Order set aside upholding reopening under s.147/148 where AO ignored differential value evidence under s.143(3)

HC set aside the order upholding reopening of assessment under s.147/148. Although the petitioner did not produce documentary proof that a Special Tahsildar order was filed before the original s.143(3) assessment, the AO's own communications showed that information about a differential value of Rs.22,11,500/- was available (via the Tahsildar order or an endorsement in the sale deed) and simply went unnoticed. The court found this justified interference and quashed the impugned notice and the first respondent's overruling of the petitioner's objection to re-opening.

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Issues Involved:
1. Reopening of Assessment u/s 148 of the Income Tax Act, 1961.
2. Validity of invoking the extended period for reassessment under Section 147.
3. Failure to disclose material facts necessary for assessment.

Summary:

1. Reopening of Assessment u/s 148 of the Income Tax Act, 1961:
The petitioner challenged the order dated 18.02.2022, which overruled their objection against the reopening of the assessment completed on 28.12.2018, via notice dated 31.03.2021 issued u/s 148 of the Income Tax Act, 1961. The petitioner had voluntarily filed a return of income u/s 139 for the assessment year 2014-15, declaring a total taxable income of Rs. 14,49,670/- and agricultural income of Rs. 12,45,000/-. The petitioner acquired an immovable property jointly with her son, declared at Rs. 51,00,000/-, while the Registering Authority demanded stamp duty based on a guideline value of Rs. 1,74,24,000/-.

2. Validity of invoking the extended period for reassessment under Section 147:
The reassessment was previously completed on 28.12.2018 following a notice issued on 12.10.2017. The petitioner sought partial relief through an appeal and attempted to settle under the Vivad Se Vishwas Scheme. A second notice for reopening was issued on 31.03.2021, citing reasons for reassessment that included discrepancies in the property's stamp duty value. The assessment was made under the faceless Assessment Scheme, 2019. The petitioner argued that the issue was covered by the Division Bench decision in ACIT Vs. Seshasayee Paper and Board Ltd., which held that the extended period for reassessment could only be invoked under specific circumstances, including the failure to disclose fully and truly all material facts necessary for assessment.

3. Failure to disclose material facts necessary for assessment:
The petitioner contended that there was no failure to disclose material facts, as the sale deed was produced for inspection in the first round. The court found that the reasons for reassessment indicated that the differential value of Rs. 22,11,500/- was omitted, suggesting that the information was available but not noticed by the Assessing Officer. The court concluded that the petitioner had made a case for interfering with the impugned order dated 18.02.2022. Thus, the impugned order overruling the objection against the reopening of the assessment was set aside, and the Writ Petition was allowed.

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