The Gujarat High Court has recently in a writ petition filed before it, held that the fact of co-owner showing different capital gains amount, is not a ground to reopen an assessment.
The aforesaid observation was made by the Gujarat High Court, when a writ petition was filed under Article 226 of the Constitution, before it, as directed against the notice dated 30.3.2018, issued by the assessing officer against the petitioner under section 148 of the Income Tax Act, 1961, in respect of the Assessment Year 2011-2012, seeking to reopen the assessment of the petitioner for the year under consideration.
The facts involved were that the return of income came to be filed by the petitioner assessee in respect of the Assessment Year 2011-2012 on 20.7.2011, and, in the return of income, the gross total income to the tune of Rs. 3,95,497/- and net income to the tune of Rs. 41,500/- were declared after showing the relevant calculations of income and other relevant details.
The said return of income came to be processed by the competent authority, with the ground for seeking to reopen the assessment as available from the reasons for re-opening of the assessment supplied to the petitioner on 30.08.2018, being that there is escapement of Rs. 1,27,94,856/-, as assessee had not declared capital gain on transfer of capital assets in his return of income, with respect to the immovable property sold for a sale consideration of Rs. 9,00,00,000/- jointly with other.
The petitioner assessee filed his objections to the reasons provided by stating inter alia in his letter dated 1st September, 2018, that the immovable property was sold by the petitioner assessee along with four other persons, for the total sale consideration of Rs. 9 crorers.
It was stated by the assessee that the return of income was filed for the Assessment Year 2011- 2012, after considering the capital gains, that the computation of income was duly reflected, and further that 1/5th share of the value of the sale of the immovable property-bungalow was also shown.
And even though there was no dispute about the fact that the sale of the immovable property bungalow was by five joint owners having equal share, in the order dated 25.09.2018, disposing of the objections raised by the respondent-assessee, the assessing officer stated that, to arrive at such a conclusion, he had reasons to believe that income had escaped assessment in respect of the year under consideration.
Hearing the opposing contentions of both sides as presented by Mr. Darshan R Patel on behalf of the petitioner, and by Mr. Karan Sanghani with Mrs. KalpanakRaval , on behalf of the Respondent, the High court observed:
“What surfaced from the facts and contentions is that the notice for reopening and the grounds on which it was rested, were without supported by any foundational facts. When the return of income was filed and all the relevant details including the share in the sale proceeds, the basis of the details of exemption claimed under section 54EC, the index cost etc. were shown, there was nothing to doubt the said details which figured in the return of income, which was processed. The submission that the co-owners showed the capital gains of different amount, is also not a valid ground since the facts and computation in case of each assessee in respect of return of income would differ. Petitioner assessee showed all facts and details in the return of income.”
Thus, the Bench of Justice N.V.Anjaria and Justice Devan M. Desai held:
“Neither there existed foundational facts, nor it could be said that any tangible material was available with the assessing officer to justify exercise of power. It could be said that the basis for reopening was absent. When the foundation was missing, there could not have been erection of ground to seek reopening of assessment. It could not be said, in the facts of the case, that the assessing officer could have harboured a reason to believe acceptable in eye of law to seek reopening. As a result of the above discussion, the impugned notice deserves to be set aside. Accordingly, the notice dated 30.03.2018 seeking to reopen the assessment of the petitioner in respect of Assessment Year 2011-2012 is hereby set aside.”
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