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2014 (10) TMI 147 - HC - Income TaxReopening of assessment u/s 148 - Validity of notice – Computation of income and indexed cost of improvement - Held that:- The AO himself had no reason to believe that any income had escaped the assessment and such reopening of the assessment is clearly at the behest of the audit party objections - any issuance of notice of reopening at the best of the audit party sans satisfaction of the AO himself, such notice must be quashed - What is important while issuing the notice for reopening within four years from the end of relevant assessment year or beyond four years must have a reason to believe that the income chargeable to tax has escaped the assessment – at the time of filing of the return of income, the assessee had in computation of income, claimed long term capital gain after showing the profit on sale of land - The statement of long term capital gain also specifies the particulars, the sale price and the year, indexed cost of the year, indexed cost of improvement and the capital gain - Again, in the computation of tax in the total income, the statement of long term capital gain is making it very clear as to what is indexed cost of improvement - The profit and loss account for the year ending 31st March 2008 shows the profit on sale of land, the balance sheet as on 31.3.2008 also in partners’ capital account has reflected land as an asset and the value has been quantified. The assessee had in computation of income, claimed long term capital gain after showing the profit on sale of land - The statement of long term capital gain also specifies the particulars, the sale price and the year, indexed cost of the year, indexed cost of improvement and the capital gain - the belief of the AO even if would have been there that income chargeable to tax had escaped assessment, the same lacks validity - Any reopening if is resorted to under Section 147 of the Act fundamental requirement of the AO is to have a reason to believe that the income chargeable to tax had escaped assessment - This fundamental requirement is not done away with - as decided in Asstt. Commissioner of Incometax V. Rajesh Jhaveri Stock Brokers (P) Limited, [2007 (5) TMI 197 - SUPREME Court] - such reason to believe need not necessarily be a final decision of the AO and yet when this requirement is not being fulfilled and when the AO himself has no reason to believe that any income chargeable to tax has escaped the assessment, the very notice lacks validity – decided in favour of assessee.
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