High Court overturns tax demand under Income Tax Act due to incorrect assessment, grants fresh hearing to petitioner. The High Court set aside the orders raising a tax demand under the Income Tax Act, finding them legally unsustainable due to the incorrect assessment of ...
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High Court overturns tax demand under Income Tax Act due to incorrect assessment, grants fresh hearing to petitioner.
The High Court set aside the orders raising a tax demand under the Income Tax Act, finding them legally unsustainable due to the incorrect assessment of the land sold. The matter was remitted back to the assessing officer for a fresh order after providing the petitioner with a hearing opportunity, granting relief to the petitioner.
Issues: Prayer for quashing orders under Articles 226/227 of the Constitution of India - Demand raised under Section 234-B of the Income Tax Act, 1961 - Dispute over sale of land - Assessment order challenged - Revision petition dismissed - Principles of natural justice alleged to be violated.
Analysis: The petitioner filed a petition under Articles 226/227 of the Constitution of India seeking to quash the orders dated 30.12.2011 and 4.3.2013, which raised a demand of Rs. 5,39,275/- including interest under Section 234-B of the Income Tax Act, 1961. The dispute revolved around the sale of land measuring 7 kanals 8 marlas by the petitioner, purchased in 1995 for Rs. 2,10,000/-. The petitioner claimed the total cost of acquisition to be Rs. 12,79,417/-, but the assessing officer calculated the taxable capital gain on Rs. 13,34,842/- by considering only 1 kanal of land sold. The petitioner's case was reopened under Section 147 of the Act, leading to the assessment order and subsequent revision petition before the Commissioner of Income Tax, which was dismissed on 4.3.2013.
The High Court noted that the sale deed was for 7 kanals 8 marlas of land, as confirmed by both parties. However, the assessing officer and the CIT erroneously considered only 1 kanal of land sold instead of the entire plot. Consequently, the court found the orders passed by the assessing officer and the CIT to be legally unsustainable. Therefore, the High Court set aside the impugned orders dated 30.12.2011 and 4.3.2013, remitting the matter back to the assessing officer for a fresh order after providing an opportunity of hearing to the petitioner in accordance with the law. As a result, the petition was allowed, granting relief to the petitioner in the matter regarding the incorrect assessment of the land sold for tax purposes.
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