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Madhya Pradesh HC: “The phrase ‘reasons to believe’ does not mean that the Assessing Officer should have ascertained the facts by legal evidence.”
The petitioner had sought the quashing of the reassessment proceeding for the Assessment Year 2014-15 within the case of the petitioner which has been introduced vide notice dated 20-12-2019 issued under Section 148 of the tax Act, 1961. The petitioner further prayed for quashing the order whereby the objections raised by the petitioner against the reassessment proceedings are rejected.
The transaction on which reassessment proceedings are initiated pertains to the allocation of rural agricultural land. For scrutinizing the same transaction, scrutiny proceeding under Section 143(3) of the Act was undertaken just in the case of the petitioner. In pursuance to an equivalent, the petitioner appeared and filed an in-depth reply alongside relevant documents. The matter was discussed intimately with the Assessing Officer and the opportunity of private hearing was granted to the petitioner. Accordingly, an assessment order recording all relevant facts and figures was gone by the respondents. it's put forth that the respondents have sought to reopen an equivalent transaction.
Advocate appearing for the petitioner submitted that no tangible material came to the notice of the respondents and, therefore, there was no failure on the part of the petitioner to disclose any information during the first assessment proceedings. Advocate appearing for the petitioner submitted that approval for reassessment has been given merely during a mechanical manner. The reassessment proceeding within the case of the petitioner is a case of “change of opinion” and review of the sooner assessment proceeding and, therefore, an equivalent is impermissible.
Advocate appearing for the respondents, National E-assessment Centre urged that initiation of reassessment proceeding against the petitioner is completely legal and justified and it's not a mere “change of opinion” because there was escapement of income under the provisions of Section 50C of the Act and therefore the LTCG disclosed by the petitioner at a lesser amount necessitated initiation of proceedings under Sections 147 and 148 of the Act.
The division bench headed by judge Mohammad Rafiq and Justice Vijay Kumar Shukla held that supported tangible material the Assessing Officer has initiated the reassessment proceedings, and if an equivalent is examined on the touchstone of “reason to believe” for issuance of notice under Section 148 of the Act verified by the Assessing Officer. A bare reading of the “reason to believe”, would show that the dual requirement of Section 147 of the Act that the Assessing Officer clear have some material on the idea of which there should be the reason to believe that certain income chargeable to tax has escaped assessment.
“It is luminescent from the record that re-assessment proceeding has been originated on the idea of the fabric which has given rise to “reason to believe” also as escapement of assessment has been enumerated by the Assessing Officer,” the court said.
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