2023 (7) TMI 512 - HC - Income Tax

Reopening of assessment u/s 147 - unexplained properties purchased - HELD THAT - All the findings are incorrect in as much as in the notice u/s 142 (1) issued petitioner was expressly called upon to submit all the details of all the properties purchased alongwith copies of purchase deed and copy of statement of the bank account from which the payment was made. In its reply petitioner has given details of property purchased including copies of Purchase Deed. The Purchase Deed also contains details of payments made. In the Assessment Order the AO has specifically stated that during the course of assessment proceedings assessee submitted various details as called for. The details filed by assessee are examined and placed on record and the CASS and ITS data has been verified from the details submitted by assessee. Assessment Order also states that the case was selected by CASS for scrutiny in view of large investment in property, among other things. Therefore, AO was certainly satisfied with all the details provided by petitioner. If he was not, in other words, if petitioner had not furnished copy of the statement of bank accounts from which the payment was made as mentioned in the notice certainly the AO would not have passed the Assessment Order the way he had passed. Moreover, in the reply to the notice issued u/s 148A(b), petitioner has given details of the consideration paid for the property and the source of funds. Therefore, for the AO to state in the impugned order dated 31st March 2023 that petitioner did not provide the details or explain the source etc., is an incorrect statement. We hereby quash and set aside the Show Cause Notice issued u/s 148A(b) - Decided in favour of assessee.

Summary

Issues involved:
The issues involved in the judgment are related to the assessment of income tax for Assessment Year 2016-17, specifically regarding the scrutiny of details of properties purchased by a partnership firm engaged in property development.

Assessment Year 2016-17 Return and Notice under Section 142(1):
The petitioner, a partnership firm engaged in property development, filed its return for Assessment Year 2016-17 declaring income. Subsequently, the firm received a notice under Section 142(1) of the Income Tax Act, 1961, requesting details of properties purchased during the year, including purchase deeds and bank account statements. The firm provided the necessary information in response to the notice, detailing the purchase of land for a housing project.

Assessment Order under Section 143(3) and Subsequent Notice under Section 148A:
Following the submission of details, an Assessment Order was passed under Section 143(3) of the Act, where the firm's return was processed and scrutinized for various reasons, including a large investment in property. However, the firm later received a notice under Section 148A, indicating that income chargeable to tax had escaped assessment due to the purchase of immovable property. The firm responded with a detailed reply, highlighting that the property transaction had already undergone scrutiny during the original assessment.

Impugned Order under Section 148A(d) and Court's Findings:
Despite the firm's explanations and submissions, an order was passed under Section 148A(d) of the Act, stating that the issue related to the property purchase needed fresh verification. The court, upon review, found discrepancies in the order, noting that the firm had provided all necessary details during the assessment process and in response to the subsequent notice. The court emphasized that the Assessing Officer was satisfied with the information provided, and therefore, the order to verify the source of funds for the property purchase was deemed incorrect.

Court's Decision and Disposal of Petition:
In light of the above findings, the court quashed and set aside the Show Cause Notice, the Impugned Order, and the subsequent notice issued under Section 148 of the Act. The petition was disposed of in favor of the petitioner, affirming that the necessary details had been adequately provided during the assessment process, and there was no basis for further verification of the property purchase transaction.