Case Law Details
Om Parkash Vs ITO (Delhi High Court)
Introduction: In the recent case of Om Parkash Vs ITO, the Delhi High Court addressed the issue of taxation on the sale of agricultural land without adjusting the cost of acquisition. The court dismissed the writ petition, directing the petitioner to seek a statutory remedy.
Analysis: The case revolved around the assessment year 2014-15, marking the second round of litigation for the petitioner. Mr Sultan Singh Khatri, the petitioner’s counsel, argued that the assessment order was flawed for several reasons, including the lack of a notice under Section 143(2) of the Act, the entire sale consideration being taxed without adjusting for the cost of acquisition, and the non-application of Section 54B of the Act.
On the other hand, the respondent’s counsel, Mr Aseem Chawla, contended that the petitioner did not provide sufficient details to establish the rural agricultural nature of the land in question. He also conceded that the entire sale consideration should not have been subject to tax.
The court directed the petitioner to appeal to the Commissioner of Income Tax (Appeals) and ensured no precipitate action would be taken against the petitioner in the interim. It also ordered that an application for stay with the relevant authority be filed within ten days.
Conclusion: The Delhi High Court’s ruling in Om Parkash Vs ITO illustrates the nuanced nature of land sale taxation. It also underscores the importance of accurate information and documentation in tax proceedings. The case offers a significant legal perspective, stressing that even in the face of perceived errors, the legal route of appeal must be pursued before seeking judicial remedies. The court’s emphasis on a statutory remedy reinforces the principle of exhaustion of remedies, a cornerstone of administrative law.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Allowed, subject to just exceptions.
2. Issue notice.
2.1 Mr Aseem Chawla, learned senior standing counsel, accepts notice on behalf of the respondent/revenue.
3. Mr Chawla says, that in view of the directions that we propose to pass, he does not wish to file a counter-affidavit, and that he will argue the matter based on the record presently available with the Court.
3.1 Therefore, with the consent of learned counsel for the parties, the matter is taken up for hearing and final disposal, at this stage itself.
4. This writ petition concerns Assessment Year (AY) 2014-15.
5. This is the second round of litigation in this Court for the petitioner. The petitioner had, in the first round, filed a writ action i.e., W.P.(C) 13119/2022, which was withdrawn with liberty to urge all contentions and submissions before the Assessing Officer (AO). The said order was passed on 09.09.2022.
6. Pursuant to the aforesaid circumstance, an assessment order dated 03.2023 has been passed.
7. Mr Sultan Singh Khatri, who appears on behalf of the petitioner, says that there are several flaws in the impugned assessment order, which has been passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [in short, “Act”].
7.1 According to Mr Khatri, inter alia, the assessment order is impregnated with the following errors:
(i) First, no notice under Section 143(2) of the Act was issued prior to passing the assessment order.
(ii) Second, the entire sale consideration on account of sale of agricultural land has been assessed to tax. There has been no adjustment for cost of acquisition.
(iii) Third, the benefit of Section 54B of the Act has not been granted.
8. Mr Chawla submits, that the petitioner did not furnish relevant details to the AO, to establish that the subject land was rural agricultural land.
9. Mr Chawla, however, cannot but accept, that the entire sale consideration could not have been brought to tax.
9.1 It is Mr Chawla‟s contention, that these aspects can be sorted out in an appeal, which the petitioner can take recourse to.
10. The record shows, that the present proceedings involve an element of both fact and law, which may require some examination qua facts, in particular, by the appellate authority. However, the fact that the cost of acquisition has been taken as „nil‟is an asp ct wich may requi e intercession by the AO, while ascertaining as to whether stay qua demand should be granted.
10.1 Therefore, the instant writ petition is disposed of with the following directions:
(i) The petitioner is granted six (6)weeks to prefer an appeal with the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”]
(ii) In the interregnum, no precipitate action will be taken against the
(iii) The petitioner will file an application for stay with the concerned authority, within ten [10] days from today.
(iv) The concerned officer will dispose of the application for stay within ten [10] days of the same being filed. The AO will inter alia, bear in mind, the broad contentions raised before us, and in particular, the aspect that the entire sale consideration has been brought to tax.
11. Needless to add, if the petitioner is aggrieved by the outcome in the application for stay, he would have liberty to take recourse to an appropriate remedy, albeit, as per law.
12. The writ petition is disposed of in the aforesaid terms.
13. Consequently, pending application shall stand closed.
14. Parties will act based on the digitally signed copy of the order.
