Point of Law:Assessment - “reason to believe” the income chargeable to tax has been under assessed - Petitioner is bound to participate in the re-assessment proceedings by availing the opportunities to be provided by the competent authorities and established his case in the manner known to law

JUDGMENT :

(Prayer: Writ Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorari, quash the impugned notice issued u/s.148 of the Act in Pan No.AAZPG3716G/ACIT/NCC-15/A.Y.2010-11 dated 31.3.2017 and consequentially quash the proceedings in Pan : AAZPG3716G/Reply to objections/NCC 15(1)/2017-18 dated 22.12.2017 as illegal and without jurisdiction.)

1. The Notice issued under Section 148 of the Income Tax Act, 1961 in proceedings dated 31.03.2017 and the reply to the objections given by the respondents for re-opening of assessment in the case of the petitioner in proceedings dated 22.12.2017 for the Assessment Year 2010-11 are under challenge in the present writ petition.

2. The petitioner was engaged in the business of investment advice to the clients in Mutual Funds, post office saving scheme, insurance companies and other deposits. He was assessed to tax under PAN No.AAZPG3716G on the file of the respondent. For the Assessment Year 2010-11, the petitioner had filed return of income on 30.07.2010, declaring a total income of Rs.4,46,870/-. The return was processed under Section 143(1) on 08.04.2011. Subsequently, the assessment was taken up for scrutiny and notice under Section 143(2) of the Act was also issued together with calling for certain details. The petitioner states that the details called for by the petitioner under Section 143(2) were fully furnished to the satisfaction.

3. During the course of original assessment proceedings, the petitioner was asked to explain as to why in connection with the property sold during the Financial year 2009-10 for a consideration of Rs.5,67,30,000/-, the capital gains was not offered to tax in the return filed by him for Assessment Year 2010-11. The petitioner had submitted that the said property was transferred and possession was given to M/s.Vinayaga Land Developers, a partnership firm, for a consideration of Rs.1,07,18,000/- through a Sale agreement dated 15.12.2003 and a registered Power of Attorney was executed in favour of one Mr.B.Nagi Reddy, a partner in the firm, to sell the property.

4. The petitioner had furnished the copy of the sale agreement and Power of Attorney entered into. The Assessing Officer in order dated 12.03.2013 has drawn reference to Paragraph 7 of the Sale agreement, which is dealing with the capital gains.

5. During the Original assessment proceedings under Section 143(3) in response to the summons issued to Mr.B.Nagi Reddy, appeared before the Assessing Officer as per the sale agreement entered into between the petitioner and Sri Vinayaga Land Developers. The petitioner had disowned the rights in the said property after receiving the consideration of Rs.1,07,18,000/- and the Power of Attorney was given in his favor to own, develop and sell the property. It was demonstrated before the Assessing officer that upon ultimate sale of the property for a consideration of Rs.5,67,30,000/-, the whole income was offered as business income in the books of accounts of M/s.Vinayaga Land Developers. In this regard, Mr.B.Nagi Reddy submitted the Books of Accounts of the Firm for the Financial Year 2009-10 and the copy of the return of income in which the said income is included as business income and offered to tax under the head “Profits and gains from business or profession”.

6. It is contended that all the above facts have been clearly brought out in the assessment order dated 12.03.2013 under Section 143(3) of the Act. The respondent having considered the above facts and upon being satisfied by order dated 12.03.2013 under Section 143(3) held as follows:

“Since it is verified that the said consideration has suffered tax in the hands of Mr.Nagi reddy and it is also verified that the assessee has not received any amount other than the consideration he received during financial year 2003-04 amounting to Rs.1,07,18,000/- which was offered to tax during the Assessment Year 2004-05, the assessee's submission that the consideration will not amou