2024 (2) TMI 343 - HC - Income Tax

Reopening of assessment u/s 147 - invocation of machinery under Section 148A(b) as time barred - as submitted escapement of income as per Section 50C read with second proviso is more than 50 lakhs and that the AO was well within the ambit of law while he exercised the jurisdictional powers vested upon him u/s 148 149 before issuing the notice u/s 148 and hence prayed for dismissal of the writ petition. HELD THAT - Although, elaborate submission was made by the petitioner on merits on the strength of proviso to Section 50(C) of the Income Tax Act, 1961, the fact remains that the petitioner had not filed the regular return u/s 139 of the Income Tax Act, 1961 for the assessment year 2016-17. Whether the petitioner is entitled to the relief based on the points raised before this Court is capable of being decided by the Assessing Officer, as admittedly no regular Returns of Income was filed by the petitioner. Even, if the petitioner may have a case for dropping of the proposed proceedings it is better for the petitioner to file a proper reply to the notice issued u/s 148 as there is no previous history of any proceeding under Income Tax Act, 1961. Therefore, this Writ Petition has to fail. AO is therefore directed to take into consideration of all the relevant facts before proceedings to conclude whether any income had escaped Assessment for the AY 2016-2017. It is expected that the AO shall pass appropriate orders, within a period of three months from the date of receipt of a copy of this order.

Summary

Issues:
The judgment deals with the reopening of assessment under section 148A(d) of the Income Tax Act, 1961 based on the notice issued under section 148 of the IT Act.

Relevant Details:
The impugned order dated 31.03.2023 stated that the conditions under section 149(1)(b) were satisfied for reopening the assessment as no return of income was filed for the year under consideration. The petitioner had paid a sum of Rs. 39,00,000/- prior to filing the suit in O.S.No.436 of 2014. The suit was decreed, and the Sale Deed was executed in favor of the petitioner. The petitioner argued that the invocation of Section 148A(b) was defeated as the petitioner had paid only Rs. 1,00,000/- during the Assessment Year 2016-2017. The respondents contended that the notice under Section 148 was issued after due consideration as the petitioner had not filed returns for the said year.

The petitioner relied on the first proviso to Section 50C of the Income Tax Act, 1961, which allows the value assessed by the stamp valuation authority on the date of agreement to be considered for computing the full value of consideration for transfer. The respondents argued that the provisions of Section 50C were applicable as the fair market value of the property was Rs. 64,00,000/-. The Assessing Officer followed the necessary procedures before invoking Section 148 and had information about the property purchase.

The court noted that the petitioner had not filed a regular return under Section 139 of the Income Tax Act for the assessment year in question. It was suggested that the petitioner file a proper reply to the notice issued under Section 148 to address the proposed proceedings. The Assessing Officer was directed to consider all relevant facts before concluding whether any income had escaped assessment for the relevant year. The writ petition was dismissed with observations, and no costs were awarded.