Reassessment-Notice u/s 148 -Escapement of income on account of sale of immovable property

Reassessment-Notice u/s 148 -Escapement of income on account of sale of immovable property

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Reassessment-Notice u/s 148

Vijay Harishchandra Patel v. ITO

Decision:    In assessee’s favour.

Reassessment–Notice under section 148–Reason to believe–Escapement of income on account of sale of immovable property

Facts:

AO issued notice under section 148 to assessee for reopening of assessment on the ground that he had sold immovable property and also capital gain chargeable on sale transaction made by the assessee for the concerned assessment year remained unexplained. Further that, the sale consideration received by the assessee was required to be treated as income of the assessee from undisclosed source, as the assessee had not filed return of income and not shown sale transaction to the department.

Therefore, there was an escaped assessment. In response to the notice, the assessee raised objection that he had made an application under section 273A, pursuant to which proceedings had been instituted under section 147 by issuance of notice under section 148 and the return filed by him in response thereto had been accepted. Therefore, there was no escaped assessment in relation to the assessment year. AO rejected request of assessee to drop the proceedings under section 147. Hence, the assessee filed writ petition against the order.

Held:

Reasons recorded by the AO were based on the fact that the assessee had not filed any return of income on account of which there was escapement of income on account of sale of the immovable property, but the assessee had filed the return of income disclosing the sale of the immovable property to the AO and the same had been duly accepted by the AO. Since the very basis for reopening of the assessment was no longer survived. The assumption of jurisdiction under section 147 by the AO. By issuing notice under section 148 was without authority of law and could not be sustained. Hence, the notice issued under section 148 was to be quashed and set aside.


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