Prashant Mansukhlal Mehta V. Assistant Commissioner of Income Tax

SCA/1680/2012

AI Insights

The case involves Prashant Mansukhlal Mehta, the petitioner, who challenged a notice issued by the Assistant Commissioner of Income Tax under Section 148 of the Income Tax Act, 1961, for reopening his assessment for the Assessment Year 2004-05. The notice was based on the grounds that income chargeable to tax had escaped assessment. The petitioner had previously declared a capital loss on the sale of plots, which was later contested by the tax authorities. The Tribunal had earlier ruled in favor of the petitioner, stating that no new additions could be made in the assessments framed under Section 153A without some material found during the search. The High Court, after considering the arguments and the legal provisions, concluded that the reopening of the assessment was not justified as no new material was presented that could warrant a change in the earlier assessment.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 794586 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 25-07-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PRANAV DESAI
• Assessee Lawyers: S N SOPARKAR; BANDISH SOPARKAR
• Keywords: Assessment Year; Capital loss; Income Tax; Long Term Capital Gain; Reopening of assessment
• Section: 147; 148; 153A

Judgement Text

"SCA/1680/2012 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 1680 of 2012 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish to see the fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to the civil judge? ========================================================= PRASHANT MANSUKHLAL MEHTA Versus ASSISTANT COMMISSIONER OF INCOME TAX ========================================================= Appearance : MR SN SOPARKAR SR COUNSEL ASSISTED BY BANDISH SOPARKAR FOR for Petitioner MR PRANAV G DESAI for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 25/07/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI) SCA/1680/2012 2/4 JUDGMENT We have heard Mr. S. N. Soparkar, learned senior counsel assisted by learned counsel Mr. Bandish Soparkar, and Mr. Pranav G. Desai, learned counsel for the respondent. Though the matter is listed for admission, with the consent of learned counsel for the parties, we have taken this writ petition for final hearing at the admission stage as the facts are not disputed and only legal question is involved. 2.0 Rule. Mr. Pranav G. Desai, learned counsel waives service of notice of Rule on behalf of respondent. 3.0 This writ petition has been filed challenging the Notice dated 17th March 2011 issued under Section 148 of the Income Tax Act, 1961 (for short 'the Act') for reopening the assessment for the Assessment Year 2004­05 on the ground that income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act. The reasons for giving Notice under Section 148 of the Act has been given on 9th November 2011 by the Assistant Commissioner of Income Tax, Circle­5, Rajkot. 4.0 The brief facts are that the assessee has filed return of income declaring capital loss on sale of various plots situated at Survey No. 150 of Kotharia which were held jointly in the name of assessee and his two brothers Shri Kamlesh Mehta and Shri Yogesh Mehta. The assessee had also credited his capital account with receipts from such sales. During SCA/1680/2012 3/4 JUDGMENT the course of assessment proceedings in the case of brother of the assessee Shri Kamlesh Mehta, it was noticed that there were sale of large number of plots for which he had shown the working of capital loss. The Assessing Officer did not accept the capital loss and reward the same as long term capital gain of Rs.15,40,275/­. The assessee carried the matter in appeal before the CIT (Appeals) who dismissed the appeal of the assessee on 24th February 2010. The assessee carried the matter by way of second appeal before the Tribunal. 4.1 The appeal filed by the assessee has been allowed by the Tribunal on 23rd September, 2010 on the ground that no assessment can be made under Section 153A unless some material is found during the course of search warranting and justifying and no new additions can be made in the assessments framed u/s.153A. Considering the totality of the facts and circumstances, the Tribunal held that the value adopted by the assessee as on 1.4.1981 was worthy of acceptance and that the value adopted by the DVO cannot be applied to assessee's case and that if it could be applied to then it for one plot only. Therefore the Tribunal deleted the additions made in all the three assessment years i.e. 2004­05, 2005­06 and 2006­07. The Notice under Section 148 of the Act has been issued on 17th March 2011. For the first two years, the notice was beyond four years and for third year i.e. 2006­07 it was issued within four years. 5.0 Having heard learned counsels for the parties, we find that the SCA/1680/2012 4/4 JUDGMENT notice issued by the respondent Assessing Officer to the petitioner was invalid inasmuch as it did not disclose that any false information was furnished by the assessee or the assessee had not disclosed the material before the Assessing Officer. The assessee had disclosed all the materials before the Assessing Officer while filing his return and the Assessing Officer had also considered the material and therefore, in our considered opinion he cannot change his opinion unless there was any new material available with him. 6.0 For the aforesaid reasons the Notice dated 17th March 2011 deserves to be quashed and set aside. 7.0 In the result, this writ petition succeeds and is allowed. Notice for reopening issued under Section 148 of the Income Tax Act, 1961 dated 17th March 2011 is hereby quashed. Rule is made absolute. Parties shall bare their own costs. [V . M. SAHAI, J.] [N. V . ANJARIA, J.] Amit "