Case Title: Artiben Amishkumar Patel Versus The Income Tax Officer,
Case No.: R/Special Civil Application No. 18957 Of 2019
Appearance
Petitioner: Mr. Tushar Hemani, Senior Counsel With Ms Vaibhavi K Parikh
Respondent : Mr. Karan Sanghani, Mrs Kalpana K Raval
CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV and HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Order dated: 12/09/2023
Introduction
The High Court of Gujarat conveyed a crucial ruling asserting that scrutiny on suspicion for making further inquiry is unsustainable under section 148 of the Income Tax Act.
Facts of the Case
The petitioner is a partner in a partnership firm, namely, “M/s. My Home Developers”. The partnership firm is engaged in the business of developing housing projects. The petitioner, along with other partners of the said partnership firm, executed a partnership deed on 27.06.2007 which contained a discretionary clause as to “payment of interest on capital” but “no remuneration” was payable to the partners.
it was mutually agreed upon that with effect from 01.04.2009, “no interest on capital” shall be payable to the partners of the firm. Thus, Financial Year 2009-10 onwards, neither any “interest on capital” nor any “remuneration” was payable to the partners. Accordingly, the “partnership firm” did not pay either any “interest on capital” or any “remuneration” to its partners, including the petitioner, during the year under consideration. The partnership firm filed a return of income for the Assessment Year 2012-13 on 29.09.2012 declaring total income at Rs. Nil after claiming a deduction of Rs.15,78,260/- under section 80IB(10) of the Act
the Income Tax Appellate Tribunal in appeal bearing Income Tax Appeal No. 2966/Ahd/2014, held that income of Rs.76,25,000/- disclosed during the course of the survey was income from developing housing projects and that the partnership firm is eligible for deduction under section 80IB(10) of the Act. The case of the partnership firm for the Assessment Years 2011-12, 2012-13, and 2013-14 was reopened by the issuance of notice under section 148 of the Act in the month of March 2018. The partnership firm challenged the reopening notice for all three years before this Court by filing a Special Civil Application
The respondent issued the impugned notice dated 30.03.2019 under section 148 of the Act seeking to reopen the case of the petitioner for the year under consideration The petitioner filed a return of income for the year under consideration in response to the notice issued under section 148 of the Act.
learned Senior Counsel, further submitted that even on merits, no addition can be made in the hands of the petitioner and accordingly, there is no escapement of income chargeable to tax. Under the circumstances, in the submission of Mr.Hemani, Senior Counsel, reopening is unjustified.
Analysis of the court
the order disposing of the objections is read, certain observations made on the gain made on the sale of property and change in the amount of interest were not reflected in the reasons for reopening of an assessment which also makes the exercise vulnerable.
all the petitions deserve to be allowed. The impugned notices in the respective petitions are quashed and set aside. The rule is made absolute accordingly, with no orders as to costs.
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Written By
Kaulav roy chowdhury
