2017 (1) TMI 1038 - HC - Income Tax

Reopening of assessment - reasons to believe - non-failure on the part of the assessee to disclose truly and fully the transaction - Held that - It is required to be noted that the assessee was required to furnish the full particulars with respect to the payment of full sale consideration of ₹ 43 lakh. He could not have produced the similar material like return of income, books of account, ledger account, bank statement of his wife. In the objections the petitioner had not stated that the sale consideration was required to be paid by both of them i.e. 50% 50%. From the sale deed it appears that out of ₹ 43 lakh towards sale consideration, ₹ 23 lakh are alleged to have been paid by cash. It is required to be noted that it is the case on behalf of the petitioner that in earlier year he sold the property worth ₹ 67 lakh (approximately) and therefore, he was having the cash. However, it is required to be noted that in the objections the assessee has not come out with the said case. It is required to be noted that sale consideration with respect to the aforesaid transaction is more than ₹ 30 lakh, as per the relevant Rules, in the return of income itself the same was required to be disclosed, which even considering the manual return filed by the assessee it appears that the petitioner assessee has not disclosed sale transaction. Shri Soparkar, learned advocate appearing on behalf of the assessee has submitted that so far as the assessee is concerned, the sale consideration qua him will be ₹ 21,50,000/which is less than ₹ 30 lakh and therefore, the said Rule shall not be applicable. The aforesaid cannot be accepted. What is required to be considered is the total consideration of the transaction which admittedly is about ₹ 43 lakh. Therefore, it is the case of non-failure on the part of the assessee to disclose truly and fully the aforesaid transaction. Therefore, all the requirement under Section 147 of the IT Act to reopen the assessment have been satisfied. - Decided against assessee.

Issues Involved:
1. Validity of the notice under Section 148 of the Income Tax Act, 1961.
2. Whether the reopening of the assessment for AY 2009-10 was justified.
3. Whether there was a failure on the part of the assessee to disclose material facts fully and truly.
4. Whether the objections raised by the assessee against the reopening were adequately addressed by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Validity of the notice under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice under Section 148 of the IT Act, which was issued for reopening the assessment for AY 2009-10. The notice was based on AIR information indicating that the assessee had purchased immovable property valued at ?43,00,000 during FY 2008-09 but had not filed a return of income for AY 2009-10. The court noted that the Assessing Officer (AO) had issued a query letter on 28.12.2015 requesting proof of the financial transaction, but the assessee did not comply. Consequently, the AO issued the impugned notice, which the court found to be valid and within the scope of Section 147 of the IT Act.

2. Whether the reopening of the assessment for AY 2009-10 was justified:
The petitioner argued that the reopening was based on the incorrect premise that no return of income was filed for AY 2009-10. The assessee contended that he had filed the return, which was later produced along with objections. The court, however, observed that the AO had prima facie material to believe that income had escaped assessment, justifying the reopening. The court emphasized that the sufficiency or correctness of the material is not to be considered at this stage, referencing the Supreme Court's decision in Raymond Woollen Mills Ltd.

3. Whether there was a failure on the part of the assessee to disclose material facts fully and truly:
The court examined whether the assessee had disclosed all material facts fully and truly. It was noted that the assessee had not initially responded to the AO's request for details regarding the ?43 lakh transaction. Even when objections were raised, the court found that the assessee did not provide adequate proof of the entire sale consideration, particularly the cash component of ?23 lakh. The court concluded that there was a failure on the part of the assessee to disclose all material facts, thereby justifying the reopening of the assessment.

4. Whether the objections raised by the assessee against the reopening were adequately addressed by the Assessing Officer:
The assessee's objections included the argument that the property was jointly purchased with his wife and the transaction was reflected in his books of account. The AO, in a speaking order, addressed these objections but found discrepancies in the sale deed and bank statements. The court held that the AO had adequately addressed the objections and that the reopening was not mechanical but based on detailed consideration of the material on record.

Conclusion:
The court dismissed the petition, upholding the validity of the notice under Section 148 and the reopening of the assessment for AY 2009-10. It found that the AO had acted within the legal framework and that there was prima facie material to justify the reopening. The court emphasized that the assessee had failed to disclose material facts fully and truly, and the AO had adequately addressed the objections raised against the reopening. The petition was dismissed with no costs, and the interim relief granted earlier was vacated.

← Previous Next →