INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Reopening on the basis of information obtained during the course of assessment of earlier assessment year under section 143(3) -

Assessee had debited a sum being cost of plot and farm development expenses in addition to various other expenses. During the course of assessment proceedings, it was noticed that assessee had escalated land cost through sham agreements. The enquiries made during the course of assessment proceeding by obtaining sale instances of the same area it was noticed the prevailing market value of the property was Rs. 1,32,46,000 was taken as cost of the land as against Rs. 25 crores claimed by assessee. Therefore assessee was entitled to proportionate land cost on the market value and proportionate farm development expenses and AO had reasons to believe that income chargeable to tax had escaped assessment. Held: Reopening notice was issued on the basis of information obtained during the course of assessment of earlier assessment year under section 143(3). Such information can form a valid basis for issuing reopening notice. Assessment for subject assessment year was by virtue of intimation under section 143(1). Therefore, AO had no occasion to examine the claim of assessee. It is on the basis of tangible information now received that reopening notice was issued, as was evident from the reasons recorded. Thus, reasons make out a prima facie case that income chargeable to tax for subject assessment year had escaped assessment.

REFERRED :

FAVOUR : Against the assessee

A.Y. :

SUBSCRIBE FOR FULL CONTENT