2022 (4) TMI 637 - HC - Income Tax

Reopening of assessment u/s 147 - Purchase of flat - complaint filed by the assessee with Maharashtra RERA, assessee has himself mentioned that he had purchased the said flat for a consideration for undone flat - HELD THAT - We have to note that petitioner had applied to the Income Tax Authorities under the Right To Information Act, 2005 (RTI Act) to find out the basis of information that Assessing Officer had received and in the order under Section 7(1) of the RTI Act, to a query raised by petitioner as to whether the verification of the complaint was done by ACIT 24(1), it is stated negative in reference of authenticity as per case records. We have to note that the order under Section 7(1) of the RTI Act has also been passed by the same Circle 24(1) which has proposed to reopen petitioner s assessment. In our view, the Assessing Officer had enough time to find the veracity or authenticity of the complaint if he had any doubt and he could not have dismissed the objections by just a wave of his hand. We cannot accept the statement of Mr. Sharma because even though the police complaint was available with the Assessing Officer he chose not to rely upon the police complaint in the reasons recorded for re-opening. Even in the order on objections there is no reference to this police complaint. Even in the affidavit in reply to the petition there is no reference to this police complaint. Mr. Sharma states that respondent cannot be precluded from issuing fresh reasons to the notice by relying upon even this police complaint. We cannot express our opinion on this. In such a case firstly the notice issued under Section 148 of the Act has to go. The reason to believe must be that of the Assessing Officer. Neither the court nor the advocate can supplement it or add to it or improve upon it. If the Revenue can do so, if permissible in law and in accordance with law, Revenue may do what it is adviced and of course petitioner may raise whatever objections he has. We repeat we have not expressed any opinion on this. One more point which we find strange is in the affidavit in reply filed through one Mr. Milind Jagtap, Assistant Commissioner of Income Tax Circle 24(1), Mumbai affirmed on 7th August, 2020, it is stated in paragraph no.7 that the assessee during the course of re-assessment proceedings had enough opportunity to produce the copy of amended complaint made before the Maha RERA Authorities and the assessment proceedings would have been finalized by taking cognizance of the same. However, assessee has failed to do for the reasons best known to him. We have stated it is rather strange because in the order disposing the objections the Assessing Officer acknowledges having received the amended copy of the RERA complaint. We are satisfied that the notice issued under Section 148 of the Act has to go. We hereby quash and set aside the notice - Decided in favour of assessee.

Summary

Issues:
1. Impugned notice dated 31st March, 2019 under Section 148 of the Income Tax Act, 1961.
2. Order dated 12th November, 2019 disposing petitioner's objections to re-open assessment for A.Y. 2012-13.

Analysis:

Issue 1: Impugned Notice under Section 148
The petitioner challenged the notice issued under Section 148 of the Income Tax Act, 1961, alleging that income chargeable to tax for A.Y. 2012-13 had escaped assessment. The notice was based on information indicating a significant difference between the consideration amount for a flat as per the complaint filed with Maharashtra RERA and the amount declared to the tax department. The notice was issued after obtaining approval from the Principal Commissioner of Income Tax, Mumbai. The reasons for re-opening the assessment primarily relied on the discrepancy in the declared consideration amount for the flat, leading to an alleged escapement of income.

Issue 2: Disposal of Objections
The petitioner filed objections to the notice, highlighting that the complaint with Maharashtra RERA, which formed the basis of re-opening, had been amended before the notice was issued. The petitioner provided the amended complaint to the Assessing Officer, but the authenticity of the amended document was questioned, and the objections were dismissed. The petitioner also raised concerns about the lack of verification of the original complaint by the Assessing Officer. The court noted that the Assessing Officer had ample time to verify the authenticity of the complaint but failed to do so adequately. The court emphasized that the Assessing Officer's dismissal of objections without proper verification was unjustifiable.

Judgment and Conclusion
The High Court quashed the notice dated 31st March, 2019, and the subsequent order dated 12th November, 2019, citing the inadequacy of verification and the dismissal of objections based on authenticity concerns. The court allowed the Revenue to re-open the assessment if permissible under the law and within the limitation period, emphasizing the need for adherence to the statutory process. The court appreciated the assistance of the Amicus Curiae in the case.

In conclusion, the judgment highlighted the importance of proper verification and adherence to legal procedures in re-opening assessments under the Income Tax Act, ensuring fairness and transparency in tax proceedings.