2023 (11) TMI 36 - HC - Income Tax

Reopening of assessment - Assessee entered into high value transactions, inter alia, concerning the subject immovable property - petitioner s assertion was that he had not earned any other income, apart from the amounts indicated hereinabove, from sale of property and interest - Petitioner submitted that if the acquisition price of the subject property is taken into account, the escaped income will be less than Rs. 50,00,000/-. and as reassessment proceedings have been commenced beyond three (3) years from the end of relevant AY, i.e., AY 2016-17, and, therefore, are time-barred. HELD THAT - We would have accepted the submission of Petitioner but for the fact that, concededly, the petitioner did not file his Income Tax Return. Therefore, according to us, the matter may require further inquiry. As said, before the AO proceeds further, he will give an opportunity to the petitioner to submit further documents in support of his defence (to which, we have made a broad reference hereinabove). AO will also deal with the stand of the petitioner that the subject property which was sold, was bought in and about 2010, at the price indicated hereinabove. AO will, in any event, deal Petitioner's submission that notwithstanding the fact that Return of Income (ROI) had not been filed, the escaped income would not exceed Rs. 50,00,000/-. This exercise will be undertaken before passing an assessment order. The petitioner is given leeway to file the ROI within the next thirty(30) days.

Summary

Issues involved: Reassessment proceedings, high value transactions concerning immovable property, capital gains, income tax return, time-barred proceedings.

Reassessment Proceedings: The writ petition pertains to Assessment Year 2016-17, where the Assessing Officer initiated reassessment proceedings against the petitioner due to high value transactions involving an immovable property. The petitioner had sold the property to two individuals for a cumulative amount, and it was revealed that the petitioner had earned capital gains from the sale.

Submission of Documents: The AO raised concerns regarding the petitioner's failure to submit essential documents such as the sale deed, agreement to sell, certificate of transfer of rights, and possession letter. The petitioner's counsel mentioned that these documents would have been provided if requested.

Escaped Income and Time-Barred Proceedings: The AO alleged that a significant amount had escaped assessment, but the petitioner's counsel argued that considering the acquisition price of the property, the escaped income would be lower. Additionally, the counsel contended that the reassessment proceedings were time-barred as they were initiated beyond the stipulated three-year period from the end of the relevant assessment year.

Further Inquiry and Opportunity to File Return: Despite the time-barred argument, the court deemed it necessary for further inquiry as the petitioner had not filed the Income Tax Return. The AO was directed to allow the petitioner to submit additional documents and address the petitioner's claim regarding the purchase price of the property.

Conclusion: The court directed the petitioner to file the Return of Income within thirty days and instructed the AO to consider all submissions before passing an assessment order. The writ petition was disposed of accordingly, with parties instructed to act based on the digitally signed copy of the judgment.