2023 (2) TMI 358 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - objections submitted by the petitioner against the reasons to believe and reopening of proceedings were turned down - unexplained investment in property - HELD THAT:- Petitioner had not procured any property at Delhi with the description C-152, Nirman Vihar, Delhi during the financial year 2016-2017. It was emphatically mentioned in this letter that the assessee had rather purchased land located at plot No.A-4, Nextgen Textile Park, Sardarsamand Road, Pali from M/s. Nextgen Textile Park, Private Limited having its registered office at C-152, Nirman Vihar, Delhi. This transaction was duly disclosed in the audited financial statement, i.e. balance-sheet and fixed asset chart as well as the return of income filed by the petitioner for the Assessment Year 2016-17. It was asserted that the reasons formed by the A.O. were based merely on suspicion, assumptions and conjectures and there was nothing in the communication dated 28.06.2021, which could suggest that there was any material to support the allegation/assumption of non-disclosure of land transaction.

As from reasons for reopening the assessment it becomes clear that the same are founded on a non-existent transaction of purchase of immovable property situated at C-152, Nirman Vihar, Delhi. In spite of the petitioner elaborating in its reply as well as objections that it had never entered into any such transaction, the respondent authorities made no effort whatsoever to rectify the blatant blunder and instead they have tried to justify the fundamentally flawed reopening proceedings on entirely a new ground that the petitioner did not upload the financial statement with the return and that the details of the land transaction were not mentioned in the Schedule 6 of the balance sheet.

This observation of the authority is also incorrect on the face of record because the balance-sheet was admittedly uploaded with the return filed by the petitioner pursuant to receiving the notice under Section 148 of the Income Tax Act. In Schedule 6 of the balance sheet, transaction pertaining to procurement of immovable property is clearly stated.

The very foundation of the impugned notice, the reasons to believe and the order turning down objections is non-existent. All the three proceedings are based sheerly on conjectures and surmises.

A.O. had no tangible evidence to initiate the re-assessment proceedings against the petitioner and the impugned action is based sheerly on borrowed satisfaction. Even if it is assumed for argument's sake that the transaction made by the petitioner for acquisition of immovable property at Pali may be read in place of Delhi, then also, the said transaction is duly mentioned in the return filed by the petitioner for the relevant financial year and is supported by the audited balance-sheet, which was accepted by the Assessing Officer. Hence, there is no escape from the conclusion that no tangible material was available with the Assessing Authority so as to initiate the re-assessment proceedings against the petitioner by taking recourse to the provisions under Section 148 and 143 (2) of the Income Tax Act. Decided in favour of assessee.