Writ petition against a Section 148A(d) order proposing reassessment for AY 2016-17. The court found the show cause notice did not raise the guideline value versus sale consideration issue decided in the impugned order, and the assessee's reply was not considered. The order was quashed and fresh proceedings directed within three months.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
W.P No.13579 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 04.01.2024
C O R A M
The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY
Writ Petition No.13579 of 2023 &
WMP Nos.13256, 13257 & 13258 of 2023
Annam Rajasekher Bindu W-113, III Avenue, Anna Nagar, Chennai 600 040 PAN: BNKPB3637C ... Petitioner
vs.
Income Tax Department No.121, Nungambakkam High Road, Chennai-600 034.
... Respondents
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W.P No.13579 of 2023
PRAYER : Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorari to call for the records of the Writ Petitioner on the file of the 1st Respondent to quash the impugned order u/s. 148A(d) of the Income Tax Act, 1961 dated 28.03.2023 in DIN & Notice No.ITBA/AST/F/148A/2022-23/1051466692(1) for the Assessment Year 2016-17.
For Petitioner : Mr.A.S.Sriraman
For Respondents: Dr.B.Ramaswamy,
Senior Standing Counsel (Income Tax)
O R D E R
The petitioner challenges an order dated 28.03.2023 under
Section 148A(d) of the Income Tax Act, 1961 (the Income Tax Act) and the consequential notice dated 28.03.2023 under Section 148 thereof.
Section 148A(b) of the Income Tax Act calling upon the petitioner to show cause as to why a notice under Section 148 should not be issued in respect of the transactions specified in the annexure to the notice. A reply dated 03.03.2023 was issued by the petitioner in respect
W.P No.13579 of 2023
thereof. Thereafter, the impugned order was issued concluding that it is a fit case for issuance of notice under Section 148 of the Income
Tax Act. This writ petition was filed in the said facts and circumstances.
no direct or live link between the information obtained from the
W.P No.13579 of 2023
Insight Portal and the income allegedly escaping assessment, and that such direct link is an essential prerequisite for the issuance of a notice under Section 148. In support of this proposition, learned counsel relied on the judgment of the Bombay High Court in Digil Electronics Pvt. Ltd. v. Assistant Commissioner of Income Tax and Others in W.P.No.1798 of 2022, order dated 08.03.2023, particularly paragraph 10 thereof. The last ground on which the impugned order was challenged is that a finding was recorded therein on an issue not raised in the show cause notice. In specific, he pointed out that it is recorded in the impugned order that immovable property was purchased for the sale consideration of Rs.1,25,00,000/-, whereas the guideline value on which stamp duty was paid was Rs.1,42,75,000/-. On this basis, the impugned order records that the differential sum of Rs.17,75,000/- is assessable under Section 56(2)(vii)(b) of the Income Tax Act as income from other sources. Learned counsel submits that the show cause notice did not call for an explanation with regard to the difference between the sale consideration and guideline value and, therefore, the petitioner was denied an opportunity to respond. By placing reliance on the judgment of the Calcutta High Court in
W.P No.13579 of 2023
Excel Commodity and Derivative (P.) Ltd. v. Union of India, [2023] 150 Taxmann.com 94 (Calcutta) , particularly paragraph 8 thereof, learned counsel submitted that Explanation 1 to Section 148 should not be lightly resorted to for purposes of re-opening an assessment.
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W.P No.13579 of 2023
the petitioner did not provide any documentary evidence for receipt of sums of Rs.31,25,000/- and Rs.8,75,000/- by way of gift from her mother, Sri A.Premaleela. In conclusion, Dr.Ramasamy submitted that the issuance of notice under Section 148 is a preliminary step and that the petitioner has statutory remedies against any orders of reassessment passed pursuant thereto. He also referred to his counter affidavit and the judgments in Red Chilli International Sales v. ITO (2022) 140 Taxmann.com and Firm Rasulji Buxji Kathawala v. Income Tax Commissioner, Delhi, AIR 1957 Raj 54 , for the proposition that the present writ petition is premature and should not be entertained.
W.P No.13579 of 2023
The annexure contains a table with three entries. The first two entries relate to the purchase of an immovable property. The last entry relates to a TDS statement for a sum of Rs.1,04,563/-.
W.P No.13579 of 2023
purchased by her was let out for a monthly rent of Rs.25,000/-, and that, after adjusting the interest paid on the home loan, there was a net loss from the property.
“On perusal of the sale deed revealed that there is a difference between the sale amount shown in sale deed and the Market Value, i.e. the stamp duty value. Market Value was Rs.1,42,75,000/- but the sale shown in sale deed was Rs.1,25,00,000/(1,42,75,000/- - 1,25,00,000/- = 17,75,000/-). The difference of Rs.17,75,000/- is assessable u/s.56(2)(vii)(b) of IT Act. It is also seen that there is no documentary evidence for the value of Rs.31,25,000 and Rs.8,75,000/- mentioned as the gift deed from Smt.A.Premaleela, as claimed by the assessee also there is no evidence for the value of Rs.2,69,000 mentioned as savings.
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(i) the difference of Rs.17,75,000/- between the guideline value of Rs.1,42,75,000/and the sale consideration of Rs.1,25,00,000/- is assessable under Section 56(2)(vii)(b) of the Income Tax Act.
(ii) There is no documentary evidence for the amounts of Rs.31,25,000/- and Rs.8,75,000/- received as gift from the petitioner's mother.
(iii) There is no evidence for the sum of Rs.2,69,000/- said to be available by way of savings.
not contain any reference to the difference between the guideline value and the sale consideration and call for an explanation. Instead, skeletal information regarding the purchase of the relevant immovable property was provided under the first two entries. On this basis, it cannot reasonably be expected of the noticee to provide an explanation with regard to the difference. While the impugned order refers to the lack of documentary evidence with regard to the gifts received from the petitioner's mother, although necessary https://www.mhc.tn.gov.in/judis 10 Of 14
W.P No.13579 of 2023
information was provided by the petitioner, there is no discussion or evidence of consideration of the income tax returns of the petitioner's mother so as to test the veracity of the petitioner's explanation. Moreover, the explanation provided by the petitioner with regard to the receipt of a home loan of Rs.93,75,000/- from Sundaram BNP Paribas, which formed the alleged principal source for the purchase, has not been dealt with in the impugned order. Unless an assessee's response to the show cause notice is duly considered before a decision is taken to issue notice under Section 148, the statutory mandate of a prior show cause notice would be reduced to an empty formality. Therefore, I am of the view that the impugned order calls for interference and the said order is hereby quashed. Consequently, the matter is remanded on terms set out below.
W.P No.13579 of 2023
reasonable opportunity to the petitioner to respond to such notice, the first respondent is directed to issue a fresh order under Section 148A(b) of the Income Tax Act. The above process shall be concluded within a maximum period of three months from the date of receipt of a copy of this order. The petitioner is directed to extend full cooperation to ensure that the above exercise is completed within the time specified.
04.01.2024
Index : Yes/No Internet : Yes/No Neutral Citation : Yes/No kal
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W.P No.13579 of 2023
To
https://www.mhc.tn.gov.in/judis 13 Of 14
W.P No.13579 of 2023
SENTHILKUMAR RAMAMOORTHY, J
kal
Writ Petition No.13579 of 2023 & WMP Nos.13256, 13257 & 13258 of 2023
04.01.2024
https://www.mhc.tn.gov.in/judis 14 Of 14
2 issues framed by the court
Whether the Section 148A(d) order was valid when based solely on Insight Portal information and recorded a finding on an issue absent from the show cause notice.
Whether failure to consider the assessee's reply to the show cause notice vitiated the order under Section 148A(d).
6 provisions across 2 enactments
Annam Rajasekher Bindu
The Income Tax Officer, Non Corporate Ward – 17(6)
The Principal Commissioner of Income Tax Chennai
The Principal Chief Commissioner of Income Tax Tamilnadu & Puducherry
Senthilkumar Ramamoorthy
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
