The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that reopening of the Income Tax Assessment of the assessee and recalculation of Capital Gains without issuing fresh Notice under Section 148 of the Income Tax Act is invalid.
The assessee challenged the draft assessment order dated 30/03/2022, passed under section 144C of the Income Tax Act, whereby the Assessing Officer Computed an additional long-term capital gains of Rs.2,65,20,504, and added the same to the total income of the assessee, on the sole basis of reexamination of the transaction already disclosed by the assessee.
During the hearing, the Assessee Representative, Hari S. Raheja submitted that reopening of assessment is bad in law as no addition has been made on the basis of the reasons as recorded by the Assessing Officer that the assessee has sold the property for a sale consideration of Rs.2,65,45,504 and capital gains on same has escaped assessment.
The representative also submitted that in the order disposing of objection as well as in the assessment order, the Assessing Officer instead reworked the capital gains already declared by the assessee and added the additional long-term capital gains of Rs.2,65,20,504.
Thus, it was submitted that the reasons for reopening are very different from the actual assessment made by the Assessing Officer.
On the contrary, the Departmental Representative, Soumendu Kumar Dash relied upon the orders passed by the lower authorities and submitted that the reassessment was made on the basis of information received that property was sold by the assessee, though the amount of sale consideration and the capital gains may be different.
However, the Income Tax Appellate Tribunal bench of Accountant Member M Balaganesh and Judicial Member Sandeep Singh Karhail observed that, “the income which was initially alleged to have escaped assessment was not ultimately added by the Assessing Officer while passing the assessment order and rather the transaction already disclosed by the assessee was re-examined and the capital gains computed by the assessee was recalculated in the assessment order without issuing a fresh notice under section 148 of the Act.”
The observations of the jurisdictional High Court in CIT vs Jet Airways India Ltd was quoted and it was held that the reopening of assessment in the present case is unsustainable in law, thereby quashing the impugned assessment proceedings.
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