2024 (10) TMI 1575 - HC - Income Tax

Validity of order made u/s 147 r.w.s. 144 and penalty order for the same year -petitioner would submit that the petitioner is a non tax payer - sale consideration received on the sale of the immovable property should be assessed as income from short term capital gain - as contended that the petitioner is an illiterate and do not know online filing of replies to the assessment, etc., in this regard, the petitioner relied on the Power of Attorney Agent to file give suitable replies to the respondents, but, the said Power of Attorney did not respond to the notices properly, which resulted in the impugned orders passed against the petitioner. HELD THAT - Petitioner, being an unlettered and also a non-tax payer, was ignorant of any of the notices/communications which were sent by the respondent-Income Tax Department through online Portal only when the recovery proceedings came to be initiated against the petitioner, the petitioner became aware of the impugned proceedings. Though Respondents raised strong objection to the plea taken by the petitioner by stating that ''Ignorantia Juris Non Excusat , since the petitioner is common plebian, there wouldn't have been any occasion for him to open and view the online portal then and there. In the said scenario, it is sheer clear that the petitioner is totally unaware of the proceedings being initiated by the respondent- Income Tax Department. That apart, the sale was made in the year 2013-14, whereas, impugned proceedings were initiated in the year 2021, therefore, the petitioner, being a non-tax payer, cannot be expected to view the Portal after a lapse of 8 eight years. Thus, the reasons assigned by the petitioner for not responding to the communications sent by the respondent- Department is genuine and reasonable. Thus, this Court, in the interest of justice, is inclined to set aside the impugned orders, as the same were passed in violation of principles of natural justice, however, the same subject to the payment of Rs. 5,000/- to the Advocate Clerk Association, High Court.

Summary

Issues:
Challenge to order under Income Tax Act for assessment year 2013-14 and penalty order for the same year.

Analysis:
The Writ Petition challenges an order made under the Income Tax Act for the assessment year 2013-14 and a penalty order issued for the same year. The petitioner, a non-taxpayer, sold a vacant land with his sister and received a total consideration of Rs. 60,30,000. The Income Tax Department issued a notice to the petitioner to show cause as to why a higher amount should be assessed as income from short-term capital gain. The petitioner, being illiterate, relied on a Power of Attorney Agent to respond to the notices, but the agent did not do so effectively, resulting in adverse orders against the petitioner.

Analysis:
The petitioner argued that the entire sale consideration was Rs. 60,30,000, and the proceeds were used for constructing a residential house within the prescribed period under Section 54 of the Income Tax Act, thus, no capital gains tax was applicable. The petitioner contended that the notice issued by the Income Tax Department was barred by limitation and sought to set aside the impugned orders. The Senior Standing Counsel for the respondents objected, stating that all notices were served to the petitioner, and ignorance of law is not an excuse.

Analysis:
Upon considering the submissions, the court found that the petitioner, being unlettered and a non-taxpayer, was unaware of the notices sent by the Income Tax Department. The court noted that the petitioner became aware of the proceedings only when recovery actions were initiated. Given the petitioner's circumstances and the delay in initiating proceedings, the court concluded that the petitioner's reasons for not responding to the communications were genuine. The court set aside the impugned orders, subject to the petitioner paying Rs. 5,000 to the Advocate Clerk Association, High Court, and directed the petitioner to file a reply within three weeks for further proceedings.

Analysis:
In the final order, the court allowed the Writ Petition on the specified terms, with no costs imposed. The judgment highlights the importance of principles of natural justice and the impact of genuine reasons for non-compliance in legal proceedings.