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2023 Supreme(Del) 1927
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
Avinash Kumar Setia – Appellant
Versus
Assessment Unit, National Faceless Assessmnet Centre, Delhi – Respondent
W.P.(C) 950 of 2023 & CM Nos. 3692-93 of 2023
Decided On : 25-01-2023
Mr Salil Kapoor, Mr Sumit Lalchandani, Mr Tarun Chanana and Ms Ananya Kapoor, Advocates, for the Petitioner.
Mr Sunil Agarwal, Sr Standing Counsel with Mr Pratyaksh Gupta, Jr Standing Counsel for Mr Abhishek Maratha, Senior Standing Counsel, for the Respondent.
Consistency in the treatment of similar transactions and providing due opportunity to the petitioner in the assessment process are essential principles in tax assessments.
Headnote:
Income Tax Act - Assessment Order - Section 143(3), Section 144B - The court set aside the impugned order and directed the Assessing Officer to pass a fresh order after giving due opportunity to the petitioner.
Fact of the Case:
The petitioner's grievance concerned the sale of shares resulting in Long Term Capital Gains (LTCG) and the treatment of the LTCG as income from other sources by the Assessing Officer.
Finding of the Court:
The court found discrepancies in the treatment of similar transactions by the Assessing Officer and directed the setting aside of the impugned order for a fresh assessment.
Issues: Treatment of LTCG, non-response of entities to notices, and lack of opportunity to the petitioner in the assessment process.
Ratio Decidendi: The court emphasized the need for consistency in the treatment of similar transactions and the importance of providing due opportunity to the petitioner in the assessment process.
Final Decision: The impugned order was set aside, and the Assessing Officer was directed to pass a fresh order after giving due opportunity to the petitioner.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral):
CM No.3693/2023
1. Allowed, subject to just exceptions.
W.P.(C) 950/2023 & CM No.3692/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. Issue notice.
2.1. Mr Pratyaksh Gupta, advocate, who appears on behalf of Mr Abhishek Maratha, learned senior standing counsel, accepts notice on behalf of the respondent/revenue.
3. Since Mr Maratha is not present, we have requested Mr Sunil Agarwal, learned senior standing counsel, who is present in court, to assist us in the matter.
4. Mr Agarwal says that in view of the directions that we intend to pass, a counter-affidavit need not be filed in the matter. Therefore, with the consent of learned counsels for the parties, this writ petition is taken up for hearing and final disposal, at this stage itself.
5. This writ petition is directed against the assessment order dated 26.12.2022, passed under Section 143(3), read with Section 144B of the Income Tax Act, 1961 [in short, "Act"].
6. The principal grievance of the petitioner/assessee concerns the sale of shares carried out by him, along with two other persons, i.e., shareholders, pursuant to the Share Purchase Agreement [in short, "SPA"] dated 21.11.2020.
6.1. The SPA concerned three shareholders, which included two persons and one entity, i.e., Mr. Avinash Kumar Setia/the petitioner, Mr Pradeep Sharma and Kochar Infrastructure Pvt. Ltd. [hereafter collectively referred to as the "shareholders", unless the context requires otherwise].
6.2. These shareholders held shares in Renuka Traders Pvt. Ltd. [in short, "RTPL"]. The transferee was an entity going by the name Imperia Structures Ltd. [in short, "ISL"].
7. Insofar as the petitioner was concerned, according to him, the sale of the shares resulted in Long Term Capital Gains (LTCG) amounting to Rs.12,63,23,160/-.
7.1. The petitioner claimed deduction under Section 54F of the Act, which was pegged at Rs.11,23,54,962/-.
8. The petitioner was issued a show cause notice dated 15.12.2022, whereupon a reply was preferred by the petitioner on 17.12.2022. Along with the reply, the petitioner furnished the relevant documents which included the aforementioned share purchase agreement, as also the annual return of RTPL.
8.1. Besides this, the transfer certificates in the prescribed form, i.e., Form SH-4, were also furnished.
9. The Assessing Officer (AO) has treated the LTGC said to have been earned by the petitioner, as income from other sources, and, accordingly, brought it to tax under Section 56 of the Act.
10. A perusal of the impugned order shows that there are two principal grounds on which the AO has reached the aforementioned conclusion.
10.1. First, a part of the consideration was received prior to the execution of the agreement to sell, i.e., 21.11.2020. The amount received prior to the said date is Rs.4,23,00,000/-. The balance amount was received after 21.11.2022; this was an amount equivalent to Rs.8,62,65,000/-.
10.2. Second, that upon notices being issued under Section 133(6) of the Act, both to RTPL and ISL, no response was received.
11. The AO was, thus, of the view that since the amount involved was huge, the said transaction had to be confirmed by the aforementioned entities.
11.1. Besides this, the AO was also of the view that mandatory steps for transfer of shares had not been taken by the petitioner i.e., the assessee.
12. The record shows that insofar as Mr Pradeep Sharma was concerned, the very same transaction, which involved almost the same number of shares and the same price, was accepted, and the said person was allowed to claim deduction/exemption under Section 54F of the Act. Furthermore, even in Mr Pradeep Sharma's case, consideration was received prior to the aforementioned execution of the sale purchase agreement.
12.1. It seems rather curious that, in the petitioner's case, the AO has taken a decision that because part of the consideration was r
