2017 (7) TMI 462 - HC - Income Tax

Reopening of assessment - capital gain - share of assessee in property sold - Held that - Going by the primary facts, we cannot come to the conclusion that the reasons recorded by the Assessing Officer lacked validity so as to prevent even the assessment to be made. As is well settled, as long as the Assessing Officer has tangible material at his command to form a bonafide belief that income chargeable to tax has escaped assessment, the Court would not interfere with the formation of such belief unless it is shown to be wholly perverse. The primary facts which we have noticed are that even as per the assessee, the property in question was sold for a consideration of ₹ 2.37 crores and the assessee would receive 50% share out of such sale proceed. The other connected fact is that adopting valuation for the purpose of stamp duty upon presentation of the document for registration, in case of coowner, the assessing authority has assessed the sale consideration for the purpose of capital gain to ₹ 3.37 crores. Thus we do not find that the notice for reopening requires any interference in exercise of writ jurisdiction. - Decided against assessee.

Summary

Issues:
1. Challenge to notice issued by Income Tax Officer for assessment year 2012-13.
2. Assessment of income based on property sale consideration.
3. Validity of reasons recorded by Assessing Officer.
4. Requirement of filing income tax return.
5. Interference with notice for reopening assessment.

Analysis:
1. The petitioner challenged a notice from the Income Tax Officer for the assessment year 2012-13, proposing to assess income based on the sale of an immovable property. The Assessing Officer believed that income chargeable to tax had escaped assessment due to the petitioner's failure to disclose material facts, warranting the reopening of the case under section 148 of the Income Tax Act, 1961.

2. The petitioner, owning a 50% share in the property sold for ?2.37 crores, argued that their income would be below the taxable limit as per the sale deed. However, the Assessing Officer determined the petitioner's share of the sale consideration at ?1.68 crores based on the assessment of a co-owner's property value at ?3.37 crores for the same assessment year.

3. The court noted that the petitioner had not filed an income tax return for the relevant year, emphasizing that the Assessing Officer had valid reasons to assess the income based on tangible material. Citing legal precedents, the court highlighted that as long as valid reasons exist, the Assessing Officer is empowered to assess income, ruling out any change of opinion issue.

4. Despite the petitioner's argument that their income would fall below the taxable limit, the court declined to speculate on the outcome of the proposed assessment. The court emphasized that the Assessing Officer's belief of income escaping assessment must be based on tangible material, which, in this case, was deemed valid due to the property sale details and valuation for stamp duty purposes.

5. Ultimately, the court found no grounds to interfere with the notice for reopening the assessment, dismissing the petition. The judgment underscored the importance of valid reasons and tangible material for the Assessing Officer to form a bonafide belief of tax evasion, maintaining that interference in such cases is unwarranted unless the belief is wholly perverse.