Reassessment under the Income Tax Act should be grounded in solid evidence rather than speculation,
Reassessment under the Income Tax Act should be grounded in solid evidence rather than speculation, as highlighted in the case of Subhash Chander Dabas vs ACIT [W.P.(C) 12784/2019; Date of Order: 5/12/2024]. The court emphasized the importance of adhering to procedural regulations in reassessment proceedings.
In this case, the High Court invalidated the reassessment conducted under Sec 148 due to the absence of valid grounds and procedural irregularities. The petitioner, a builder, contested the reassessment order by the ACIT for the assessment year 2012-13 under Sec 148. It was alleged that the petitioner failed to disclose transactions amounting to ₹ 24 Crore from the Delhi States Newspaper Employee Co-op. Group Hsg Society in the financial year 2011-12, despite acknowledging such income. The Assessing Officer (AO) inferred from this income receipt that the petitioner had not fully and truthfully disclosed their income.
Following information from the Income Tax Investigation Wing indicating unaccounted cash in the petitioner’s accounts, the revenue initiated reassessment proceedings. The revenue suspected the petitioner of engaging in benami transactions to sell properties at inflated prices and distribute funds among related firms – Tirupati Construction and Tirupati Constwell Pvt Ltd. The petitioner argued that the reassessment was based on assumptions without concrete evidence and that the cited transactions had already been disclosed in previous assessments, rendering reassessment unnecessary.
The High Court ruled that reassessment must rely on solid evidence rather than speculation. It noted discrepancies in the Revenue’s claims during the proceedings, emphasizing the importance of conclusive evidence in reassessment. The court highlighted that the petitioner had complied with disclosure requirements under Sec 143(3) and that the reassessment notice did not meet the legal standards for reopening a closed assessment under Sec 147. The Court emphasized that reassessment powers should not be used to rectify oversights from prior assessments but should be based on substantial evidence
The copy of the order is as under:
YVA05122024CW127842019_132625
