2024 (2) TMI 843 - HC - Income Tax

Validity of reopening of assessment u/s 147/148A - tangible matter to issue notice under Section 148A or Section 148 - reasons to believe - unaccounted income, which included on-money (cash) receipts on sale of certain flats/units by different entities - only basis on which an allegation is made that Petitioner has paid cash is a statement of somebody from Lucina that it received cash from Petitioner HELD THAT - There is nothing on record to indicate that Petitioner has paid the entire amount. Further, in the order, it is stated that the income of source for purchase of immovable property remained unexplained and therefore, it would fall within the meaning of assets as per Explanation-1 of Section 149 of the Act. There is no explanation as to when it is the AO s case that the market value of the flat itself was only Rs. 51,55,000/-, how could the property be valued at Rs. 64,94,200/-. This has been done, in our view, simply to get over the fetters placed u/s 149(1)(b) of the Act. AO has not explained any of these factors. Even in the assessment order, it is stated therefore, during the assessment proceedings, the source of payments alongwith on-money payment towards the purchase of flat have been asked to assessee. However, assessee has failed to provide the justified reply in regard to the complete source of payments, which have been made during the Assessment Year under consideration for purchase of flat. During the assessment year, only a payment of Rs. 10,00,000/- has been paid and there is nothing that the AO has produced to show that any amount in excess of Rs. 50,00,000/- has been paid during the assessment year. The entire basis is the letter received from Lucina. In our view, that alone is not enough, particularly when assessee has denied having paid any cash to Lucina. The onus is on the Revenue to show evidence that assessee has in fact paid cash and purchased immovable property of Rs. 64,94,200/-. Simply relying on a letter allegedly from Lucina is not enough. In our view, there is no tangible matter to issue notice under Section 148A or Section 148 of the Act. We also note from the assessment order that in any case this amount of Rs. 20,91,200/- has been offered by Lucina to tax before the Settlement Commission. If that is the case, we wonder how can the amount be taxed again in the hands of Petitioner. Thus the impugned order passed u/s 148A(d) has to be quashed and set aside. Decided in favour of assessee.

Summary

Issues involved:
The issues involved in the judgment are related to the validity of the notice issued under Section 148 of the Income Tax Act, 1961, the assessment order passed under Section 148A(d) of the Act, and the imposition of tax liability on the petitioner based on alleged unaccounted income.

Details of the Judgment:

Validity of Notice under Section 148:
The petitioner, a senior citizen, had not filed a return of income for Assessment Year 2015-2016 due to no taxable income. The petitioner paid a sum of Rs. 10,00,000 to a development company for a flat. The notice under Section 148 was issued based on information that the company received cash from the petitioner. However, the petitioner denied paying cash and provided explanations for the source of funds. The court held that there was insufficient evidence to support the allegation of cash payment, and the notice was not valid.

Assessment Order under Section 148A(d):
The assessment order passed under Section 148A(d) alleged unexplained income for the purchase of the flat. The petitioner denied paying cash and provided explanations for the source of funds. The court found discrepancies in the assessment order, noting that the AO failed to provide evidence of cash payments and the valuation of the property. The court quashed the order, notice, and assessment order, as there was no tangible evidence to support the tax liability imposed on the petitioner.

Conclusion:
In view of the circumstances and lack of concrete evidence, the court quashed the impugned order passed under Section 148A(d) of the Act, along with the notice and assessment order. The petitioner was relieved from the tax liability, and the appeal was withdrawn. The petition was disposed of with no order as to costs.