PARAKKADAVIL MOHAMMED KUNJU ANSARI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The petitioner, an individual and an income tax assessee on the rolls of the Income Tax Officer, Ward-1, Kottayam, was engaged in timber business during the financial year 2015-16, corresponding to the assessment year 2016-17. The petitioner had sold about 13 adjacent agricultural plots to the M/s Believers Church, and while filing his return showed the sale consideration as agricultural income which was exempted from tax under the head of Capital Gains. The return submitted by the petitioner for the assessment year in question was subjected to scrutiny through a notice dated 07.07.2017 issued to the petitioner under Section 143(2) of the Income Tax Act. This was followed by another notice dated 23.4.2018, and later by Ext.P3 notice dated 10.7.2018, where the petitioner was asked to furnish information to the queries raised in the annexure to the said notice. While the petitioner submitted Ext.P4 reply to the said query, by Ext.P5 query dated 12.11.2018, the petitioner was asked to produce documents to substantiate his claim in the return that an amount of Rs.17 crores was exempted from income tax under the head Capital Gains as the same was purportedly in respect of sale of agricultural land. The petitioner submitted Ext.P6 reply to the said query, but the department thereafter raised a fresh query seeking evidence in respect of all sources of income declared in the return of income tax for the assessment year 2016- 17 (Ext.P7 dated 27.11.2018). The petitioner responded to the said query by Ext.P8 reply dated 6.12.2018. Thereafter, a sworn statement was taken from the petitioner on 10.12.2018 (Ext.P9) and on 19.12.2018, the department through Ext.P10 query, sought for further documents from the petitioner to substantiate his claim with regard to the sources of income and details of expense incurred during the financial year to support his claim in the returns filed by him. The petitioner states that the details sought for in Ext.P10 query were furnished through Ext.P11 reply dated 21.12.2018. Thereafter, an inspection was conducted for verifying the factual aspects, disclosed by the petitioner in his various replies, to substantiate his claim for exemption. Pursuant to the inspection, some clarifications was sought for, which the petitioner furnished through Ext.P14 communication dated 24.12.2018. Thereafter Ext.P15 notice dated 28.12.2018 was issued to the petitioner giving a summary of the proposals of the department for completing the assessment in relation to the petitioner, and since the time limit for completing the assessment under the Income Tax Act was due to expire, the petitioner was asked to submit his explanation, if any, to the said proposal within a day, making it clear that if no reply was received, the assessment would be completed without any further notice.

(2.) It is not in dispute that the petitioner submitted his reply to Ext.P15 notice through Ext.P16 communication of the same date.

(3.) A statement has been filed on behalf of the respondent wherein the sequence of events leading to the passing of the assessment order is detailed. It is pointed out that, through the series of queries that were raised on the petitioner by the department, the department was only seeking corroborative evidence for substantiating the claim of the petitioner for exemption of a substantial portion of the income declared by him. It is pointed out that the details sought were essentially for enabling the petitioner to establish that the exemption claim was in respect of agricultural income which would not fall for assessment under the head of Capital Gains. It is the stand of the department that the assessment order confirmed a demand of income tax on the petitioner only because he had not succeeded in substantiating his claim for exemption, and further, had not offered any satisfactory explanation for the unaccounted income detected, with any reliable documents and hence there was no prejudice caused to the petitioner on account of no hearing having been extended to him prior to passing the assessment order. It is, in particular, pointed out that, had the petitioner disclosed the true and correct information before the Assessing Officer, as he was obliged to do in terms of the Income Tax Act, there would have been no necessity for the department to issue notices to the petitioner calling for documents to substantiate his claim for exemption. The delay in completing the assessment is therefore stated to be attributable solely to the inaction on the part of the petitioner in not furnishing the necessary details along with the return for the assessment year in question.