YUSUFBHAI GAFURBHAI SHAIKH,SURAT vs. I.T.O WARD- 3(2)(6), SURAT

The brief facts relevant for adjudication of the issue are that the assessment was reopened on the basis of information received by the Assessing Officer that the assessee was a 1/6th co-owner of immovable property which was sold for a total consideration of Rs.2,45,68,140/-. Prior to issuance of notice u/s 148 of the Act, the Assessing Officer conducted enquiries and issued notice under section 133(6) of the Act. In response thereto, the assessee submitted that he was owner of 1/6th share in the said property and had already offered the corresponding capital gains to tax and paid due taxes thereon. The assessee also furnished complete details along with documentary evidences in support of computation and payment of taxes. Despite the above submissions and evidences placed on record, the Assessing Officer proceeded to issue notice under section 148 of the Act and completed the reassessment. The reopening was upheld by the Ld. CIT(A).

Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.

We have heard the rival submissions and perused the material available on record. From the facts on record, it is undisputed that the assessee was only a Yusufbhai Gafurbhai Shaikh Vs. ITO Asst. Year : 2010-11 - 3– 1/6th co-owner of the property. The assessee had already disclosed the transaction, computed Long-Term Capital Gain relatable to his share and paid due taxes. All relevant details and evidences were furnished before issuance of notice u/s 148, including in response to notice under section 133(6) of the Act. Explanation 2(a) to section 147 deems income to have escaped assessment where no return of income has been furnished, whereas in the present case, the assessee had duly furnished return of income in response to notice u/s 148 and had already discharged his tax liability on the impugned transaction. It is a settled principle of law that reassessment proceedings cannot be initiated merely on suspicion or for verification, particularly when the assessee has already disclosed all primary facts and paid due taxes. Once the Assessing Officer is in possession of complete facts prior to issuance of notice u/s 148, reopening of assessment lacks jurisdiction. In the present case, since no income chargeable to tax had escaped assessment, and the assessee had fully and truly disclosed all material facts, the basic jurisdictional requirement u/s 147 of the Act fails. Therefore, we hold that the reopening of assessment is bad in law and liable to be quashed.

In view of the above discussion, we set aside the order of the Ld. CIT(A) and quash the reassessment proceedings initiated u/s 147 of the Act.

In the result, the appeal of the assessee is allowed.