Discrepancy Between Property Values in ATS and Sale Deed Constitutes a Prima Facie Case for Income Escaping Assessment

Case Details: Smt. Geeta Devi Sharma vs. ITO - [2024] 159 taxmann.com 483 (Jaipur - Trib.)

Judiciary and Counsel Details

• Sandeep Gosain, Judicial Member & Rathod Kamlesh Jayantbhai, Accountant Member
• Mahendra Gargieya & Devan Gargieya, Advs. for the Appellant
• Smt Monisha Choudhary, Addl. CIT for the Respondent.

Facts of the Case

The assessee had purchased a residential plot pursuant to a sale agreement in which the assessee agreed to pay Rs. 34 lakhs (approximately) to purchase a house property, against which Rs. 6 lacs were paid in cash in advance at the time of signing of an agreement, and the rest was assured to be paid by 15.03.2012.

When asked, the assessee submitted that the assessee paid Rs. 12 lakhs through various cheques to purchase the property through a conveyance deed registered on 22.03.2012 before the Sub Registrar. However, dissatisfied with the assessee’s reply, the Assessing Officer (AO) concluded that the assessee had purchased the property for Rs. 34 lakhs as per the Agreement to Sale dated 12.02.2012 instead of Rs. 12 Lacs declared.

Contending the discrepancy of the values as a reason to believe, the AO initiated reassessment proceedings by issuing notice under section 148. The assessee opined that the discrepancy in value does not form a ‘reason to believe’ to initiate reassessment proceedings.

On appeal, the CIT(A) confirmed the action of AO. Aggrieved-assessee filed an appeal before the Jaipur Tribunal.

ITAT Held

The Tribunal held that according to the AO, this information and documents were enough ‘’reasons to believe’’ that the assessee’s income had escaped assessment. Therefore, he issued a notice under section 148 of the Act.

In this regard, it was found that the AO invoked the provisions of Section 148 after coming to know about the agreement to sell dated 12-02-2012. Even the existence of the said agreement to sell dated 12-02-2012 is not disputed, and the copy of the same was furnished by the assessee, which means that the same was already in the possession of the assessee.

The principal ‘’prima facie belief’’ of the AO that income had escaped assessment is enough at the stage of reopening and merits of the matter are not relevant at this stage. The only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Therefore, whether the materials would conclusively prove the escapement is not a concern at that stage. This is so because of the formation of belief by the AO is in the realm of subjective satisfaction.

Accordingly, it was held that AO’s action of reopening the assessee’s assessment was found to be in accordance with the provisions of the law.