Direct Tax Amicus, June 2026

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Article

Why disclosure is no longer enough: Sanand Properties ruling reshapes reassessment and income characterization

By Vasudevan S., Venkat Ramanan and Krishna Laasya V.

The article in this issue of Direct Tax Amicus discusses a recent decision of the Supreme Court in the case of Sanand Properties Pvt. Ltd. v. JCIT. The Apex Court here seems to suggest that the true test for reassessment is not whether basic facts/ underlying documents were merely disclosed, but whether their true implication was made known to the assessing authority. The authors, however, note that the issue before the Court was not one of non-disclosure, but of failure on the part of the AO to properly appreciate the nature and implications of the agreement. According to them, when it has been ascertained that the AO did not consider material in the proper light, then the appropriate remedy would have been to invoke revisionary jurisdiction under Section 263 of the Income Tax Act rather than reassessment. 

Notifications and Circulars

• Notification of an entity for ‘scientific research’
• Research association – Notification of entities under ‘University, college or other institution’
• Specified infrastructure sub-sectors notified for the purpose of Schedule V [tax-exempt investments]

Ratio Decidendi

• Date for determining holding period of property for capital gains calculation would be the date of final and binding allotment – ITAT Mumbai
• Cost of acquisition in case of assets acquired by way of exchange – ITAT Mumbai
• Auditorium rental when is not business income and is merely incidental to attainment of charitable objects – ITAT Mumbai
• Deemed dividend u/s 2(22)(e) upheld, as statutory conditions satisfied notwithstanding that the loan was repaid or was interest bearing – ITAT New Delhi
• Equalisation levy does not apply to reimbursements, considering legislative intent; Corporate veil cannot be pierced without evidence of impropriety – Madras High Court
• Slump sale loss disallowed where assessee fails to justify consideration and support valuation with cogent evidence – ITAT Chandigarh