Rajasthan High Court Stayed Time Order: Time Of Accrual For Taking Income Gets Postponed Till Adjudication Of Dispute By Civil Court

The Rajasthan High Court in the case Lalit Kumar Kothari Versus National Faceless Assessment Centre and Anr. observed and has stayed the penalty order and consequential demand notices passed by the court under Section 270-A and Section 156 of the Income Tax Act.
The bench comprising of Justice Pushpendra Singh Bhati and Justice Munnuri Laxman was hearing the present matter.
The court in the case observed and has issued the notice to the National Faceless Assessment Centre, NFAC.
The Court stated that that the time of accrual for taxing income gets postponed till the dispute is adjudicated by the Civil Court.
Therefore, they reopened the assessment on the footing that the Petitioner-Assessee had undervalued the consideration in the sale deed.
The notice has been issued by respondent-department under section 148 of the Income-tax Act of 1961 to the petitioner for reopening the assessment in relation to FY 2017-2018.
The respondent passed a revised assessment order dated March 9, 2023 and that the petitioner replied that a notice as stated under Section 148 was submitted to Income- Tax.
The petitioner in the plea stated that the civil rights with regards to the property were under adjudication in the civil suit pending before the Civil Court, Mavli, District Udaipur.
On the other hand, the respondent department while rejecting the reply of the petitioner, passed the consequential notice of demand dated 21.09.2023, against the petitioner while ignoring the fact that the civil rights with regards to the property in question are under adjudication in Civil Suit No. 12/2020 pending before the Civil Court.
The petitioner in the plea contended that since the dispute regarding power of attorney and the sale deed executed in favour of the petitioner is pending before a civil court, the petitioner is not owed any debt and since the dispute is pending before the Civil Court, there is no factual or deemed accrual of income. The said order deserves to be quashed and set aside.
It has also been contended by the petitioner that once there is a cloud of suspicion over the Petitioner’s title being adjudicated by civil court and the petitioner is not in possession of the land, it would be an absurdity if department reopens assessment.
The court in the case observed and has issued the notice to the respondent department
The court while considering the facts and circumstances of the case clarified that the department shall be at liberty to file an application for vacation of the interim order.
Accordingly, the court listed the matter for further consideration on April 03, 2024.
The counsel, Advocate Avin Chhangani appeared for the Petitioner.
The counsel, Advocate Gajendra Chauhan represented the respondent.