2020 (10) TMI 305 - HC - Income Tax

Reopening of assessment u/s 147 - notice u/s 148 is barred by limitation - petitioner had under quoted the sale amount in the returns - HELD THAT - Under the proviso to Section 147 department was entitled to issue the notice on or before 31.03.2014, on which date, the four year period prescribed under this Section, expires. Apparently, the notice under Section 148 dated 30.03.2016 is beyond the period of six years and as such, the notice itself is bad in law, since barred by limitation. As such, the consequential impugned assessment order dated 30.12.2016, cannot be sustained. Department submission that the petitioner had disclosed the full value in Annexure 1-A of the sale deed and that he had shown a lesser amount in the returns, cannot be sustained for two reasons. Firstly, such a reasoning was not assigned while the petitioner's objections were considered at the time of passing the assessment order. This ground of objection has been brought in the first time by way of a counter affidavit, which is impermissible. Secondly, Annexure 1-A is a statement made along with sale deed presented for registration and the value of ₹ 1,94,95,000/- is only a guideline, whereas the recitals in the sale deed evidences that the property was purchased at ₹ 1,50,00,000/-. Therefore the guideline value shown in the Annexure 1-A of the sale deed, cannot be construed to be an actual sale value and therefore the consequential decision that the petitioner had under quoted the sale amount in the returns, cannot be accepted. Nevertheless, it is made clear that this Court is not expressing its views that the sale price shown in the Sale Deed would be conclusive evidence for determination. Impugned assessment order cannot be sustained since it is barred by limitation and accordingly, the same stands quashed - Decided in favour of assessee.

Issues:
1. Validity of notice under Section 148 for reopening assessment.
2. Barred by limitation under Section 147 of the Income Tax Act.
3. Discrepancy in property value disclosed in returns and sale deed.

Analysis:

Issue 1: Validity of notice under Section 148 for reopening assessment
The petitioner challenged the notice issued under Section 148 to reopen the assessment for the Assessment Year 2009-10. The petitioner requested to treat the returns already filed as valid in response to the notice under Section 140, which was rejected by the respondent. The assessment under Section 143(3) was completed through the impugned assessment order dated 30.12.2016.

Issue 2: Barred by limitation under Section 147 of the Income Tax Act
The petitioner contended that the notice under Section 148 issued on 30.03.2016 was beyond the prescribed period of four years, thus barred by limitation as per the proviso to Section 147 of the Act. The High Court observed that the notice under Section 148 was issued beyond the period of six years, making it bad in law and unsustainable. Consequently, the impugned assessment order dated 30.12.2016 was deemed invalid and quashed.

Issue 3: Discrepancy in property value disclosed in returns and sale deed
The department argued that the petitioner disclosed a lesser purchase value in the balance sheet compared to the sale value mentioned in the sale deed. However, the Court noted that the petitioner's objections regarding the discrepancy were not considered during the assessment process. The Court clarified that the guideline value in the sale deed is not conclusive evidence of the actual sale value, and the department's decision based on this discrepancy was not accepted.

In conclusion, the High Court allowed the Writ Petition on the grounds that the notice under Section 148 was barred by limitation, rendering the impugned assessment order invalid. The discrepancy in property value disclosed in the returns and sale deed was not considered conclusive evidence. The Court quashed the assessment order dated 30.12.2016, and the connected Miscellaneous Petition was closed without costs.

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