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2010 (2) TMI 271 - HC - Income Tax
Reassessment- The petitioner retired from the partnership consisted of developing of real estate. The petitioner retired from the partnership on March 11, 2005. under the deed of dissolution the petitioner agreed to receive a sum of Rs. 50 lakhs, in addition to the balance lying to his credit on the capital or current account as reflected in the books of account as on March 8, 2005, in null and final settlement in respect of dues on account of retirement. The petitioner received two notice u/s 148 for the year 2005-06 and 2006-07. The only reason recorded by the Assessing officer was that the Commissioner of Income tax (Appeals) by his order dated Sept. 17, 2008, in the case of the firm for assessment year 2005-06 allowed a claim for treating the payment of Rs. 1 crore to the two retiring partners as revenue expenditure. Since the assessee claimed the payment to be exempt by treating it as a capital receipt, it was stated that there was reason to believe that the receipts under the deed of retirement had escaped assessment within the meaning of section 147. held that-there was absolutely no basis for the Assessing Officer to form a belief that any income chargeable to tax had escaped assessment within the meaning of substantive provisions of section 147. The notices were not valid and liable to be quashed. Appeal is allowed.