2016 (12) TMI 414 - HC - Income Tax

Reopening of assessment - capital gains on account of sale of tenancy/ lease hold rights - Held that - In particular, the Petitioner has specifically pointed that the capital gains on account of sale of tenancy/ lease hold rights arose in the Assessment Year 2008-09 as is evident from ₹ 1.90 Crores being offered to tax in his return of income for Assessment Year 2008-09. Therefore, the impugned reopening notice is without jurisdiction to the extent it seeks to open the assessment for the Assessment Year 2009-10. Besides, in law, the Petitioner submitted that there could be no reason to believe that any income chargeable to tax has escaped assessment under Section 50C of the Act. This for the reason that it would have no application in case of transfer of tenancy/ lease hold rights. The order dated 28th July, 2016 disposing of Petitioner s objection does not even remotely refer to the Petitioner s above objections let alone deal with them. Nevertheless, the objections are rejected by order dated 28th July, 2016. In the above view, Mr. Kotangle, learned Counsel appearing for the Revenue very fairly states that the impugned order dated 28th July, 2016 may be set aside and restored to the Assessing Officer. This would enable the Assessing Officer to dispose of afresh the Petitioner s objection dated 6th June, 2016 on proper application of mind tn the objections raised. Order dated 28th July, 2016 is quashed and set aside.

Summary

Issues:
Challenge to notice under Section 148 of Income Tax Act, 1961 and rejection of objection to the notice.

Analysis:
The Petitioner challenged a notice dated 29th March, 2016 issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961, along with the order dated 28th July, 2016 rejecting the Petitioner's objection to the notice. The notice pertained to the sale of property in Mumbai during the F.Y. 2008-09 relevant to A.Y. 2009-10 for a consideration of ?1,90,00,000, while the market value was ?3,22,52,500, invoking Section 50C of the Act. The Petitioner contended that the capital gains arose in A.Y. 2008-09 and were offered to tax in that year, making the reopening notice for A.Y. 2009-10 without jurisdiction. The objections raised were not addressed in the order dated 28th July, 2016, leading to its quashing and setting aside.

The Court noted that the objections raised by the Petitioner were not considered in the order dated 28th July, 2016. The Revenue's counsel agreed to set aside the order for fresh consideration of the objections by the Assessing Officer. Consequently, the order dated 28th July, 2016 was quashed, and the notice along with the objections were restored to the Assessing Officer for a fresh decision. The Revenue assured that the objection would be disposed of within two weeks from the date of the decision, and a stay was granted on the notice until the objection was resolved and for four weeks thereafter.

In conclusion, the Writ Petition was disposed of with no order as to costs, emphasizing the need for proper consideration of the Petitioner's objections by the Assessing Officer and ensuring a fair process in dealing with the tax assessment issues raised by the Petitioner for the relevant assessment year.