The High Court of Delhi Sustained Tax Assessment, Dismissed Appellant’s Claims: Cites Reason as Assessments Deemed Valid After Review
Case Title – Sunita Goel Vs. Deputy Commissioner of Income Tax Central, Circle 1, Delhi
Case Number – W.P. (C) 5132/2021
Dated on – 8th May, 2024
Quorum – Justice Yashwant Varma & Justice Purushaindra Kumar Kaurav
FACTS OF THE CASE
In the case of Sunita Goel Vs. Deputy Commissioner of Income Tax Central, Circle 1, Delhi, the Appellant, Sunita Goel, filed her Income Tax Return (ITR) on dated 7th of November, 2014, declaring a total income of INR 39,76,435 for the AY 2014-2015. On the 15th of December,2016, a search operation under Section 132 of the Income Tax Act was conducted at 157, Harsh Vihar, Pitampura, New Delhi, against Mr. Hemant Kumar Sharma, Director of M/s. Almina Textiles Pvt. Ltd. During the search, it was unveiled that Mr. Hemant Kumar Sharma had sold a property at 153, Harsh Vihar, Pitampura, new Delhi, to the Appellant for a total consideration of INR 26,170,000. Out of these, INR 99,50,000 was received vide cheque, and INR 1,62,20,000 was received in cash. An assessment order dated 30th of December,2018 was passed against Mr. Hemant Kumar Sharma, adding INR 1,62,20,000 as unexplained money under Section 69A of the Income Tax Act, 1961. Subsequently, the proceedings of the assessment were initiated against the petitioner under Section 153C of the Income Tax Act, 1961, and notices were served to her. The Appellant was provided with opportunities to respond to the notices and furnish with explanations regarding the cash transaction. Despite, being provided with multiple opportunities, the Appellant did not respond to the notices promptly. Eventually, the AO passed an order under Section 153C of the Income Tax Act, 1961, adding INR 1,62,20,000 to the total income of the Appellant for AY 2014-2015. Aggrieved by this order, the Appellant approached the High Court through a Writ Petition, primarily alleging a violation of principles of natural justice.
ISSUES
The main issue of the case whirled around whether the Assessment order passed against the Appellant under Section 153C of the Income Tax Act, 1961, adding INR 1,62,20,000 to her total income for the AY 2014-2015 valid?
Whether the AO complied with the principles of natural justice while passing the assessment order against the petitioner?
Whether the Appellant was provided with adequate opportunities to respond to the notices and furnish explanations concerning the cash transactions in questions?
Whether the initiation of the assessment proceedings against the Appellant under Section 153C of the Income Tax Act, 1961, was justified based on the material unearthed during the search operation conducted against Mr. Hemant Kumar Sharma?
LEGAL PROVISIONS
Section 69A of the Income Tax Act, 1961 prescribes the Unexplained money, etc.
Section 132 of the Income Tax Act, 1961 prescribes the Search and seizure
Section 142(1) of the Income Tax Act, 1961 prescribes the Inquiry before assessment
Section 143(2) of the Income Tax Act, 1961 prescribes the Definition of Assessment
Section 144 of the Income Tax Act, 1961 prescribes the Best Judgment Assessment
Section 153A of the Income Tax Act, 1961 prescribes the Assessment in case of search or requisition
Section 153C of the Income Tax Act, 1961 prescribes the Assessment of income of any other person
CONTENTIONS OF THE APPELLANTS
The Appellants, through their counsel, in the said case contented that the search and seizure operation conducted by the Income Tax Authorities against Mr. Hemant Kumar Sharma was invalid and illegal and that the Section 132 of the Income Tax Act, 1961were not complied with, either in terms of procedural requirements or substantive grounds, rendering the search operation null and void.
The Appellants, through their counsel, in the said case contented that there were jurisdictional issues regarding the authority of the AO to initiate the proceedings of the assessment against them under Section 153C of the Income Tax Act, 1961 and that there was no valid basis for extending the assessment to them, particularly if they were not directly connected to the person searched or if the seized assets were not linked to them.
The Appellants, through their counsel, in the said case contented that the assessment was made arbitrarily and without proper consideration of the evidence, resulting in an erred determination of their taxable income.
CONTENTIONS OF THE RESPONDENTS
The Respondents, through their counsel, in the said case contented that the search and seizure operation conducted against Mr. Hemant Kumar Sharma was valid and conducted in accordance with the provisions of Section 132 of the Income Tax Act, 1961.
The Respondents, through their counsel, in the said case contented that the AO had the jurisdiction to initiate the proceedings of assessment against the Appellants under Section 153C of the Income Tax Act, 1962.
The Respondents, through their counsel, in the said case contented that the principles of natural justice were fully complied with during the proceedings of the assessment and that the Appellants were given adequate opportunities to participate in the proceedings, submit their explanations, and present their case before the AO.
The Respondents, through their counsel, in the said case contented that the assessment was conducted on the basis of credible evidences and in accordance with the provisions of the Income Tax Act, 1961.
COURT ANALYSIS AND JUDGMENT
The court in the case of Sunita Goel Vs. Deputy Commissioner of Income Tax Central, Circle 1, Delhi, discovered that the Appellant was indeed provided with ample opportunities to present her case and that notices were issued, and the Appellant was given the chance to respond to each of them. Moreover, a satisfaction note, detailing the incriminating material, was provided to the Appellant, allowing her to understand the basis on which the assessment proceedings were initiated. The court observed that the assessing officer duly considered the responses of the Appellant before passing the impugned order. The court, concerning the assertion of delay, referred to relevant legal precedents, especially the decision in the case of Calcutta Knitwears, which stressed on the significance of the assessing whether any delay in the proceedings of the initiation were unreasonable. The court stated that a delay of 5 months, as in the present case, cannot be deemed unreasonable, specifically when it falls within a reasonable period from the date of closure of assessment of the searched person. The court concluded that the contentions of the Appellant lacked merit and that was no violation of the principles of natural justice, and the delay in the initiating proceedings was not reasonable. Thus, the impugned order adding INR 1,62,20,000 to the total income of the Appellant for AY 2014-2015 was upheld. The court in this case, dismissed the Writ Petition instituted by Sunita Goel challenging the order passed under Section 153C of the Income Tax Act, 1961. The court found no grounds to interfere with the assessment proceedings, as the Appellant was provided with ample opportunity to present her case and the delay in initiating proceedings was deemed reasonable.
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Judgement Reviewed by – Sruti Sikha Maharana
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