The main legal point established in the judgment is the importance of clear and sufficient reasons for reassessment under section 148 of the Income Tax Act, and the need to follow valuation guidelines for immovable properties.

R. M. BORDE, J.

Heard. Rule. Rule made returnable forthwith and heard finally by consent of learned Counsel for respective parties.

2. The petitioner assessee is praying for issuance of writ of certiorari or any other appropriate writ, order or direction in the nature of writ of certiorari to quash and set aside order dated 4-8-2017, passed by the Assistant Commissioner of Income Tax-II, Aurangabad, whereby objection tendered by the assessee for issuance of notice under section 148 of the Income Tax Act, 1961, is rejected. The petitioner is also praying to uphold the objection raised by him vide communication dated 11-11-2016 and to drop the proceedings initiated vide notice dated 14-9-2016, under section 148 of the Income Tax Act.

3. According to the petitioner, land CTS No. 4619, admeasuring 3994.06 square meters was purchased by late Shri Balubhai Amin at Rs. 1,80,000/-. The land is situate at Aurangpura, Aurangabad. After demise of Balubhai Amin in 1968, the property is inherited and belong to the petitioner i.e. J. B. Amin and Brothers (HUF). The value of the property has been shown in the Books of Accounts maintained by the petitioner as Rs. 1,80,000/-. The petitioner alienated the land along with superstructure standing thereon for consideration of Rs. 18 crores on 27-4-2009. The consideration, in respect of the land, is stated to be Rs. 16 crores. The petitioner filed return of Income for the year 2009-2010 (Assessment year 2010-2011) wherein this transaction was duly disclosed.

4. According to the petitioner, it is permissible under section 55(2)(b)(ii) of the Income Tax Act to compute market value of the property, which was assessed at Rs. 2,00,63,643/- as on 1-4-1981, to be cost of acquisition. The computation of long term gain and indexation was made considering the aforesaid market value as on 1-4-1981. The Respondent Income Tax Department proposed to reassess income of the petitioner and as such, notice came to be issued on 14-9-2016, under section 148 of the Act, requiring the petitioner to file return of income.

5. Section 149 of the Income Tax Act provides limitation of six years from the end of assessment year for issuing notice under section 148 of the Act. In response to the notice, petitioner – assessee presented return of income on 3-11-2016. The petitioner thereafter requested Respondent – Income Tax Department to provide reasons recorded by them, as required under section 148(2) of the Act believing that income of the present petitioner has escaped assessment. On 3-11-2016, the Respondent – department informed reasons for believing that the income of present petitioner has escaped assessment. The petitioner tendered an objection to the proposed action since, according to the petitioner, the reason informed by the Respondent for taking proposed action, was not sustainable in law.

6. According to the petitioner, section 55(2)(b)(ii) of the Act provides that it is the option of the assessee to take into account market value as on 1-4-1981 for computing long term gain or the actual price paid for purchase of the property. The Respondent, however, was pleased to reject the objection raised by petitioner – assessee by an order dated 4-8-2017 on the ground that the market value estimated by the present petitioner as on 1-4-1981 is incorrect and that only cost of acquisition can be computed for capital gain. Since the Respondent department proposed to proceed further with the action on new and distinct ground than the reason originally recorded by the Respondent-department, the petitioner has approached this Court with a prayer to quash and set aside the order passed by the Respondent rejecting the objection as well as for setting aside the notice issued under section 148 of the Act.

7. The notice issued by the Assistant Commissioner of Income Tax, Circle-II, Aurangabad, on 3-11-2016, records that the assessee is a Hindu United Family (HUF) and has presented return of income for the year 2010-2011 on 31-7-2010