Delhi HC quashes reopening notice after tax officer ignored evidence showing property purchase not sale

The Delhi HC set aside an order under Section 148A(d) and consequential notice for reopening assessment. The AO issued notice alleging petitioner sold immovable property without disclosing capital gains. However, petitioner had previously clarified through documents that it purchased, not sold, the property. The court found the AO failed to apply mind and ignored crucial evidence showing it was a purchase transaction. The order was not aligned with the Section 148A(b) notice and demonstrated lack of proper consideration of available information.

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Issues involved:
The judgment involves issues related to Income Tax Act, 1961, specifically concerning an allegation of undisclosed capital gains on the sale of an immovable property for Assessment Year 2017-18.

Details of the Judgment:
The petitioner responded to the notice of undisclosed capital gains by stating that they had actually purchased the property and not sold it. They provided details of the transaction, including the purchase consideration of Rs. 8 crores and TDS deduction details. The petitioner had also responded to a previous notice under Section 133(6) of the Act.

The Assessing Officer (AO) initially believed the petitioner had sold the property, but after reviewing the response, concluded that income on the transaction had escaped assessment. The AO's order was challenged on the grounds that the petitioner had disclosed the purchase in their balance sheet, provided bank account details, and also availed a loan for the purchase.

The court found that the AO had not considered crucial facts presented by the petitioner, such as the details in the balance sheet and the loan availed for the purchase. The court noted that the AO's order was not aligned with the initial notice, which stated that the petitioner had sold the property despite evidence to the contrary provided earlier.

The court set aside the impugned order and directed the AO to revisit the conclusion, emphasizing that it was a purchase transaction and not a sale. The court instructed the AO to reassess the petitioner from the stage prior to the issuance of the initial notice under Section 148A(b) of the Act.

The writ petition was disposed of accordingly, and parties were instructed to act based on the digitally signed copy of the order.

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