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The High Court of Delhi Sustained Tax Assessment, Dismissed Appellant’s Claims: Cites Reason as Assessments Deemed Valid After Review

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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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Delhi High Court Nullifies Tax Assessments Due to Lack of Valid Transfer Order Citing Procedural Deficiencies: Emphasizes Importance of Proper Transfer Orders

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Case Title – Raj Sheela Growth Fund (P) LTD. Vs. Income Tax Officer, Ward-21(1), Delhi

Case Number – W.P. (C) 3777/2022 & CM APPL. 11224/2022

Dated on – 8th May, 2024

Quorum – Justice Yashwant Varma & Justice Purushaindra Kumar Kaurav

FACTS OF THE CASE
The case of Raj Sheela Growth Fund (P) LTD. Vs. Income Tax Officer, Ward-21(1), Delhi, revolves around the taxation matters concerning Raj Sheela Growth Fund (P) LTD., a private limited company which falls under the jurisdiction of the Income Tax Department. The office of the Central Circle-16, New Delhi, later renamed Central Circle-20, New Delhi, pursuant to an order of centralization dated 16th of July, 2008, had the jurisdiction over the case of the Appellant. For the Assessment Year (AY) 2015-2016, Raj Sheela Growth Fund, declaring a total amount of INR 7,920, filed its Income Tax Return (ITR). The case of the Appellant was picked up for inspection, and thereafter, a notice under Section 143(2) of the Income Tax Act, 1961, was issued by the office of the Income Tax Officer (ITO) Ward 21(1), New Delhi, on 21st of March, 2016. Furthermore, an assessment order was passed on the dated 31st of December, 2017, adding an amount of INR 1,35,11,59,300 to the total income of the Appellant under the Section 56(2) (viia) of the Income Tax Act, 1961. Being aggrieved by the assessment order, the Appellant instituted an appeal before the Commissioner of the Income Tax (Appeals)(CIT(A)), which was duly rejected. Subsequently, the Appellant appealed to the Income Tax Appellate Tribunal (ITAT), which partially allowed the appeal on the 9th of August, 2019 and handed over the matter back to the Assessing Officer (AO) to ascertain whether the transfer order under Section 127 of the Income Tax Act, 1961 was passed. On the dated 22nd of September, 2021, the Appellant instituted an application under Section 144A of the Income Tax Act, 1961, before the Assistant Commissioner of Income Tax (ACIT) inquiring regarding the transfer of the order under Section 127. Pursuant to this, an order was passed on dated 27th of September, 2021, confirming the transfer order and directing the AO to continue with the proceedings of the assessment. Thus, on the 30th of the September,2021, an assessment order was passed by the ITO Ward 21(1), New Delhi, making an addition under Section 56(2)(viia) of the Income Tax Act, 1961. The Appellant challenged the orders dated 31st of December,2017 and 30th of the September,2021, asserting lack of jurisdiction due to the absence of a valid transfer order under Section 127 of the Income Tax Act, 1961. The matter was brought before the Delhi High Court for the purpose of resolution.

ISSUES
The main issue of the case whirled around whether the assessment order passed by the ITO Ward 21(1), New Delhi, for the AY2015-2016 is valid?
Whether the AO lacked jurisdiction to assess the income of the Appellant due to the absence of a valid transfer order under Section 127 of the Income Tax Act, 1961?
Whether the Ao followed proper procedural requirements in issuing the assessment orders?
Whether all the relevant legal provisions were adhered to throughout the process of assessment?

LEGAL PROVISIONS
Section 64 of the Income Tax Act, 1961 prescribes the Income of individual to include income of spouse, minor child etc
Section 120 of the Income Tax Act, 1961 prescribes the Jurisdiction of income-tax authorities
Section 124 of the Income Tax Act, 1961 prescribes the Jurisdiction of assessing officer
Section 127 of the Income Tax Act, 1961 prescribes the Power to transfer cases
Section 143(2) of the Income Tax Act, 1961 prescribes that An incorrect claim, if such incorrect claim is apparent from any information in the return
Section 144A of the Income Tax Act, 1961 prescribes the Power of Joint Commissioner to issue directions in certain cases

CONTENTIONS OF THE APPELLANTS
The Appellants, through their counsel, in the said case contented that the AO lacked jurisdiction to assess their income for the AY2015-2016 due to the absence of a valid transfer order under Section 127 of the Income Tax Act, 1961 and that the AO did not have the authority to assess their income, as the case was not properly transferred to them.
The Appellants, through their counsel, in the said case contented regarding the validity of the assessment orders dated 31st of December,2017 as well as dated 30th of September,2021 that these orders are void ab initio since they were issued without jurisdiction and that any assessment made without proper jurisdiction is null and void in the eyes of law.
The Appellants, through their counsel, in the said case contented that it was a failure on the part of the assessing authority to follow the proper procedural requirements in issuing the assessment orders and that the AO did not adhere to the requisite legal provisions and failed to provide them with adequate opportunities to present their case or challenge the assessment.

CONTENTIONS OF THE RESPONDENTS
The Respondents, through their counsel, in the said case contented that AO had the proper jurisdiction to assess the income of the Appellant for the AY2015-2016.
The Respondents, through their counsel, in the said case contented that the assessment orders dated 31st of December,2017 as well as dated 30th of September,2021 were issued according to the provisions of the Income Tax Act, 1961 after due consideration of the relevant facts and evidences.
The Respondents, through their counsel, in the said case contented that the Ao followed all the requisite procedural requirements in issuing the assessment orders.

COURT ANALYSIS AND JUDGMENT
The court in the case of Raj Sheela Growth Fund (P) LTD. Vs. Income Tax Officer, Ward-21(1), Delhi, scrupulously reviewed the legislative framework laid down in Section 127 of the Income Tax Act, 1961, which governs the transfer of the cases between the Aos. The court stated the underlying principles of public interest and administrative convenience that guide such transfers. Stressing on these principles, the court illuminated the significance of ensuring that the transfer under Section 127 of the Income Tax Act, 1961, are executed in accordance with the law. The court considered various judicial precedents and stressed on the importance of the Section 127 of the Income Tax Act, 1961, in the context of the administrative efficiency and taxpayers’ rights. The court focused on the absence of a valid transfer order under Section 127 of the Income Tax Act, 1961 in the present case. The court observed that the case of the Appellants had been purportedly transferred to the ITO Ward 21(1), New Delhi, without the required transfer order mandated by the Income Tax Act, 1961. The court stated that such a transfer order is a prerequisite for any legal transfer under Section 127 of the Income Tax Act, 1961. The court, in this case, held that the impugned orders dated 31st of December,2017 as well as dated 30th of September,2021, which were issued without a valid transfer order under Section 127 of the Income Tax Act, 1961, were legally flawed and therefore set them aside. The court in the said case, allowed the petition of the Appellant.
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Judgement Reviewed by – Sruti Sikha Maharana
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The Delhi High Court Dismisses Charges and Scraps The FIR: Cites Reason as Unconscious Possession Not an Offense Under the Arms Act

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Case Title – Pritpal Singh Vs. State

Case Number – CRL. M.C. 5732/2019 & CRL. M.C. 40024/2019

Dated on – 1st of May, 2024

Quorum – Justice Amit Mahajan

FACTS OF THE CASE
In the case of Pritpal Singh Vs. State, the Appellant, Pritpal Singh, was taken into custody by the police at the entrance of the US Embassy while he was entering for his visa interview. The police discovered 14 live cartridges in the possession of the Appellant. The Appellant in the said case had a license for the arms and ammunition but the same was valid until 31st of December, 2017, and had expired at the time of the incident. During further investigation it was unveiled that the Appellant held a valid license (No. 539/PS) issued by the District Magistrate of Kanpur, Uttar Pradesh, permitting him to carry a 0.32 Caliber NPT bore weapon throughout India.

ISSUES
The main issue of the case whirled around whether the Appellant was in conscious possession of the live cartridges recovered from him?
Whether the possessions of the live cartridges amount to an offense under Section 25 of the Arms Act, 1959?

LEGAL PROVISIONS
Section 25 of the Arms Act, 1959 prescribes the Offense of possession of arms or ammunition without a valid license.
Section 45(D) of the Arms Act, 1959 prescribes the condition under which the possession of minor parts of arms or ammunition is not considered as an offense
Section 482 of the Criminal Procedure Code, 1973 prescribes the Power of the High Court to quash an FIR to prevent abuse of the process of court.

CONTENTIONS OF THE APPELLANTS
The Appellants, through their counsel, in the said case contented that the Appellant, Pritpal Singh was unaware that the bag he carried contained 14 live cartridges.
The Appellants, through their counsel, in the said case contented that the possession of the 14 cartridges with the Appellant was unconscious and unintentional.
The Appellants, through their counsel, in the said case contented that the Appellant possessed a valid arms license which authorized him to carry the weapon throughout India.

CONTENTIONS OF THE RESPONDENTS
The Respondents, through their counsel, in the said case did not allege conscious possession or mens rea behind carrying the cartridges.
The Respondents, through their counsel, in the said case contented that the possession seemed to be unintended rather than intentional.

COURT ANALYSIS AND JUDGMENT
The court in the case of Pritpal Singh Vs. State, analysed the concept of conscious possession as interpreted by the varied judgments, inclusive of Gunwantlal Vs. State of M.P. and Sanjay Dutt Vs. State through CBI, Bombay. The court in this case, stressed that the possession of arms and ammunition under the Arms Act, 1959 require a mental element of consciousness or knowledge. Based on the facts presented and the legal precedents, the court in this case concluded that the possession of the live cartridges with the Appellant, Pritpal Singh, was unconscious and unintentional. As such, it did not amount to an offense under the section 25 of the Arms Act, 1959. The court also observed that the absence of the evidence suggesting conscious possession and that the prolongation of proceedings would be vain. Hence, the court in this present case, quashed the FIR and all the consequential proceedings. Furthermore, taking into consideration the involvement of the State machinery and to serve the ends of justice, the court imposed a cost of Rupees 50,000 on the Appellant, specifying the allocation of the money to various welfare funds and the bar associations.
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Judgement Reviewed by – Sruti Sikha Maharana

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The High Court of Delhi Disposed Petition with Opportunity for Detailed Reply, Personal Hearing : Directs Re-Adjudication of Show Cause Notice

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Case Title – Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes

Case Number – W.P.(C) 5670/2024 & CM APPL. 23433/2024

Order Number – 24th April, 2024

Quorum – Justice Sanjeev Sachdeva and Justice Ravinder Dudeja

FACTS OF THE CASE

In the case of Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes, an order dated 19th December,2023 was challenged by the Appellants, which was duly disposed of a Show Cause Notice dated 23rd September,2023. The Show Cause Notice presented a demand of Rupees 15,19,68,460 against the Appellant under Section 73 of the Central Goods and Service TaxAct, 2017. The notice stated reasons inclusive of excess claim of Input Tax Credit (ITC), scrutiny of the ITC availed, and under-declaration of ineligible ITC. The Appellant provided the response to the notice on the dated 23rd of the October, 2023, seeking the additional time for a detailed reply and a personal hearing. The Appellant provided with a response to the reminder on the dated 18th of December, 2023, seeking further time to furnish a reply and appear for a personal hearing. Furthermore, the Appellant of the said case, replied to the reminder on the dated 18th December,2023, seeking further time to furnish a reply and appear for a personal hearing. However, the impugned order dated 19th of the December, 2023 did not consider the request of the Appellant for the extension of time and was said to be enigmatic.

CONTENTIONS OF THE APPELLANT

  1. The appellant, through their counsel, in the said case contented that even after seeking for additional time for a detailed reply and a personal hearing, the impugned order did not consider the request made by them
  2. The appellant, through their counsel, in the said case relied on the Section 75(5) of the Central Goods and Service Tax Act, 2017, which allows them for adjournment for personal hearings up to three time in the case of proper and sufficient cause shown concerning the same.
  3. The appellant, through their counsel, in the said case contented that they weren’t provided with the opportunity of a personal hearing, which is violative of the principles of natural justice.

CONTENTIONS OF THE RESPONDENT

  1. The respondent, through their counsel, in the said case contented that even after two opportunities provided to the Appellants, they failed to file a detailed reply or appear in person.
  2. The appellant, through their counsel, in the said case contented that no detailed reply was furnished by the Appellants, and the impugned order was justified based on their non-compliance.

LEGAL PROVISIONS

  1. Section 73 of the Central Goods and Services Tax Act, 2017 prescribes the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason of fraud or any wilful-misstatement or suppression of facts
  2. Section 75(5) of the Central Goods and Services Tax Act, 2017 prescribes that the proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing, provided that, no such adjournment shall be granted for more than three times to a person during the proceedings.

ISSUES 

  1. The main issue of the case revolved around whether the impugned order denying the request of the Appellant for the extension of the time and a personal hearing was justified?
  2. Whether it was violative of the principles of natural justice in the proceedings?

COURT ANALYSIS AND JUDGMENT

The court in the case of Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes, observed that it is not mandatory for the proper officer to grant them adjournments, even though, Section 75(5) of the Central Goods and Services Tax Act, 2017 allows for up to three adjournments of personal hearings. The court observed that the discretion to adjourn hearings depends on the circumstances of each case and that whether the cause shown is sufficient. The court, in this case, observed the impugned order to be abstruse and agreed with the request of the Appellant for one more opportunity to file a detailed reply. The court set aside the impugned order and the show cause notice is remitted to the proper officer for re-adjudication. The Appellant, in this case, is directed to institute a reply within 30 days, and the proper officer is instructed to re-adjudicate the show cause notice, providing an opportunity for a personal hearing and issuance of a fresh speaking order within the stipulated period of time under Section 75(3) of the Central Goods and Services Tax Act, 2017. The court cited clearly that it has not commented on the merits of the case, and that all rights and contentions of the parties to the case are reserved.

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The Delhi High Court commutes a man’s death sentence for the murder of a 12-year-old girl and reduces his sentence to 20 years in jail without the possibility of parole.

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Title: State v. Jeevak Nagpal
Decided on: 26th June, 2023

+ CRL.A. 166/2021

CORAM: HON’BLE MS. JUSTICE MUKTA GUPTA, HON’BLE MR. JUSTICE ANISH DAYAL
Introduction

The Delhi High Court mitigated a man’s death sentence for kidnapping and killing a 12-year-old girl in 2009. A division bench of Justice Mukta Gupta and Justice Anish Dayal reduced Jeevak Nagpal’s sentence to 20 years in jail without the possibility of parole.

Facts of the Case

Nagpal was sentenced to death by a trial court january 2020. He was 21 at the time of the crime and 32 at the time of his conviction.  “The appellant’s sentence is thus modified to rigorous imprisonment for life with no remission until the age of 20 years and to pay a fine of one lakh, failing which, to undergo simple imprisonment for six months for an offence punishable under Section 302 IPC.”

 “The learned Trial Court’s sentences for offenses punishable under Sections 364A, 201, and 506 IPC are not modified and will remain the same,” the court stated. Nagpal was the young victim’s neighbor. Nagpal abducted the youngster in March 2009 and sought a ransom from the parent, according to the complaint. Nagpal was found guilty of killing the youngster by injuring him with his car’s jack handle and suffocating him. He then dumped the victim’s body down a drain.

Courts analysis and decision

The trial court noted that the deed was “cruel and gruesome” and did not deserve mercy when it sentenced him to death. The panel denied Nagpal’s request for confirmation of his death sentence and dismissed his appeal, affirming his conviction for actions punishable under Sections 302, 364A, 201, and 506 of the IPC by amending the sentencing order.

“The appellant was a Chartered Accountant Course student.” The appellant and his family members have no prior criminal background. No such condition or historical history was discovered during the appellant’s psychiatric evaluation. The appellant’s jail conduct is good, according to the Nominal Roll, except for one jail sentence dated July 15, 2020. The appellant is a Sahayak in the legal office of the prison. As a result, the prospect of a life sentence cannot be ruled out. It added that the even though the offence of kidnapping of the minor for ransom was committed in a preplanned manner, it could not be held that the murder was committed in a pre-planned manner.

Judgment- click here to read the judgment2

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Written by- Anushka Satwani