Allen De Noronha Vs ACIT-1 (ITAT Lucknow)
The Lucknow ITAT allowed the assessee’s appeal and quashed the reassessment proceedings initiated under Sections 147/148 of the Income-tax Act, holding that the reasons recorded by the Assessing Officer were arbitrary, mechanically recorded, and lacked a direct nexus with the alleged escapement of income.
The assessee challenged the order of the CIT(A) and also raised additional legal grounds before the Tribunal, contending that the Assessing Officer had mechanically recorded reasons for reopening the assessment and that the reasons were vague and based on incorrect and non-exhaustive facts. The Tribunal admitted the additional grounds, observing that they involved pure questions of law requiring no further factual verification.
The reasons recorded by the Assessing Officer stated that the assessee had sold a property during the relevant financial year for ₹4.68 crore, whereas the value adopted for stamp duty purposes was ₹6.68 crore, resulting in a difference of ₹2.00 crore. Based on this difference, the Assessing Officer formed a belief that capital gains taxable under Section 50C had escaped assessment and initiated proceedings under Section 147.
The assessee objected to the reopening and specifically contended that the reasons were not based on relevant material or credible information. The assessee pointed out that the facts recorded by the Assessing Officer were incorrect. According to the assessee, the property in question had been sold jointly by several co-owners for ₹2.34 crore, and the assessee’s share was only one-fourth. It was argued that the very foundation of the recorded reasons was factually incorrect and therefore the reopening proceedings were invalid.
