High Court directs Assessing Officer to reevaluate tax objections on share sale, emphasizing evidence review for reassessment.

The High Court directed the Assessing Officer to reevaluate the objections raised by the petitioner regarding the tax liability on the sale of shares, emphasizing the need for a thorough consideration of the evidence presented before proceeding with reassessment. The court highlighted the necessity for the Assessing Officer to form a belief that income chargeable to tax had escaped assessment, even if the return had been accepted without scrutiny, and instructed a detailed response to the petitioner's objections within a specified timeframe.

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Issues:
1. Challenge to notice of reopening of assessment
2. Allegation of income escaping assessment
3. Validity of reasons recorded by Assessing Officer
4. Consideration of objections raised by petitioner
5. Requirement of forming a belief for reopening assessment

Issue 1: Challenge to notice of reopening of assessment
The petitioner challenged a notice of reopening of assessment dated 24th March, 2018, which was issued by the Assessing Officer based on reasons recorded. The petitioner contended that there was no income chargeable to tax that had escaped assessment, despite the Assessing Officer's belief that a substantial sum from the sale of shares had not been reflected in the return filed for the assessment year.

Issue 2: Allegation of income escaping assessment
The Assessing Officer alleged that income chargeable to tax had escaped assessment due to the sale of shares by Savoy Finance, which later merged with the petitioner company. The Assessing Officer's belief was based on the discrepancy between the sale consideration amount declared in the return and the actual amount received from the sale of shares, leading to the initiation of the reassessment process.

Issue 3: Validity of reasons recorded by Assessing Officer
The petitioner raised objections to the notice of reopening, arguing that the Assessing Officer did not consider the evidence provided regarding the holding period of the shares in question, which could exempt the capital gain tax liability under Section 10(38) of the Income Tax Act, 1961. The Assessing Officer's order disposing of the objections did not address this contention, leading to a challenge on the sufficiency of the reasons recorded.

Issue 4: Consideration of objections raised by petitioner
The petitioner submitted detailed objections along with supporting documents to contest the reopening of assessment. The objections emphasized the exemption from capital gain tax based on the holding period of the shares and sought a fair consideration of the evidence presented. However, the Assessing Officer's response did not adequately address these objections, prompting the petitioner to seek judicial intervention.

Issue 5: Requirement of forming a belief for reopening assessment
The High Court emphasized the necessity for the Assessing Officer to form a belief that income chargeable to tax had escaped assessment, even in cases where the return had been accepted without scrutiny. The court highlighted the importance of fulfilling this requirement and directed the Assessing Officer to consider the petitioner's objections regarding the holding period of the shares and provide a detailed response through a speaking order within a specified timeframe.

In conclusion, the High Court directed the Assessing Officer to reevaluate the objections raised by the petitioner regarding the tax liability on the sale of shares, emphasizing the need for a thorough consideration of the evidence presented before proceeding with reassessment.

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