Disclosure of Sale of Agricultural Land in Return of Income during Scrutiny Assessment: Madras HC quashes Reassessment initiated beyond 4 Years [Read Order]

The Madras High Court quashed reassessment initiated beyond 4 years on the disclosure of sale of agricultural land in the return of income during scrutiny assessment.

The case of the petitioner, Mr.S.Uttam Chand, was that the present notice issued under Section 147 of the Income Tax Act was beyond the period of four years stipulated in the Act since the impugned notice was issued on 30.03.2021 whereas the issue pertains to the Assessment Year 2013- 2014.

In terms of proviso to Section 147, the limitation period is four years. Within four years, the respondents are supposed to re-open the assessment otherwise, in terms of the first proviso to Section 147, the respondent is supposed to empower to re-open, in the event if there isany failure on the part of the assessee to disclose the income.

When an assessment under sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of the four years period from end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub section (1) or Section 142 or Section 148 or to disclose fully and truly all material facts necessary for the assessment, for that assessment year.

The counsel for the petitioner submitted that the petitioner has furnished the details to the Assessing Officer on 30.01.2016 and 04.02.2016 by furnishing copy of the ledger accounts of Kyanallur property purchase, copy of the sale deed of kyanallur property and copy of the sale deed of Kyanallur property. Therefore, he would submit that nothing has been concealed on the part of the petitioner in as much as possible he has furnished all the details called for by the Assessing Officer. Only in the event of failure on the part of the assessee to disclose the particulars of income, the assessment can be re-opened in terms of Section 147 of the Income Tax Act.

A Single Bench of Justice Krishnan Ramaswamy observed that “The petitioner had disclosed the information with regard to the sale of the agricultural land and all the particulars with regard to sale of agricultural land was disclosed before the Assessing officer in full extent. Further, a perusal of the materials placed before this Court would suffice to arrive at a conclusion that there is no failure on the part of the petitioner with regard to providing material facts and the notice issued under Section 148 and 149 of the Income Tax Act for re-opening assessment for the Assessment Year 2013-14 is not sustainable and the same is liable to be set aside.”

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