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.
Justice Sabharwal served as the 36th Chief Justice of India (November 1, 2005 to January 14, 2007) 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.
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 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.
