INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Assessee had not offered money receipt as Hardship Compensation for taxation -

AO recorded the satisfaction for reopening the case of the assessee for assessment year 2011-12 under section 148. In pursuance to notice under section 148, assessee filed his return of income declaring the income as declared in the original return. AO asked the assessee regarding receipt of Hardship compensation from M/s. D. Assessee submitted that he had not offered money receipt as Hardship Compensation for taxation for the relevant assessment year as Hardship Compensation for taxation was not a revenue receipt but, a capital receipt. However, AO did not accept the above contention of the assessee and treated the compensation received by the assessee as income of the assessee from other sources and charged to tax accordingly. Held: Assessee had received flat in lieu of old flat in addition to said hardship allowance. It was not controverted that the said agreement was undertaken between the said two parties and assessee was also one of the beneficiary/flat owner in the said society. Assessee had not pointed out any fact that he declared the said transaction before the department, therefore, allegation levelled by AO that assessee had not declared fully and truly the income chargeable to tax for assessment year 2010-11. AO had to draw a prima facie inference and satisfaction that income had escaped assessment but AO had not debarred or stopped from granting relief to the assessee by dropping the reassessment proceedings if during the course of reassessment, assessee exclusively established and substantiated that there was no income chargeable to tax had escaped. Initiation of reassessment proceedings under section 147 was valid and was based on sound legal principles.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 28

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