VIP Housing and Properties Vs DCIT (Madras High Court)
Madras High Court held that re-opening of assessment u/s. 147 must be based on some tangible material without such tangible material, re-opening is merely inspired from change of opinion and hence the same is liable to be quashed.
Facts- During the course of search and seizure operation, the following amounts were seized: Rs. 1,77,50,045/- from the office premises of VIP Housing, Rs.50,00,000/- was seized from the residence of Shri Dhanapal, Rs.50,00,000/- and gold of Rs.38,69,168/- seized from VIP City.
The case was centralized with this circle and a notice u/s 142(1) was issued to the assessee. In response to that assessee filed return of income on 22.02.20 16 returning an income of Rs. 2,34,86,595/-. Subsequently, the assessment was completed u/s 143(3) of IT Act, 1961 by accepting the returned income. No addition was made on the seized cash and jewellery which resulted in escapement of taxable income worth Rs.3,16,19,213. Thus, re-opening of assessment was initiated u/s. 148 and the same is challenged vide the present writ petition.
Conclusion- Held that to invoke the machinery under Section 148 of the IT Act as it stood till 31.03.2021, the Courts have repeatedly held that the term “reason to believe” means that Assessing Officer must have some tangible material passing before assuming jurisdiction under Section 147 of the IT Act. The dispute in the present case pertains to the Assessment Year 2014- It can therefore hardly be said that the Assessing Officer was unaware of the search proceedings and the seizure made pursuant to the search conducted on 03.09.2013 resulting in seizure of a sum of Rs.1,77,50,045/- from the petitioner Firm, and a sum of Rs.50,00,000/- from the petitioner’s partner, and gold worth of Rs.38,69,168/-, which was recovered from M/s.VIP City. Therefore, the Impugned Order dated 11.02.2022 along with the Impugned Notice dated 31.03.2021 are liable to be quashed and the same are accordingly quashed as they are inspired from the change of opinion.
