2016 (10) TMI 780 - HC - Income Tax

Reopening of assessment - original assessment was accepted without scrutiny u/s 143(1) - registration of the property in subsequent year whereas the consideration was received many years before - Held that - the attempt on the part of Assessing Officer to reopen the assessment for the Assessment Year 2009-10 was by way of abundant caution. Even the materials on record would prima facie suggest that the ground of payment and acceptance of on- money in purchase of landed property, is relatable to the period relevant to the Assessment Year 2013-14. Perhaps only on account of fact that the sale deed was registered during the period relevant for the Assessment Year 2009-10 and the amount involved was considerable, the Assessing Officer has issued the notice of reopening also in relation to the assessment year 2009-10. On such ground, though the original assessment was framed without scrutiny, we are inclined to quash the notice of reopening in connection with Assessment Year 2009-10. When we come to the notice of reopening for the Assessment Year 2013-14, the situation is vastly different. This notice has been issued within a period of 4 years from the end of relevant assessment year. There is nothing on record to suggest that the issues referred to in the reasons recorded by the Assessing Officer came up for consideration during such scrutiny assessment. It is not even the case of the petitioner that any addition on such count would be based on change of opinion. - Notice us/ 148 for the AY 2013-14 sustained. - Decided partly in favor of assessee.

Summary

Issues:
1. Reopening of assessment for the Assessment Year 2009-10 challenged by the petitioner.
2. Reopening of assessment for the Assessment Year 2013-14 challenged by the petitioner.

Analysis:

1. Reopening of Assessment for the Year 2009-10:
The petitioner challenged a notice seeking to reopen the assessment for the year 2009-10 based on information from a survey action revealing transactions related to the purchase of land. The Assessing Officer recorded reasons for reopening due to alleged escapement of income. However, the High Court found that the reasons for reopening were identical to those for the year 2013-14. It was noted that the transactions in question were more relevant to the later assessment year. Despite the sale deed being registered in 2009-10, the court concluded that the issues related to the escapement of income were more pertinent to the 2013-14 assessment year. Consequently, the court quashed the notice for reopening the assessment for 2009-10.

2. Reopening of Assessment for the Year 2013-14:
In contrast to the assessment for 2009-10, the court found that the notice to reopen the assessment for 2013-14 was issued within the statutory period and based on prima facie material indicating escapement of income. The court noted that there was no evidence to suggest that the issues raised in the reasons for reopening were previously considered during scrutiny assessment. Additionally, the court rejected the petitioner's argument that the same amount had been added in the hands of the company's director in a separate proceeding. The court emphasized that such issues should be addressed during the assessment proceedings. Therefore, the court dismissed the petition challenging the reopening of the assessment for 2013-14.

In conclusion, the High Court allowed the petition challenging the reopening of the assessment for the year 2009-10 and quashed the notice while dismissing the petition related to the assessment for the year 2013-14, finding the notice to be valid based on prima facie material indicating income escapement.