The Tax Publishers2020 TaxPub(DT) 3313 (Guj-HC) : (2020) 425 ITR 0162

INCOME TAX ACT, 1961

Section 148

Where assessee pointed out to AO that he had purchased the land and sold the same during the current year and since the purchaser was not an agriculturist, he had made an agreement and the sale deed would be executed after conversion of the land into non-agricultural use, therefore, reasons lack validity and there was a degree of lack of application of mind on the part of AO when he conveyed that the cost of improvement was not reflected in assessee's books of account.

Reassessment - Cost of improvement not reflected in accounts of assessee - Lack of application of mind on the part of AO -

Assessee had declared long-term capital gain arising out of sale of immovable property. The return was taken in scrutiny by AO, during which he examined the transaction of sale of agricultural land of assessee which led to assessee earning capital gain. AO issued noticed under section 148 reopening the assessment of assessee on the ground that assessee had earned LTCG after claiming deduction cost of improvement on land. For claiming improvement cost, assessee had furnished copy of personal balance sheet depicting cost of improvement. It was noticed from the audited balance sheet that though the cost of land was mentioned, there was nothing in balance sheet to indicate that assessee had incurred any expenditure on this land. Held: As was apparent from assessee's response to AO pertained to the sale of the property in question. Assessee pointed out to AO that he had purchased the said land and sold the same during the current year. Since the purchaser is not an agriculturist, he had made an agreement and the sale deed would be executed after conversion of the land into non-agricultural use. The reasons lack validity and there was a degree of lack of application of mind on the part of AO when he conveyed that the cost of improvement was not reflected in the assessee's books of account. Therefore, notice issued under section 148 was quashed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13



IN THE GUJARAT HIGH COURT

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