Assessee Disclosed Sale Of Agricultural Land In ROI During Scrutiny Assessment: Madras High Court Quashes Reassessment Initiated Beyond 4 Years

The Madras High Court has quashed the reassessment proceedings as the petitioner had disclosed the information with regard to the sale of agricultural land, and all the particulars with regard to the sale of agricultural land were disclosed before the Assessing Officer in full extent.

The bench of Justice Krishnan Ramasamy has observed that there is no failure on the part of the petitioner with regard to providing material facts, and the notice issued under Sections 148 and 149 of the Income Tax Act for reopening assessment for the Assessment Year 2013–14 is not sustainable, and the same is liable to be set aside.

The petitioner/assessee challenged that the reassessment notice issued under Section 147 of the Income Tax Act was beyond the period of four years. The notice was issued on March 30, 2021, whereas the issue pertains to the assessment year 2013–2014.

The assessee contended that, in terms of proviso to Section 147, the limitation period is four years. Within four years, the respondents are supposed to re-open the assessment; otherwise, in terms of the first proviso to Section 147, the respondent is supposed to be empowered to re-open in the event of any failure on the part of the assessee to disclose the income.

The assessee contended that the exempted income in the capital gain arising out of the sale of Kyanallur agricultural land has been shown as Rs. 9,96,57,892. Nothing has been concealed on the part of the petitioner; as much as possible, he has furnished all the details called for by the Assessing Officer. Only in the event of failure on the part of the assessee to disclose the particulars of income can the assessment be re-opened in terms of Section 147. Therefore, no other circumstances warrant reopening the assessment, nor does the consequential order reject the petitioner's objections to reopening.

The department contended that it is only for clarity purposes that the reassessment notice has been issued, and no prejudice would be caused by the petitioner providing the information. The petitioner was asked to clarify whether it is really agricultural land and whether the income earned is through the sale of said agricultural land, which is around nine crores. Therefore, for the interest of the revenue, the respondents have ordered a reopening assessment.

The court held that there is no failure on the part of the petitioner with regard to providing material facts, and the notice issued under Sections 148 and 149 of the Act for re-opening assessment for the assessment year 2013–14 is not sustainable, and the same is liable to be set aside.

Counsel For Petitioner: Srinath Sridevan

Counsel For Respondent: B.Ramana Kumar

Case Title: S.Uttam Chand Versus ACIT

Citation: 2023 LiveLaw (Mad) 379

Case No.: W.P. No.6921 of 2022

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