High-Pitched, Unreasonable Reassessment Orders, Allahabad High Court Directs The Authorities To Take Action

The division bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji has observed that the centre should ensure to establish a monitoring cell at the level of government or CBDT within a month if it has not been established so far. The cell will ensure regular monitoring of the Local Committees, as well as follow-up actions and reviews by the Principal Chief Commissioners of Income Tax and Zonal Members, as well as an analysis of the quarterly reports.

"This Court is also frequently coming across writ petitions in which impugned orders reflect non-observance of principles of natural justice and even replies submitted by assessees are not being considered by Assessing Officers under the faceless regime as well as the non-faceless regime under the Act, 1961," the court said.

The petitioner/assessee submitted that the two parcels of land in question were jointly owned by seven people. The petitioner and Dushyant Bhati were also co-owners of the agricultural land, which was sold by two separate registered sale deeds. For the same set of reasons, proceedings under Section 148 of the Act, 1961, were initiated against the petitioner and Dushyant Bhati, who is the son of the petitioner. The Assessment Order under Section 147 read with Section 144 B of the Act, 1961, in respect of Dushyant Bhati has been passed by the National Faceless Assessment Centre, Delhi, accepting his claim that the land in question was accepted to be agricultural land situated beyond 8 km. of municipal limits.

Thus, the disclosed income in the returns for the Assessment Year 2013-14 has been accepted and no tax has been imposed in respect of the sale of the land in question.

On the other hand, a totally contrary view has been taken in the reassessment order under Section 147 read with Section 144 B of the Act, 1961, passed by the National Faceless Assessment Centre, Delhi. As per the reassessment order, 1/7th of the consideration in respect of the land in question, belonging to the petitioner, has been assessed as a long term capital gain on the finding that the land in question is not agricultural land. The respondents have accepted the claim of the petitioner's son in respect of the same land. On the other hand, in respect of the same land, the stand taken by the petitioner has been rejected and the sale proceeds of the agricultural land have been assessed as a long-term capital gain.

The CBDT, in its instructions/circular dated 09.11.2015, issued by the CBDT itself, has noted that the tendency to frame high-pitched and unreasonable assessment orders is still persisting due to the grievances being raised by the taxpayers. Such grievances not only reflect harassment of taxpayers but also lead to the generation of unproductive work for the Department as well as the Appellate Authorities. Under the instructions dated November 9, 2015, Local Committees were constituted to quickly resolve the taxpayers' grievances on account of high-pitched and unreasonable additions made by the Assessing Authorities. But it appears that the tendency to frame high-pitched and unreasonable assessment orders is still persisting, as also acknowledged by the respondents, which resulted in the issuance of instructions to give it statutory backing.

The court noted that taxpayers are one of the important pillars of the economy of the country. Their harassment not only causes a jolt to the economy of the country and employment but also comes in the way of economic policies of the government, including the policy of "Ease of Doing Business".

Case Title: Harish Chandra Bhati Versus Principal Commissioner Of Income Tax Noida

Case Citation: 2022 LiveLaw (AB) 268

Dated: 19.05.2022

Counsel For Petitioner: Advocate Ashish Bansal

Counsel For Respondent: Advocate Gaurav Mahajan,Arvind Kumar Goswami

Click Here To read/Download Order