CIT (Central) Vs C. Ramaiah Reddy (Karnataka High Court)
The Karnataka High Court considered the Revenue’s appeal under Section 260A of the Income-tax Act concerning AY 2005-06. The appeal challenged the ITAT order dated 27 January 2012, which had annulled the reassessment on the ground that the Assessing Officer had not issued a notice under Section 143(2). The High Court had admitted the appeal on two substantial questions concerning whether such notice was mandatory in reassessment proceedings under Sections 147 and 148 and whether Section 292B could validate the reassessment despite its absence.
The assessee, an individual engaged in real estate business, had filed a return declaring a loss of Rs.65,49,770 for AY 2005-06. The Assessing Officer subsequently completed reassessment under Section 143(3) read with Section 147 on 31 December 2008, determining taxable income at Rs.12,10,51,209 after making additions of Rs.12,14,68,180 as long-term capital gains and Rs.61,32,800 as short-term capital gains under Section 45(2).
Before the CIT(A), the assessee challenged the validity of the reassessment on the ground that no notice under Section 143(2) had been issued. The CIT(A) rejected the objection, holding that the assessee had not raised the issue of non-service before the Assessing Officer and that Section 292B applied. The CIT(A) also considered the treatment of lands received by the assessee through family partition and upheld the assessment.
