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2017 (11) TMI 1893 - AT - Income TaxReopening of assessment - Addition of assessee's share on account of profit generated from sale of property - assessee having l/6th share in the property - HELD THAT - There was no basis or material on record to calculate the value of land @Rs, 1000/- per sq.yd and of the cost of construction of ₹ 100/- per sq.ft. as is noted in the reasons. There is no material, what to say of tangible material available on record to justify re-opening of the assessment. AO merely on assumption, presumption, recording vague and non-existing reasons, recorded the reasons for re-opening of the assessment which are not sufficient to validate the re-opening of the assessment in the matter. Thus, there is no reason to believe with the Assessing Officer to assume the jurisdiction u/s148. Reasons recorded u/s 148 reflect as arbitrary use of power conferred, under section 147 of the Act. In this view of the matter, we set aside the orders of authorities below and quash the re-opening of the assessment under section 147/148 - Decided in favour of assessee.
Issues:
1. Addition of share of profit from the sale of property 2. Validity of re-opening assessment 3. Consideration of ITAT's decision in a co-owner's case Issue 1: Addition of share of profit from the sale of property The appeal was filed by the Revenue challenging the deletion of an addition of &8377;1,83,90524/- as the assessee's share of profit from the sale of property at Industrial Plot No.8, Phase-1, Industrial Area, Chandigarh. The assessee, along with other co-owners, sold the property for &8377;22,00,00,000/-, in which she had a 1/6th share. The AO referred the matter to the DVO to ascertain the value of the asset as on 01.04.1981. The AO calculated the capital gains based on the value determined by the DVO, over-ruling the objections of the assessee. The CIT(A) considered the issue and relied on the ITAT's decision in a co-owner's case, where the reassessment was quashed due to lack of material to justify the re-opening. The ITAT held that the reasons for re-opening were arbitrary, leading to the quashing of the reassessment. The ITAT's decision was followed, resulting in the deletion of the addition in the present case as well. Issue 2: Validity of re-opening assessment The validity of re-opening the assessment was a crucial aspect of the case. The ITAT, in a co-owner's case, emphasized that there was no tangible material to justify the re-opening of the assessment. The ITAT found the reasons for re-opening to be based on assumption and presumption, lacking a factual basis. Consequently, the ITAT quashed the re-opening of the assessment under section 147/148 of the Income Tax Act. The CIT(A) and the ITAT in the present case followed this decision, highlighting the importance of having valid and concrete reasons for re-opening an assessment to ensure the jurisdiction under the Income Tax Act. Issue 3: Consideration of ITAT's decision in a co-owner's case The decision of the ITAT in a co-owner's case played a significant role in the present appeal. The ITAT's ruling in the co-owner's case emphasized the necessity of tangible material to support the re-opening of an assessment. The ITAT's decision led to the quashing of the reassessment in the co-owner's case, which was followed in the present appeal as well. The ITAT's decision set a precedent for cases involving re-opening assessments based on arbitrary reasons, ensuring that assessments are conducted on valid grounds supported by factual material. In conclusion, the judgment by the ITAT Chandigarh addressed the issues of addition of share of profit from the sale of property, validity of re-opening assessment, and consideration of the ITAT's decision in a co-owner's case. The decision highlighted the importance of having concrete reasons and tangible material to support the re-opening of assessments, ensuring that assessments are conducted fairly and based on factual grounds. The appeal of the Revenue was dismissed based on the findings and conclusions drawn from the ITAT's decision in a similar case, emphasizing the need for valid justifications in assessment proceedings.
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