2021 (4) TMI 1227 - HC - Income Tax

Reopening of assessment u/s 147 - LTCG on sale property - HELD THAT - Sale consideration shown by the assessee in the return of income for the assessment year 2013- 14 is not disputed. The document registered, which is now in appeal under Section 47A of the Indian Stamps Act is also not in dispute. Thus, the market value as stated in the document is disputed and the actual market value and the stamp duty paid is also in dispute. Thus, the disputes are providing new material facts and informations to the Income Tax Department for reopening of the assessment. The manner in which the sale deed was valued by the assessee and the stamp duty paid at the time of registration as well as the appeal filed under Section 47A of the Indian Stamp Act and the actual market value prevailing during the relevant point of time with reference to the subject property, provides new information and an additional material, which were not considered by the Assessing Officer at the time of original assessment. Thus, the said factors would be new material for the purpose of reopening of assessment. Thus, the reopening of the assessment by the Assessing Officer is in consonance with the provisions of Section 147 and no further inference is required from the hands of this Court.

Summary

Issues:
1. Challenge to notice issued under Section 148 of the Income Tax Act and order of disposal of objections for reopening of assessment.
2. Challenge to assessment order passed pursuant to reopening of assessment under Section 147 of the Act.

Analysis:

Issue 1: Challenge to Notice under Section 148 and Order of Disposal of Objections for Reopening of Assessment

The petitioner, a listed company engaged in manufacturing heavy electrical equipment, challenged the initiation of proceedings under Section 147 of the Income Tax Act. The petitioner argued that the notice under Section 148 was based on a change of opinion, lacking the necessary reason to believe as mandated under Section 147. The petitioner had provided all relevant details during the original assessment, including capital gains from the sale of properties. Despite furnishing necessary information, the Assessing Officer initiated reopening proceedings based on audit objections, which the petitioner contended were already addressed in the original assessment order. The petitioner emphasized that mere suspicion is insufficient for reopening under Section 147, requiring concrete new materials to justify the action.

Issue 2: Challenge to Assessment Order Pursuant to Reopening of Assessment

The Assessing Officer reopened the assessment due to a significant difference in Long Term Capital Gains (LTCG) amounting to a substantial sum. The court opined that the disputes over the market value of properties and stamp duty payment constituted new material facts, justifying the reopening of assessment under Section 147. The court noted that the petitioner's valuation of properties and stamp duty paid were under dispute, providing fresh information not previously considered by the Assessing Officer. The court held that the reopening of assessment was in line with Section 147 requirements, and the petitioner was advised to pursue an appeal under Section 246A for further recourse.

In conclusion, the court dismissed both writ petitions, allowing the petitioner to appeal under Section 246A for the final assessment order. The court found the initiation of Section 147 proceedings and the subsequent assessment order to be in compliance with the law, providing the petitioner with the opportunity to address any grievances through the appropriate appellate channels within the specified timeframe.