2024 (8) TMI 186 - HC - Income Tax

Reopening of assessment - there was a difference of the market value i.e. Jantri rate and the value of registration and therefore, there is an escapement of the income - as argued submitted that section 43CA of the Act was not on Statute for the year under consideration and as the petitioner was not the owner of the land in question, section 50C of the Act would not be applicable - HELD THAT - AO has considered the registration of sale of the plot of land as if the petitioner is the owner of the such property and thereby has assumed the jurisdiction to reopen the assessment on the basis of the difference between the market value of the property and the registration value. It appears that the AO while disposing of the objections, has not considered the objections raised by the petitioner to the effect that there is no escapement of income as the difference between the value for stamp duty and the value of registration shown in the document cannot be taxed in any of the provisions of the Act. There is no information available with the AO which has a direct nexus with the income which is alleged to have been escaped. The petitioner has also disclosed fully and truly all material facts and therefore, as per proviso to section 147 AO would not have any jurisdiction as the impugned notice is issued beyond the period of four years from the end of the relevant assessment year. The petition succeeds and is accordingly allowed.

Summary

Issues Involved:
Challenge to notice under section 148 of the Income Tax Act, 1961 for A.Y. 2013-14 based on alleged escapement of income due to property transactions.

Detailed Analysis:

1. Reopening of Assessment:
The petitioner challenged the notice dated 16.03.2020 issued under section 148 of the Income Tax Act, 1961 for A.Y. 2013-14. The petitioner contended that the property in question was transferred in 1995 and was not owned by them, thus disputing the basis for the alleged escapement of income. The petitioner had previously filed objections and the assessment was framed under section 143(3) read with section 147, accepting the return income. The respondent issued another notice under section 133(6) seeking information on property transfer, leading to the impugned notice under section 148.

2. Arguments by Petitioner and Respondent:
The petitioner, a developer, argued that the property was booked under a development agreement in 1995, and as they were not the owner of the land, provisions like section 50C of the Act would not apply. They contended that no addition could be made under any provisions of the Act. On the other hand, the respondent argued that there was an escapement of income due to discrepancies between market value and registration value, invoking section 50C.

3. Judicial Analysis:
The court noted that the Assessing Officer misinterpreted section 50C and assumed jurisdiction based on differences in property values. The court found that the objections raised by the petitioner were not adequately considered, and there was no direct nexus between the alleged escaped income and available information. The court held that the petitioner had fully disclosed all material facts, and as per the proviso to section 147, the Assessing Officer lacked jurisdiction due to the notice being issued beyond the prescribed period.

4. Decision:
The court allowed the petition, quashing and setting aside the impugned notice dated 16.03.2020. The court ruled in favor of the petitioner, stating that the notice was beyond the statutory period and lacked merit due to the petitioner's full disclosure of material facts. The rule was made absolute in favor of the petitioner, leading to the dismissal of the notice under section 148.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the court's decision in the matter concerning the alleged escapement of income based on property transactions.