SC paves way for IT assessments of two businessmen sons of former CJI YK Sabharwal

New Delhi, The Supreme Court has cleared the decks for the income-tax assessments of the two businessmen sons of former Chief Justice of India YK Sabharwal over share transactions that funded their purchase of a prime property on Delhi's Sikandra Road in 2010.SC paves way for IT assessments of two businessmen sons of former CJI YK SabharwalA bench of Justices JB Pardiwala and K Vinod Chandran dismissed four appeals filed by Chetan and Nitin Sabharwal, while upholding income tax reassessment notices issued for assessment years 2008-09 and 2009-10.Justice Sabharwal served as the 36th Chief Justice of India and had a long judicial career spanning the Delhi High Court, Bombay High Court, and the Supreme Court of India.The top court said the notice issued by the Income Tax Department dated March 31, 2015, rested on valid "reason to believe" under Sections 147 and 148 of the Income Tax Act, 1961.The apex court, in its October 28 judgment, said the probe report by the director general provided tangible material for the Assessing Officer to form a reasonable belief that income chargeable to tax had escaped assessment.It said "reason to believe" means cause or justification, and the officer need not have finally proved the escape of income.It said courts cannot weigh the sufficiency of the reasons and rejected the argument that overvaluation cannot lead to escaped income."The escapement of income at the hands of the seller of the shares, the proceeds of which were later utilised to acquire capital assets to thus claim deduction, could as well be a diversion of income, assessable to tax under the guise of sale proceeds which, in the present case, assumes relevance for reason of the sale proceeds being far above the actual value of the shares...."The present case is not one wherein it could be said that the Assessing Officer had only a vague feeling on the basis of which he recorded that proper investigation was necessary. We are of the view that a conclusion that the truth of the alleged transactions needs to be investigated is not the same thing as having reasons, post investigation, to issue a notice," the bench said.In October 2007, the Sabharwal brothers and two other shareholders agreed to sell shares of Pawan Impex Ltd and SVIIT Software Ltd to GYS Real Estate Pvt Ltd. The agreed prices were ₹195 crore and ₹60 crore, with each seller entitled to a one-fourth share. Chetan Sabharwal's assessment for 2008-09 was completed in December 2010 and his returned income was accepted.The subsequent investigation by the Income Tax Department raised concerns over the valuation of these shares, observing prima facie that the sale consideration was significantly higher than what could be warranted by the cost of the underlying land and buildings.The department further found that a substantial portion of the proceeds had been used to acquire a property on Sikandra Road in April 2010, with the brothers claiming exemption from capital gains tax on the investment under Section 54F of the Income Tax Act.This article was generated from an automated news agency feed without modifications to text.