2020 (1) TMI 873 - HC - Income Tax

Reopening of assessment u/s 147 - capital gain - main contentions is that the property in question though sold vide Deed of Transfer dated 30 March 2012, the cheque was encashed on 16 April 2012 , the possession was handed over on 20 April 2012 and the registration was completed on 20 April 2012 with documents supporting this contention - HELD THAT - The order rejecting the objections of the Petitioner nowhere refers to any of these documents. The Assessing Officer has merely reiterated the reasons already supplied. The Petitioner has relied upon the decision in the case of Commissioner of Income-tax-2 v. Millennium Estates (P.) Ltd. 2018 (2) TMI 308 - BOMBAY HIGH COURT to contend that for the purpose of capital gains, handing over of possession is of importance. Contention of the Petitioner, that there is no reason to believe that the income had escaped assessment, prima facie, holds merit.

Summary

Issues:
Challenge to notice seeking to reopen assessment for the assessment year 2012-13 under section 148 of the Income Tax Act, 1961.

Analysis:
The petitioner challenged a notice issued under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2012-13. The reasons accompanying the notice stated that a deed of transfer was executed in 2012 for the sale of a flat, and income had escaped assessment as the Short Term Capital Gain should have been offered in 2012-13 instead of 2013-14. The objections filed by the petitioner were disposed of by an order dated 4 October 2019.

The main contention raised by the petitioner was regarding the timing of the sale transaction, highlighting that although the deed of transfer was dated 30 March 2012, the cheque was encashed, possession was handed over, and registration was completed in April 2012. The petitioner submitted documents supporting this timeline, which were not considered in the order rejecting the objections.

The Assessing Officer's rejection of the objections did not reference the documents provided by the petitioner. The petitioner's counsel cited a relevant case law emphasizing the importance of possession for capital gains assessment. Considering this argument, the court found merit in the petitioner's contention that there was no reason to believe that the income had escaped assessment, prima facie.

As a result of the above analysis, the court ruled in favor of the petitioner and issued a judgment in their favor. The court also ordered the ad-interim relief granted earlier to continue during the pendency of the petition, providing interim relief to the petitioner.