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2014 (3) TMI 721 - AT - Income TaxValidity of reassessment u/s 147 of the Act – Income escapement – Computation of cost of construction - inclusion of cost towards common area - excess claim of expenditure - Held that:- The assessee has not disclosed truly and completely all the material facts necessary for the completion of the assessment in its case - By working out the cost of construction per sft. on an incorrect basis, assessee has furnished inaccurate particulars of income, the provisions of S.147 are clearly applicable - In a summary assessment under S.143(1), assessing officer cannot be said to have taken any view for or against the assessee, on the basis of material furnished with the return - since original assessment in this case has been done only under S.143(1) of the Act – the decision in Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME Court] followed - merely because summary assessment has been done earlier in terms of S.143(1), it cannot be said that the assessing officer, has already applied his mind to the material furnished by the assessee along with the return, and it is only on the basis of mere change of opinion, that he has invoked the provisions of S.147 of the Act - the reopening of assessment is very much legal and valid, and the contentions of the assessee is without any merit. Cost of construction per sft has to be determined by dividing the total area received by it in terms of the development agreement, and there is no justification for adopting only the area which the assessee is claiming to be the saleable area - As observed by the CIT(A) in the order, after development, assessee has sold various flats and also sold the parking areas to the flat owners and as such it is not correct to say that there is less expenditure in developing a parking area and a lot more expenditure in developing the kitchen - it is neither practical nor feasible to break up the cost of construction and the sale price into individual elements like fittings, bedrooms etc. and to calculate capital gains on such individual elements - Such an exercise would also be redundant, since a flat consist of all areas which belong to the purchaser including common areas which are used by various purchasers - A lot of developers incorporate common swimming pools, clubs and many other facilities in their integrated development and charge each flat owner a corresponding price, even though by way of advertisement or selling technique, a builder would state that certain portions are free, while other is being charged - The reasons discussed by the Revenue authorities in the orders for making the impugned addition are sound an valid – the order of the CIT(A) upheld – Decided against Assessee.
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