TMI Blog2023 (2) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the return of income for the Assessment Year 2017-18, a notice/summon dated 24.08.2017 under Section 131 (1A) of the Income Tax Act was issued to the petitioner for making an enquiry in relation to the source of large investment to the tune of Rs.1,21,40,000/- made by the petitioner firm in acquiring immovable property situated at plot No.A-4, Nextgen Textile Park, Sardarsamand Road, Pali. The petitioner filed detailed explanation in prescribed format alongwith documentary evidence in response to the said notice/summon. No further proceedings were forthcoming after the explanation submitted by the petitioner as above. However, a notice dated 31.03.2021 (Annex.5) was served upon the petitioner under Section 148 of the Income Tax Act proposing to reopen proceedings for the assessment year 2017-2018 stating therein that the Assessing Officer (A.O.) had reasons to believe that income chargeable to tax had escaped assessment for the Assessment Year 2017-18 within the meaning of Section 147 of the Income Tax Act. The petitioner filed a fresh return of income in response to the notice issued under Section 148 of the Income Tax Act declaring identical particulars of income as per the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The preliminary objections submitted by the petitioner against the reopening of assessment for the Assessment Year 2017-18 were disposed of by the respondent I.T.O., Ward-1, Pali by order dated 13.09.2021 (Annex.12). The notice under Section 148 of the Income Tax Act dated 31.03.2021 (Annex.5), the reasons to believe conveyed vide notice under Section 143(2) of the Income Tax Act dated 28.06.2021 (Annex.8) and the order dated 13.09.2021 (Annex.12), whereby the objections submitted by the petitioner against the reasons to believe and reopening of proceedings were turned down, are assailed in this writ petition filed on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-sheet. He urged that this schedule was duly annexed with the duly uploaded balance-sheet, which fact is not disputed in the reply of the respondents. In this schedule, the transaction to the tune of Rs.1,26,25,900/- for purchase of land situated at Pali is clearly depicted under the column of fixed assets. Shri Kothari, thus, urged that the foundation of the impugned notice and the impugned order being non-existent, the same are liable to be struck down. Shri K.K. Bissa, learned counsel representing the respondents, has filed a detailed reply to the writ petition, wherein the allegations made in the impugned notice; the order indicating reasons to believe and the order disposing the objections are reiterated and highlighted. However, the pertinent assertion of the petitioner that it did not acquire any property with the description C-152, Nirman Vihar, Delhi is not disputed and rather it is submitted that as the investigating wing supplied the information regarding investment in the immovable property located at C-152, Nirman Vihar, Delhi and since the proceedings were lapsing on account of bar of limitation, the notice was issued on the basis of the details supplied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on the Delhi High Court judgment in the case of Touchstone Holdings Pvt. Ltd. vs. Income Tax Officer, Delhi Ors. (W.P.C. No.13102/2021 decided on 09.09.2022) and urged that the sufficiency or correctness of the material is not to be considered at this stage when the matter is before the writ court. The Court cannot strike down the reopening of the case on these grounds and it will be open to the assessee to prove that the assumptions of facts made in the notice were erroneous. The questions of fact and law should be left open to be investigated and decided by the assessing authority. On these submissions, he implored the Court to dismiss the writ petition. Nonetheless Shri Bissa was candid enough in admitting during the course of arguments that the impugned notice dated 31.03.2021 (Annex.5), the order conveying reasons dated 28.06.2021 (Annex.8) and the order dated 13.09.2021 (Annex.12) turning down the objections of the petitioner suffer from a fundamental flaw inasmuch as the property transaction which as referred to and reiterated by the A.O. (of the property at C-152, Nirman Vihar, Delhi) does not exist. It is an admitted fact that the petitioner filed detailed objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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. The 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. As a consequence, the impugned notice under Section 148 of the Income Tax Act dated 31.03.2021 (Annex.5), the reasons to believe conveyed vide notice under Section 143(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
