2020 (10) TMI 1330 - HC - Income Tax

Penalty proceeding u/s 271AAC - unexplained income u/s 69 (A) - action of the Respondent Income Tax Officer in rejecting the explanation offered by the petitioner - petitioner, argues that the order passed is cryptic in nature as also the Officer has not assigned any reason for carrying out re- assessment in the case of the petitioner - HELD THAT - We are of the considered view that all material facts necessary for adjudication were recorded and considered by the Officer and as such the order cannot be said to be in violation of principles of natural justice, even though it may be short in nature. Since disputed questions of fact are raised before us, we refrain from adjudicating the same, reserving liberty to the petitioner to prefer a statutory appeal which is an equally efficacious remedy. As such, present petition stands disposed of. At this stage, learned counsel for the petitioner submits that limitation may not come in the way of adjudication of the appeal. Shri Rishi Raj Sinha, learned counsel for the Income Tax Department, states that if an appeal is preferred within a period of four weeks from today, the issue of limitation shall neither be raised nor allowed to come in the way of adjudication of the appeal on merits, more so keeping in view current Pandemic Covid-19. Statement is accepted and taken on record. Shri Rishi Raj Sinha, learned counsel appearing for the Income Tax Department, states that as on date no coercive action stands taken against the petitioner in terms of the demand raised pursuant to the passing of the impugned order and that position would be allowed to be maintained if the petitioner were to file an appeal within a period of four weeks from today.

Summary

Issues:
Challenge to assessment order under Income Tax Act 1961, demand raised under Section 156, penalty proceedings initiated under Section 271AAC, coercive action by Respondents, rejection of explanation by Income Tax Officer, consideration of demonetization period deposits, application of section 69A presumption, treatment of cash deposits during demonetization as unexplained.

Analysis:
The petitioner sought relief through various writs to challenge assessment orders, demand raised, penalty proceedings, and coercive actions by the Income Tax Officer. The primary contention was the treatment of Rs.95,50,000 as unexplained income under section 69A and the initiation of penalty proceedings under section 271AAC. The court examined the orders and found that all necessary facts were considered, and the order was not in violation of natural justice, even though it was brief. The court refrained from adjudicating disputed facts, advising the petitioner to opt for a statutory appeal. The petition was disposed of, with the petitioner granted liberty to appeal within four weeks without limitation hindrance.

The petitioner also argued against the rejection of their explanation by the Income Tax Officer, emphasizing the consideration of cash deposits during the demonetization period from business activities. The court acknowledged the argument but refrained from further adjudication, directing the petitioner to appeal statutorily. The court also addressed the application of section 69A presumption, stating it can only be applied when unaccounted assets are found, not for accounted cash deposits. The court highlighted that since the cash deposits were duly recorded in the books of accounts, the Income Tax Officer erred in treating them as unexplained.

Moreover, the court accepted statements from both parties regarding the appeal process and the maintenance of status quo without coercive actions until the appeal is filed. The judgment focused on ensuring the petitioner's right to appeal without limitation issues and maintaining the current position due to the ongoing pandemic. Overall, the court provided guidance on the appeal process and refrained from delving into disputed facts, emphasizing the statutory remedy available to the petitioner for a comprehensive review of the issues raised.