2024 (6) TMI 356 - AT - Income Tax

Validity of Reassessment proceedings - unexplained investment u/s 69 - Taxability in current AY or not? - HELD THAT - From the judgment of Chintan Jadavbhai Patel 2017 (3) TMI 734 - GUJARAT HIGH COURT we note that capital gains, if any, is taxable, in the hands of the assessee, in the previous assessment year 2011-12, (since the Satakhat was executed on 16.08.2010, which falls in the assessment year 2011-12). Therefore, the impugned capital gain, if any, is not taxable, in the assessment year 2012-13, hence the reasons recorded by the assessing officer for assessment year 2012-13 is not sustainable in the eye of law. Therefore, the issue of reopening of the assessment, is covered in favour of assessee, by the judgment of Chintan Jadevbhai Patel (supra), therefore respectfully, following the binding precedent, we quash the re-assessment proceedings initiated against the assessee u/s 147 - Assessee appeal allowed.

Summary

Issues Involved:
1. Reopening of assessment u/s 147 by issuing notice u/s 148.
2. Validity of assessment order u/s 147 r.w.s. 143(3).
3. Addition of Rs. 65,40,750/- on account of unexplained investment u/s 69.

Summary:

Issue 1: Reopening of assessment u/s 147 by issuing notice u/s 148
The assessee challenged the reopening of the assessment u/s 147 by issuing notice u/s 148, arguing that there was no tangible material for the assessment year (AY) 2012-13. The Tribunal noted that the information regarding the Satakhat executed on 16.08.2010, which falls in AY 2011-12, was used to reopen the assessment for AY 2012-13. The Tribunal held that the reasons recorded by the Assessing Officer (AO) for AY 2012-13 based on the Satakhat executed in AY 2011-12 are not sustainable in law. The Tribunal relied on the judgment of the Hon'ble Jurisdictional High Court in the case of Chintan Jadavbhai Patel Vs. Income-tax Officer [2017] 79 taxmann.com 302 (Guj), which held that capital gains are taxable in the year of execution of the deed. Therefore, the Tribunal quashed the re-assessment proceedings initiated against the assessee u/s 147.

Issue 2: Validity of assessment order u/s 147 r.w.s. 143(3)
The assessee contended that the assessment order u/s 147 r.w.s. 143(3) is bad in law as the assessee was not given a copy of the material available with the department despite repeated requests. The Tribunal, having quashed the reassessment proceedings itself, did not find it necessary to adjudicate on this issue.

Issue 3: Addition of Rs. 65,40,750/- on account of unexplained investment u/s 69
The AO made an addition of Rs. 65,40,750/- on account of unexplained investment u/s 69, based on the difference between the sale consideration as per the registered sale deed and the Satakhat. The Tribunal, having quashed the reassessment proceedings, rendered this issue academic and did not require any adjudication.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the reassessment proceedings initiated u/s 147 and rendering other matters academic. The order was pronounced on 17/01/2024 by placing the result on the Notice Board.