2018 (12) TMI 1220 - HC - Income Tax

Reopening of assessment - applicability of Section 50C - Held that - Perusal of the impugned order indicates that the Assessing Officer except extracting some case laws and making his general observation on the power under Section 147, has not adverted to any of the contentions raised by the petitioner in their objection against the reasons for re-opening, more particularly, with regard to the applicability of Section 50C to the facts and circumstances of the present case. Needless to state that the AO while considering the objections raised against re-opening has to necessarily deal with each of the objections raised and express his decision on those objections. A mere statement of power vested on the authority under Section 147 is not enough to presume that he has applied his mind to the objections. This Court makes it very clear that it is not expressing any view on the merits of the above contentions raised by the learned Senior Counsel for the petitioner, as this Court is inclined to set aside the order dated 22.11.2018 and remit the matter back to the AO to pass fresh orders, by considering all the objections raised by the petitioner, through their communications dated 09.11.2018 and 18.11.2018.

Summary

Issues Involved:
Re-opening of assessment under Section 147 of the Income Tax Act, 1961 based on alleged escapement of income due to application of Section 50C in the case of an Assessee for the assessment year 2013-2014.

Analysis:

1. Re-opening of Assessment:
The petitioner, an Assessee, had a scrutiny assessment order passed for the assessment year 2013-2014 under Section 143(3) of the Income Tax Act, 1961. Subsequently, the Assessing Officer issued a notice under Section 148 of the IT Act, 1961, alleging that income had escaped assessment due to the application of Section 50C. The petitioner raised objections, contending that Section 50C did not apply as the lands sold were treated as business income, not capital gains. The Assessing Officer rejected the objections and passed an order for re-opening the assessment.

2. Arguments by Petitioner:
The petitioner's Senior Counsel argued that the Assessing Officer had already considered and dealt with the issue of treating income from land sales as business income in the original assessment order. Therefore, the Officer could not re-open the assessment based on the same issue. Additionally, it was contended that Section 50C was wrongly relied upon for re-opening, as it pertains to capital gains, not business income.

3. Respondents' Submission:
The standing counsel for the respondents acknowledged that the Assessing Officer did not consider all objections raised by the petitioner, specifically missing the objection regarding the applicability of Section 50C raised in an earlier communication. It was suggested that the matter be remitted back to the Assessing Officer for fresh consideration considering all objections.

4. Court's Decision:
The Court noted that the Assessing Officer failed to address all objections raised by the petitioner, especially regarding the application of Section 50C. The Court emphasized that the Officer must consider and decide on each objection raised before re-opening an assessment. Therefore, the Court set aside the order for re-opening and remitted the matter back to the Assessing Officer to pass fresh orders, considering all objections raised by the petitioner. The Court clarified that it did not express any view on the merits of the contentions raised but focused on procedural compliance.

Conclusion:
The writ petition was allowed, the impugned order was set aside, and the matter was remitted back to the Assessing Officer for fresh consideration. The Court highlighted the necessity for the Officer to address all objections raised by the Assessee before re-opening an assessment to ensure procedural fairness and compliance with the law.