2019 (1) TMI 1279 - HC - Income Tax

Reopening of assessment - notice issued beyond four years from the end of the relevant assessment year - sale of house property - Held that - Petitioner had made full and complete disclosure during the regular Assessment Proceedings of the sale of its house property and the consideration of ₹ 10 lakhs in the aggregate paid by the Petitioner to his wife and father out of a total consideration received while determining his capital gains during the regular Assessment Proceedings. In view of the fact that the impugned notice is issued beyond four years from the end of the relevant assessment year in respect of an assessment completed under Section 143(3) of the Act, where all material facts were disclosed would made the notice bad, in view of the proviso to Section 147 of the Act. There has been complete disclosure of material facts truly and fully as is evident from the fact that the Assessing Officer does not rely on fresh material in the reasons recorded in the impugned notice to reopen the Assessment. - decided in favour of assessee.

Summary

Issues:
Challenge to order seeking to reopen assessment for Assessment Year 2011-12 based on full and true disclosure of material facts during regular assessment proceedings.

Analysis:
The petition under Article 226 challenges an order seeking to reopen the assessment for Assessment Year 2011-12 based on the petitioner's sale of a house property and the gain offered to tax under 'long term capital gain.' The petitioner deducted sums paid to his wife and father from the total consideration received on the sale. The Assessing Officer passed an assessment order under section 143(3) of the Act in 2014, where the petitioner's wife and father also offered tax on the amounts received. The impugned notice to reopen the assessment in 2018 questioned the compensation paid to the petitioner's wife and father, claiming it was not justifiable as the petitioner was the sole owner of the property. The notice alleged that the income liable for taxation had escaped assessment due to the petitioner's failure to fully disclose material facts necessary for assessment. The notice was issued beyond four years from the end of the relevant assessment year, based on facts already on record.

The High Court noted that the petitioner made full and complete disclosure during the regular assessment proceedings regarding the sale of the house property and the compensation paid to his wife and father. The court emphasized that the impugned notice was issued beyond the prescribed time limit and did not rely on fresh material, making it invalid under the proviso to Section 147 of the Act. The court concluded that there was complete disclosure of material facts during the regular assessment, leading to the quashing and setting aside of the impugned notice.

In conclusion, the court allowed the writ petition, ruling in favor of the petitioner and setting aside the impugned notice seeking to reopen the assessment for Assessment Year 2011-12. No costs were awarded in the matter.