PRASHANT MANSUKHLAL MEHTA vs. ASSISTANT COMMISSIONER OF INCOME TAX

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SCA/1680/2012HC GujaratGJHC24007473201225 July 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the notice dated March 17, 2011, issued under Section 148 of the Income Tax Act, 1961, was invalid. The Court reasoned that the notice did not disclose that any false information was furnished by the assessee or that the assessee had failed to disclose material facts before the Assessing Officer. The assessee had disclosed all relevant materials during the original assessment, and the Assessing Officer had considered them. Therefore, the Assessing Officer could not alter his previous conclusion unless new material was available. The Court found that the prior order of the Tribunal, which had deleted the additions, was a significant factor. The ratio decidendi is that a reopening notice under Section 148 must demonstrate a failure on the part of the assessee to disclose material facts or the furnishing of inaccurate particulars, and an AO cannot change his opinion without new material, especially when a higher appellate authority has already decided the issue.

What were the facts?

The assessee, Prashant Mansukhlal Mehta, filed a writ petition challenging a notice dated March 17, 2011, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for Assessment Year 2004-05. The notice alleged that income chargeable to tax had escaped assessment under Section 147. The assessee had declared a capital loss on the sale of jointly held plots. In the assessment of his brother, Shri Kamlesh Mehta, the Assessing Officer (AO) treated the capital loss as long-term capital gain of Rs. 15,40,275. This was upheld by the CIT(Appeals) but later deleted by the Tribunal on September 23, 2010, for assessment years 2004-05, 2005-06, and 2006-07. The notice under Section 148 was issued on March 17, 2011.

What were the issues?

1. Whether the notice dated March 17, 2011, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for Assessment Year 2004-05 is valid, considering the prior order of the Tribunal? Assessee's Contention: The assessee argued that the notice was invalid because it did not disclose any false information furnished by the assessee or any non-disclosure of material facts. The assessee contended that all material was disclosed during the original assessment, and the AO had considered it. Therefore, the AO could not change his opinion without new material. Revenue's Contention: The judgment does not record any specific contentions from the revenue regarding the validity of the notice.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 153A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
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

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