The Bombay High Court has recently observed that a re-assessment made in spite of the escaped assessment amount being less than Rs. 50 Lakh is invalid in the eyes of law.
However, the bench refused to adjudicate upon the merits of the show cause notice as the same would involve delving into the questions of fact, in this case.
The Counsel for the petitioner Sajiv B. Deshpande submitted that petitioner/society entered into the settlement deed in respect of land whose sale proceeds were reassessed as capital gains and the impugned show cause notice was issued.
The Advocate further submitted that the petitioner/society had submitted its Income Tax Returns (ITR) for the assessment year 2015-2016. The government value of the said land was Rs.51,70,500/- and indexed cost of acquisition was Rs.24,31,464/-.
Accordingly, capital gain was computed at Rs.27,39,036/- which is less than Rs.50 Lakhs. The Income Tax Authorities accepted the aforesaid returns of the year 2014-2015.
In response to the show cause notice issued under Section 148(b) of the Income Tax Act, petitioner had responded to the notice and pointed out that it would not be permissible under law to open the assessment of income tax returns filed by the petitioner for the year 2014-2015 since the valuation of alleged escaped assessment is less than Rs.50 Lakhs.
The petitioner counsel further submitted that, “The indexed cost of acquisition, litigation cost and capital gain in the alleged transaction was less than Rs.50 Lakhs. Therefore, the proceeding under Section 148 of the Act could not have been initiated after six years.”
On the other hand, for the state, Alok Sharma submitted that the disputed question of facts cannot be gone into in exercise of writ jurisdiction under Article 226 of the Constitution of India.
The bench observed that, “The impugned show-cause notice dated 29th July, 2022 is in respect of alleged escaped assessment for the assessment year 2015-2016. In view of the amended provisions of the Act, the reassessment would not be permissible after expiry of six years particularly, when the escaped assessment amount is less than Rs.50 Lakhs.”
It was also observed by the division bench that the impugned notice is without jurisdiction and the same is liable to be quashed and set aside.
However, the Bench of Justice S G Chapalgaonkar and Justice Mangesh S Patil pointed out that, “When the challenge to the show-cause notice is based on disputed questions of facts, this Court would be slow in entertaining the writ petition in exercise of jurisdiction under Article 226 of the Constitution of India particularly, when decision of authority would be susceptible to appeal in terms of Section 246 of the Income Tax Act.”
The writ petition was thereby dismissed.
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