18.07.2018 is cancelled with the direction to the Assessing
Officer to pass a fresh assessment order after due verification
and after affording proper opportunity of being heard to the
assessee."
9. Aggrieved by the order of the PCIT, the assessee
preferred the appeal which has been dismissed by the
Tribunal.
10. The relevant extracts from the impugned order
passed by the PCIT reads as follows:-
"7. We have considered the rival arguments made by
both the sides, perused the orders of the AO and Id. PCIT
and the paper book filed on behalf of the assessee. We
have also considered the various decisions cited before us.
We find that the case of the assessee was selected under
limited scrutiny to examine the issue as to whether
investments and income relating to properties are duly
disclosed. A perusal of the reply given by the assessee
during the course of assessment proceedings show that
the assessee has purchased two properties, the details of
which are as under:
Date Purchase Price (Rs.)
24.06.2015 4,73,00,000/-
24.06.2015 3,50,00,000/-
8. However, it is surprising to note that neither the AO has
called for the bank account from which such huge
amounts of more than Rs.8 crores has been paid to the
seller nor the assessee has filed any document before us
that he has filed the bank account before the AO from
which the payments were made. The submissions of Id.
Counsel for the assessee that he has verbally explained
the issue to the AO during the course of assessment
proceedings cannot be accepted as proper inquiry by the
AO during the course of assessment proceedings in
absence of any query raised by the AO to this effect. So
far as, the arguments of the Id. Counsel for the assessee
that the Assessment Order in the case of Kulwant Kaur
Kukreja Educational Society was passed u/s 143(3) of the
I.T. Act and no action u/s 147/263 of the I.T. Act has been
taken is concerned, we find the said order is dated
27.12.2018 i.e. after the passing the order of the assessee
on 02.11.2018. In our opinion, when the case was
selected for limited scrutiny for the purpose of verification
of investment in properties and the AO failed to examine
the issue for which the case was selected by not asking for
the bank account, the source, the applicability of
provisions of Section 13(1)(c) of the I.T. Act etc.
therefore, the order passed by the AO without examining
the basic details in our opinion, makes the order
erroneous as well as prejudicial to the interest of the
revenue. We, therefore, uphold the order of the Id. PCIT
in cancelling the assessment under the provisions of
Section 263 of the I.T. Act with a direction to the AO to
pass the fresh Assessment Order after due verification and
after affording proper opportunity of being heard to the
assessee. Accordingly, the grounds raised by the assessee
are dismissed."
11. The submission of the learned counsel for the
appellant / assessee is that the Income Tax Return filed
by the aforesaid society was accepted and, therefore, the
order passed by the PCIT revising the assessment under
Section 263 was incongruous. He submits that it was the
case of the appellant/ assessee that the monies for
purchase of the land amounting to Rs.8,64,15,000/- was
sourced from the said society, however, the aspect of
violation of Section 14(1) (c) of the Income Tax Act was
not raised by the AO, while completing the assessment of
the aforesaid society.
12. We have perused the record and heard learned
counsel for the appellant and, we are of the view that no
substantial question of law arises for our consideration in
the present appeal. The order passed by the PCIT under
Section 263 of the Income Tax Act, as well as the order
passed by the Tribunal are completely justified in the facts
of the case. In fact, we are shocked to see the manner in
which the AO dealt with the case after issuance of notices
under Section 143(2) & 142(1) of the Income Tax Act
along with questionnaire to the assessee.
13. The least that the AO was called upon to do was
to require the assessee to make good his claim that the
amount of Rs.8,64,15,000/- was sourced from Kulwant
Kaur Kukreja Educational Society. The violation of Section
13(1) (c) of the Income Tax Act also required examination
after examination of the first aspect as aforesaid.
14. We also fail to appreciate / understand as to
what is the reason for the assessee to avoid the inquiry
and scrutiny with regard to the source of funds through
which the land was purchased by the assessee for
Rs.8,64,15,000/-.
15. We, therefore, dismiss this appeal and we also
direct the Principal Commissioner of Income Tax,
Dehradun to administratively examine whether any action
is called for against the AO in the light of the manner in
which he has conducted himself while dealing with the
proceedings after issuance of the notices under Section
143(2) and Section 142(1) of the Income Tax Act.
________________
VIPIN SANGHI, C.J.
________________________
RAMESH CHANDRA KHULBE, J.
Dated: 27th July, 2022
BS/SS
