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Court invalidates assessment reopening notice for 2012-13 due to disclosed improvement costs. The High Court allowed the petition challenging the notice to reopen the assessment for the assessment year 2012-13. The court found that the reasons for ...
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Court invalidates assessment reopening notice for 2012-13 due to disclosed improvement costs.
The High Court allowed the petition challenging the notice to reopen the assessment for the assessment year 2012-13. The court found that the reasons for reopening the assessment were invalid as the improvement cost was already disclosed in the petitioner's books and return, supported by evidence such as a valuer's report. As a result, the court set aside the notice and disposed of the case in favor of the petitioner.
Issues: Challenge to notice for reopening assessment for the assessment year 2012-13.
Analysis: The petitioner, an individual, filed a return of income for the assessment year 2012-13, disclosing total income of Rs. 1.22 crores, including long term capital gain from the sale of immovable property. The Assessing Officer conducted scrutiny and passed an order of assessment under section 143(3) without changing the capital gain declaration. Subsequently, the Assessing Officer issued a notice to reopen the assessment, citing under-assessment due to the petitioner's claim of improvement cost for the property. The petitioner objected to the notice, arguing that the issue was already scrutinized, and the reasons for reopening were incorrect. The department contended that proper reasons were recorded, and the notice was issued within the prescribed period.
During the original assessment, the Assessing Officer raised queries about the property sale, to which the petitioner responded with details of the purchase and improvement cost incurred in the financial year 1987-88. The petitioner provided evidence of the improvement cost in the personal balance sheet, which was duly reflected in the return filed. The Assessing Officer made no disallowance after examining the issue minutely. The High Court observed that the reasons for reopening lacked validity, as the improvement cost was indeed reflected in the petitioner's books and return. The petitioner had also submitted a valuer's report estimating the construction cost. Consequently, the High Court allowed the petition, setting aside the impugned notice and disposing of the case.
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