2018 (5) TMI 1550 - HC - Income Tax

Notice of re-assessment u/s 148 - purchase of immovable property by the assessee without furnising the source of investment - purchase in the name of self or in the name of trust - Held that - the documents which are enclosed by the assessee clearly discloses that the property has been purchased solely by the assessee himself in his name and no documentary evidence has been produced which establishes that the assessee has purchased the property on behalf of the trust - also the trust has not disclosed the purchase of the property in its return - thus the income had escaped assessment u/s 147 - decided against the assessee.

Issues Involved:
1. Notice of re-assessment under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Authority for initiating re-assessment proceedings.
3. Validity of the sanction for issuance of notice under Section 148.
4. Whether the property was purchased by the petitioner in an individual capacity or as a trustee/agent for a trust.

Issue-wise Detailed Analysis:

1. Notice of Re-assessment under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice of re-assessment issued on 14.04.2017 for the Assessment Year 2014-15. The Assessing Authority observed that the petitioner purchased an immovable property for ?20,00,000/- with a stamp value of ?1,55,60,000/- and did not furnish the source of investment. The Assessing Authority recorded reasons for the issuance of the notice under Section 148, believing that the income related to the source of investment had escaped assessment.

2. Jurisdiction of the Assessing Authority for Initiating Re-assessment Proceedings:
The petitioner claimed that the Assessing Authority lacked jurisdiction to initiate re-assessment proceedings. It was contended that the property was purchased in the capacity of trustee/agent for a trust, M/s Vidya Niketan Education Centre, and not in an individual capacity. The petitioner argued that the provisions of Section 56(2)(vii)(b) were not applicable and that the necessary permission for issuing the notice was not obtained from the competent authority.

3. Validity of the Sanction for Issuance of Notice under Section 148:
The petitioner contended that the sanction for the notice under Section 148 was not accorded by the competent authority, rendering the proceedings void ab initio. The court found that the sanction was granted by the Additional Commissioner as per Section 151(2) of the Act. It was noted that the Additional Commissioner was an authority higher in rank to the Joint Commissioner, and the sanction was validly granted.

4. Whether the Property was Purchased by the Petitioner in an Individual Capacity or as a Trustee/Agent for a Trust:
The court examined the sale deed and other documents, which indicated that the property was purchased in the name of the petitioner, Chandra Mohan Tiwari. The court observed that the petitioner did not provide documentary evidence to establish that the property was purchased for the trust. The petitioner’s argument that the property was purchased on behalf of the trust was not substantiated by the documents presented. The court noted that the petitioner had filed the return of income in an individual capacity without disclosing the purchase of the property.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioner’s arguments. The court held that the initiation of re-assessment proceedings by the Assessing Authority was justified. The petitioner was given the liberty to raise grievances before the competent authority and to adduce evidence or documents in support of his contentions. The writ petition was dismissed accordingly.

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