2025 (3) TMI 833 - HC - Income Tax

Validity of reopening of assessment as contradicted u/s 149 - revenue vehemently argues that the impugned order being contrary to the scheme of Section 149 once an amount of Rs. 50.00 lakh is ascertained as escaped income for assessment the interference of the Writ Court was uncalled for - assessee per contra submits that merely because the concerned conveyance mentions Rs. 55.00 lakh that itself cannot be taken as the income escaping assessment inasmuch as the cost of acquisition to be deducted from it and if that is done it would fall below the ceiling limit of Rs. 50.00 lakh HELD THAT - We are broadly in agreement with the views of the learned Single Judge inter alia to the effect that while assessing the quantum of escaped income in matters like this the amount mentioned in the registered conveyance cannot be straight away taken without deducting the cost of acquisition therefrom. This apart as rightly submitted by assessee the Jabalpur Bench of Madhya Pradesh High Court in the case 2023 (8) TMI 1027 - MADHYA PRADESH HIGH COURT followed the impugned order of the learned Single Judge of this Court 2023 (6) TMI 49 - KARNATAKA HIGH COURT and later the challenge by the Revenue before the Apex Court of the Country 2024 (9) TMI 1138 - SC ORDER has been repelled. Appeal dismissed.

Summary

The High Court of Karnataka, comprising Hon'ble Mr. Justice Krishna S. Dixit and Hon'ble Mr. Justice G. Basavaraja, delivered an oral judgment in an intra-court appeal challenging a Single Judge's order dated May 24, 2023. The order favored the respondent-Assessee's Writ Petition No. 7647 of 2023, setting aside an order under Section 148A(d) and a notice under Section 148 of the Income Tax Act, 1961, concerning the Assessment Year 2016-2017.The Revenue argued that the Single Judge's order contradicted Section 149 of the Income Tax Act, as an amount of Rs. 50.00 lakh was identified as escaped income. In contrast, the Assessee contended that the amount of Rs. 55.00 lakh mentioned in the conveyance should not automatically be considered escaped income without deducting the cost of acquisition, which would reduce it below the Rs. 50.00 lakh threshold. This argument was supported by a precedent from the Madhya Pradesh High Court in NITIN NEMA v. OFFICE OF PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, which was upheld by the Apex Court.The High Court agreed with the Single Judge's view that the quantum of escaped income should consider deductions for the cost of acquisition. The appeal was dismissed, affirming the Single Judge's order, with costs made easy.