The Delhi High Court recently delivered a significant judgement in the case of Almina Textiles Pvt. Ltd. vs. Sunita Gupta. The case involved assessment proceedings under the Income Tax Act, related to unexplained money and capital gains. The court’s ruling has implications for similar cases in the future, setting a precedent for such matters. Read on to delve into the details of this crucial legal decision.
Facts
- Search conducted under section 132 of the Income Tax Act, 1961 on 15.12.2016 at the premises of M/s Almina Textiles Pvt. Ltd.
- Incriminating documents found during the search related to Smt. Sunita Gupta.
- Brothers Sh. Hemant Kumar Sharma and Sh. Chandra Mohan Sharma sold a jointly owned property in AY 2014-15 to Smt. Sunita Gupta & M/s Kirtiman Buildtech Pvt. Ltd.
- During assessment of Sh. Hemant Kumar Sharma, unaccounted amount of Rs. 1,62,20,000/- was found and acknowledged by Sh. Aditya Sharma.
- Facts established in Sh. Hemant Kumar Sharma’s case were used as basis for initiating proceedings against Smt. Sunita Gupta under section 153C of the IT Act for AY 2014-15.
Issue
- The assessee filed her Income Tax under Section 153A read with Section 144 of the Act for Mr. Hemant Sharma.
- Additions of ₹1,62,20,000/- for unexplained money under Section 69A and ₹21,12,141/- for Long Term Capital Gains were made to the total income.
- The sole issue raised was whether the AO considered the assessee’s reply, which she chose not to file.
- Not replying to notices dated 04.03.2021 and 06.04.2021 led to a show cause notice regarding a cash transaction of ₹1,62,20,000/- for a specific property.
Analysis
- Assessee provided with opportunity of hearing since 04.03.2021.
- Assessing Officer relied on incriminating material and reasons for initiation of Section 153C.
- Assessee given multiple chances to respond and provide explanations.
- AO considered reply of the assessee before making additions.
- Assessing Officer relied on cash payments made over circle rate in Pitampura area.
- Addition of Rs. 1,62,20,000 made as unexplained money under Section 69A.
- Assessee requested for proof of permissions and satisfaction note.
- Statement of Sh. Aditya Sharma recorded during enquiry.
- Assessee’s reply was found untenable and rejected by the department.
- AO acted in accordance with provisions of Section 153C for initiating proceedings.
- Documents seized during search led to initiation of proceedings against the assessee.
- AO provided satisfaction note to assessee and allowed for objections.
- Centralization of the case to a specific charge on 09.02.2021.
- Cash payment related to property transaction at 153, Harsh Vihar, Pitampura highlighted.
- The Court referred to the case of Calcutta Knitwears which laid down the principle of unreasonable delay in initiation of proceedings.
- The Court emphasized that the expression ‘immediately after’ as mentioned in Calcutta Knitwears was not interpreted as rigid and absolute, but rather the focus was on inordinate delay.
- It was noted that the determination of whether a delay is inordinate and thus warranting annulment of assessment proceedings is a factual assessment based on the circumstances of each case.
- The Court mentioned that the scope, extent, and complexity of the investigation prior to the initiation of proceedings under Section 153C should be considered when evaluating the reasonableness of the timeline for taking action.
- The Court concluded that in the specific case at hand, the delay of 5 months in issuing the notice by the Assessing Officer was not unreasonable and therefore upheld the validity of the satisfaction note and the timeline for the proceedings.
- Writ 21 cannot be invoked based on the discussion provided
- Principles of natural justice were met in the case
- The AO applied due diligence in exercising powers under Article 226
- None of the exigencies mentioned were present in the instant case
Decision
- The writ petition is dismissed and disposed of, along with pending applications.
- The assessee can seek any other alternate remedy available to her under the law.
- The same should be handled in accordance with the law.
- The parties can raise all pleas and contentions following the law.
- The observations made in the judgment should not be considered as an expression on the merits of the case.
Case Title: SUNITA GOEL Vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL, CIRCLE 1, DELHI (2024:DHC:3723-DB)
Case Number: W.P.(C)-5132/2021
