Income Tax Assessment Can’t Be Reopened Without Any Foundation: Gujarat High Court

The Gujarat High Court has held that when the foundation was missing, there could not have been the erection of ground to seek reopening of assessment.

The bench of Justice N.V. Anjaria and Justice Devan M. Desai has observed that neither foundational facts existed nor could any tangible material be available with the assessing officer to justify the exercise of power to reopen the assessment.

The petitioner/assessee challenged the notice dated March 30, 2018, issued by the assessing officer against the petitioner under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment. It was stated in the notice that for the assessment year 2011–2012, the income chargeable to tax had escaped the assessment within the meaning of Section 147 of the Income Tax Act, 1961.

The assessee filed his objections to the reasons provided by stating, inter alia, in his letter dated September 1, 2018, that the immovable property was sold by the petitioner assessee along with four other persons for a total sale consideration of Rs. 9 crores.

The return of income was filed for the assessment year 2011–2012 after considering the capital gains. The computation of income was duly reflected, and 1/5th share of the value of the sale of the immovable property—the bungalow—was also shown. The sale of the immovable property bungalow was by five joint owners having equal shares.

The petitioner submitted that the assessing officer had reopened the case beyond the period of four years from the end of the relevant assessment year. The petitioner had, jointly with the other five co-owners, sold the immovable property for a total consideration of Rs. 9 crores and filed a return of income, which was only for the net income; it was submitted for Rs. 41,500.

The department contended that the petitioner had not declared the capital gains and that there was an escapement of income. The other co-owner assessed the total capital gain at Rs. 1,27,94,856.

The court held that the assessee showed all facts and details in the return of income, and there is no question of reopening the assessment.

Case Title: Bimlakumari Lajpatraj Hurra Versus Income Tax Officer [R/Special Civil Application No. 16884 Of 2018]

Case Citation: 2023 Livelaw (Guj) 76

Date: 17/04/2023

Counsel For Petitioner: Darshan R Patel

Counsel For Respondent: Karan Sanghani

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