NITIN NEMA VS ITO WARD 1(1) JABALPUR & ORS

Case snapshot

Sections / provisions: 147; 148; 148A(d); Income chargeable to tax

Questions before the Court / Tribunal

• Reassessment where alleged escaped income is gross sale consideration rather than taxable income; need to identify chargeable income before reopening.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

NITIN NEMA S/O SHRI S.L. NEMA, AGED ABOUT 42 YEARS, OCCUPATION: BUSINESSMAN R/O 4/10, GOPALBAGH DAMOH NAKA JABALPUR (MADHYA PRADESH) .....PETITIONER

2. Shri H.S. Chhabra, learned counsel for petitioner and Shri Siddharth Sharma, learned counsel for the respondents are heard on the question of admission so also final disposal.

3. The grounds raised by learned counsel for petitioner in support of challenge to the impugned order and notice are as follows:

(a) The income referred to in impugned order and notice Annexure P-3 and P-4 is not income chargeable to tax but is the gross proceeds/consideration received by petitioner for sale of 16 scooters during the assessment year 2016-2017 and thus the Revenue has no authority to invoke Section 148A or issue notice under Section 148.

3.1. Learned counsel for the petitioner in support of the aforesaid challenge and the grounds raised has relied upon Division Bench decision of Gujarat High Court rendered on 20.4.1999 in The Commissioner of Income Tax Vs. President Industries, 1999 SCC Online Guj. 402, the Division Bench decision of Bombay High Court in I.T.A. No.313/2013 Commissioner of Income Tax Vs. Shri

Appellant / assessee submissions

2. Shri H.S. Chhabra, learned counsel for petitioner and Shri Siddharth Sharma, learned counsel for the respondents are heard on the question of admission so also final disposal.

3. The grounds raised by learned counsel for petitioner in support of challenge to the impugned order and notice are as follows:

3.1. Learned counsel for the petitioner in support of the aforesaid challenge and the grounds raised has relied upon Division Bench decision of Gujarat High Court rendered on 20.4.1999 in The Commissioner of Income Tax Vs. President Industries, 1999 SCC Online Guj. 402, the Division Bench decision of Bombay High Court in I.T.A. No.313/2013 Commissioner of Income Tax Vs. Shri

4. Per contra, learned counsel for the Revenue has filed return opposing this petition raising the following contentions:

Revenue / respondent submissions

4. Per contra, learned counsel for the Revenue has filed return opposing this petition raising the following contentions:

“18. Accordingly, in the present case, the words found in Section 149 which is 'income chargeable to tax' must be read in terms of 'income' as arising out of the 'Capital Gains' as provided under Section 48 and this is the only manner of understanding the words, 'income chargeable to tax under Section 149(1)(b) of I.T. Act. 19. The contention of the Revenue that under Section 149 what is required to be taken note of, is the 'income that has escaped assessment' being the entirety of sale consideration of Rs.55,77,700/- cannot be accepted, in light of the express words in the statutory provision '……….income chargeable to tax…… which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more'. It cannot be stated that since the stage at which the notice is issued is at a premature stage, the entirety of consideration of Rs.55,77,700/- ought to be taken note of. A plain reading of Section 48 would provide that the entirety of sale consideration does not constitute 'income'. The memorandum explaining the provisions of Finance Act, 2021 does not in any way lead to giving a different interpretation to the words, 'income chargeable to tax'. The words used under…

6.4. The objection of learned counsel for Revenue that the petitioner having failed to file return for the relevant assessment year cannot seek to challenge the impugned order, is heard to be dismissed. The provisions from Section 147 to Section 151 pertaining to subject of income escaping assessment in the IT Act do not support the contention of the Revenue. There is nothing in Section 148, 148 A or Section 149 which may prevent assessee from taking advantage of said provisions merely because of his failure to file return.

Court / Tribunal analysis and reasoning

The reasoning is integrated into the packaged record. Read it with the facts, statutory text and operative directions; this editorial article does not invent missing reasons.

Operative decision and relief

6.4. The objection of learned counsel for Revenue that the petitioner having failed to file return for the relevant assessment year cannot seek to challenge the impugned order, is heard to be dismissed. The provisions from Section 147 to Section 151 pertaining to subject of income escaping assessment in the IT Act do not support the contention of the Revenue. There is nothing in Section 148, 148 A or Section 149 which may prevent assessee from taking advantage of said provisions merely because of his failure to file return.

10. Consequently, this petition stands allowed in the following terms:

Ratio and legal principle

• For reassessment, gross business receipts or sale consideration cannot mechanically be equated with income chargeable to tax; the statutory trigger concerns taxable income.
• A section 148A(d) order must meaningfully deal with a taxpayer's material objection and cannot proceed on a facially incorrect measure of escaped income.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with reassessment where alleged escaped income is gross sale consideration rather than taxable income; need to identify chargeable income before reopening. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• 147 - apply the exact version considered in the judgment.
• 148 - apply the exact version considered in the judgment.
• 148A(d) - apply the exact version considered in the judgment.
• Income chargeable to tax - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• Uttrakhand Poorv Sainik Kalyan Nigam Ltd. vs. ITO - ITAT Dehradun Circuit Bench
• Jindal Exports and Imports Private Limited vs. DCIT - Delhi High Court
• ITO CIR 6(1)-4 VS ASAHI INFRA & PROJECTS LIMITED - ITAT Mumbai

Different outcome / possible distinction

• Amrita Jhaveri (Ms.) v. Dy. CIT - Quashed / set aside
• M/s. Aditi Constructions v. DCIT - Quashed / set aside

Full judgment and source control

Read / download packaged judgment record

Source class: OFFICIAL_PRIMARY_DIGITALLY_SIGNED_AUTHENTICATED · Repository status: PUBLISH_READY