B.S. SHANTHARAJU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee has preferred this appeal against the order passed by the Income Tax Appellate Tribunal, Bangalore, confirming the order of the lower authorities where the assessee was held to be liable to pay the capital gain tax on the transaction in question.

(2.) The assessee along with his return enclosed a note stating that, he is liable to pay capital gain tax in the United Kingdom as per domestic law and not taxable in India. Acting on the said note, when the return was processed under Section 143(1) of the Income Tax Act (hereinafter referred to as the Act ), the Assessing Officer accepted the return. However, subsequently he issued a notice under Section 148 of the Act, on the ground that he has reason to believe that any income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act. The assessee appeared and contended that there is no other material other than what was produced along with the return, which is the basis for coming to such conclusion and therefore, he stated that the proceedings initiated for re-opening the assessment is bad. The objections were overruled. The Assessing Officer held that capital gain tax is liable to be paid by the assessee according to the domestic law of his country. Aggrieved by the same, he preferred an appeal to the first appellate court, which dismissed the appeal. The assessee preferred an appeal to the Income Tax Appellate Tribunal against these two orders. The Tribunal has also dismissed the appeal. Aggrieved by the same, the present appeal is filed.

(3.) The appeal was admitted on 16.6.2009 to consider the following substantial questions of law: