2023 (12) TMI 215 - HC - Income Tax

Reopening of assessment - notice issued beyond the period of four years - income earned out of the sale of the agricultural land undisclosed - HELD THAT - For the specific request of the respondent, the sale deed was produced. Hence, it cannot be construed as that it would fall under the explanation (1) of Section 147 of the Act. Sale deed is not a Books of accounts . Upon perusal of the exempted income, since the details furnished in the category with regard to sale of agricultural property were not fully disclosed, these details were called for. Therefore, the respondent's contention that in terms of explanation (1) to Section 147 that merely producing the Sale deed would not amount to providing the entire material facts fully and truly cannot be accepted. Further, he would submit that the explanation also provides other evidences . It is not that without specific request, these evidences were furnished. In order to justify whether the sale of property comes under capital gain income or not, the specific request was made calling upon the petitioner to file the sale deeds. The petitioner had disclosed the information with regard to the sale of the agricultural land and all the particulars with regard to sale of agricultural land was disclosed before the Assessing officer in full extent. Further, a perusal of the materials placed before this Court would suffice to arrive at a conclusion that there is no failure on the part of the petitioner with regard to providing material facts and the notice issued under Section 148 and 149 of the Act for re-opening assessment for the Assessment Year 2013-14 is not sustainable and the same is liable to be set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening notice under Section 147 of the Income Tax Act.
2. Compliance with the four-year limitation period for reopening assessments.
3. Adequacy of disclosure by the petitioner in the original return.

Summary:

1. Validity of Reopening Notice under Section 147:
The petitioner challenged the reopening notice dated 30.03.2021 and the subsequent order rejecting objections for reopening. The petitioner argued that the notice was issued beyond the four-year limitation period stipulated in Section 147 of the Income Tax Act, as the issue pertained to the Assessment Year 2013-2014. The petitioner had disclosed exempted income from the sale of agricultural land in the return filed on 25.09.2013 and provided all requested details to the Assessing Officer, thus no failure to disclose material facts occurred.

2. Compliance with the Four-Year Limitation Period:
The court noted that the four-year limitation period for reopening the assessment for the Assessment Year 2013-2014 expired on 30.03.2019. According to the first proviso to Section 147, reopening after this period is only permissible if there was a failure by the assessee to file a return or to disclose fully and truly all material facts necessary for the assessment. The court found that the petitioner had disclosed the income earned from the sale of agricultural land in the return and provided all necessary documents upon request.

3. Adequacy of Disclosure by the Petitioner:
The respondents argued that the petitioner did not fully disclose the particulars necessary for the assessment and that merely producing documents like the sale deed does not amount to proper disclosure under Section 147. However, the court held that the petitioner had provided all required information, including the sale deed, upon specific request from the Assessing Officer. The court concluded that there was no failure on the part of the petitioner to disclose material facts.

Conclusion:
The court set aside the reopening notice dated 30.03.2021 and the consequential order dated 09.03.2022, declaring them unsustainable. The writ petition was allowed, and no costs were imposed. Consequently, all connected miscellaneous petitions were closed.