Absence Of Material: Bombay High Court Quashes Reassessment Proceedings
Konark Life Spaces (WP No. 2840 of 2022)
Facts:
- The AO had reopened the case of the assessee U/S 148 of the Income Tax Act. The assessee had acquired the developmental rights and payment was made to M/S Nancy Builders and Developers. However the assessee had not entered into MOU to acquire the development rights directly with the original party i.e. M/s Goel Ganga Developers Private Limited, but with M/s Nancy Builders and Developers.
- Considering the above facts, the AO established that the MOU is only a colourable device to transfer the money to M/s Nancy Builders. Hence the transaction of Rs.17,76,08,505/- remains unexplained and to be treated as an unexplained investment.
- However the assessee maintained that there was no omission on the part of the assessee to disclose fully and truly any material fact and that all material facts had been disclosed before the AO. It was stated that during the course of the said scrutiny assessment, the A.O. had vide his notice dated 16th May, 2017 issued under Section 142(1) of the Act, sought details with regard to the loans/advances made to a sister concern(s)(Form 3CD). In this regard, it is stated that the said notice was adequately replied and so this reopening is merely a change in opinion.
Hon Bombay HC held as below:
- It is not justifable as to what information was received by the assessing offcer and what was that issue or material that had not been considered by the assessing offcer during the scrutiny assessment proceedings.
- As between the date of Order of assessment, which is sought to be reopened and the date of forming of the opinion, in the present case, nothing new had happened.
- There cannot be any failure to disclose fully and truly, if there was no such document as such (agreement). This, in our opinion, is nothing but a change of opinion, which does not satisfy the jurisdictional foundation U/S 147 of the Act.
- The petition of the assessee is allowed.
