Reassessment proceedings under section 147 quashed as capital gains from 2010 transaction taxable in different assessment year

The ITAT Surat quashed reassessment proceedings under section 147 initiated against the assessee for AY 2012-13. Following the Gujarat HC precedent in Chintan Jadavbhai Patel, the tribunal held that capital gains from a transaction executed on 16.08.2010 were taxable in AY 2011-12, not AY 2012-13. Since the impugned capital gain was not taxable in the assessment year under consideration, the assessing officer's reasons for reopening the assessment were legally unsustainable. The assessee's appeal was allowed.

---

---

Issues Involved:
1. Reopening of assessment u/s 147 by issuing notice u/s 148.
2. Validity of assessment order u/s 147 r.w.s. 143(3).
3. Addition of Rs. 65,40,750/- on account of unexplained investment u/s 69.

Summary:

Issue 1: Reopening of assessment u/s 147 by issuing notice u/s 148
The assessee challenged the reopening of the assessment u/s 147 by issuing notice u/s 148, arguing that there was no tangible material for the assessment year (AY) 2012-13. The Tribunal noted that the information regarding the Satakhat executed on 16.08.2010, which falls in AY 2011-12, was used to reopen the assessment for AY 2012-13. The Tribunal held that the reasons recorded by the Assessing Officer (AO) for AY 2012-13 based on the Satakhat executed in AY 2011-12 are not sustainable in law. The Tribunal relied on the judgment of the Hon'ble Jurisdictional High Court in the case of Chintan Jadavbhai Patel Vs. Income-tax Officer [2017] 79 taxmann.com 302 (Guj), which held that capital gains are taxable in the year of execution of the deed. Therefore, the Tribunal quashed the re-assessment proceedings initiated against the assessee u/s 147.

Issue 2: Validity of assessment order u/s 147 r.w.s. 143(3)
The assessee contended that the assessment order u/s 147 r.w.s. 143(3) is bad in law as the assessee was not given a copy of the material available with the department despite repeated requests. The Tribunal, having quashed the reassessment proceedings itself, did not find it necessary to adjudicate on this issue.

Issue 3: Addition of Rs. 65,40,750/- on account of unexplained investment u/s 69
The AO made an addition of Rs. 65,40,750/- on account of unexplained investment u/s 69, based on the difference between the sale consideration as per the registered sale deed and the Satakhat. The Tribunal, having quashed the reassessment proceedings, rendered this issue academic and did not require any adjudication.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the reassessment proceedings initiated u/s 147 and rendering other matters academic. The order was pronounced on 17/01/2024 by placing the result on the Notice Board.

---