2016 (7) TMI 518 - HC - Income Tax

Reopening of assessment - exemption under section 54F not allowable - petitioner had pointed out that he had purchased two plots of land under a deed dated 20.6.2008 - Held that - Quite apart from the assessee s placing full material at the disposal of the Assessing Officer the claim was also examined by the Assessing Officer during assessment proceedings. Having accepted the claim in law but having made partial disallowance considering the facts it was thereafter not open for the Assessing Officer to issue notice for reopening that too without any additional material which would suggest that the assessee had made a false declaration or provided inaccurate particulars. - Decided in favour of assessee.

Summary

Issues:
Challenging notice for re-opening assessment for the year 2009-2010 under section 54F of the Income Tax Act.

Analysis:
The petitioner filed a return of income for the assessment year 2009-2010, disclosing total income and claiming exemption under section 54F of the Act based on investments in residential plots. The Assessing Officer made a partial disallowance in the original assessment. The re-opening notice issued beyond the four-year period was challenged by the petitioner, arguing that there was no failure to disclose material facts and the conclusions were based on existing records. The Counsel for the revenue contended that the exemption was not allowable as the investment was in open land, not a residential unit.

The High Court examined the reasons for re-opening and found that the Assessing Officer's conclusions were based on case records, indicating no new material outside the assessment proceedings. The Court emphasized that the notice for re-opening, issued beyond four years, was invalid due to the absence of failure to disclose material facts. Additionally, the assessment proceedings revealed that the petitioner had provided necessary details during the original assessment, including proof of investment in residential plots.

The Court further noted that the Assessing Officer had examined the petitioner's claim during the original assessment, accepted it in law, and made partial disallowance based on facts. Therefore, issuing a re-opening notice without new material suggesting false declaration was unwarranted. Consequently, the Court set aside the impugned notice dated 18.6.2014, allowing the petition and disposing of the matter.