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2021 (7) TMI 64 - GUJARAT HIGH COURTReopening of assessment u/s 147 - non-disclosure of capital gain - sale of assets which were transferred to the partnership firm as capital contribution - whether the revenue is justified in reopening the assessment for the year under consideration? - assessment sought to be reopened by the revenue mainly on the ground that the assessee had received the amount as referred in the reasons recorded, from the partnership firm namely M/s. Swaminarayan Enterprises against the transfer of his land as capital contribution is chargeable to tax under the head Capital Gain in the hands of partners - HELD THAT:- It appears from the record that the assessee had transferred his land to M/s. Swaminarayan Enterprise as part of capital contribution in the partnership firm as per Partnership Deed duly executed on 15.08.2008. Undisputedly, the land in question was not transferred in the name of Firm. It is a settled law that where immovable property is transferred by a partner to the firm as a capital contribution and registration does not take place by paying stamp duty, the case would be covered under Section 45(3) - As per Section 45(3) of the Act, whenever a partner contributes any capital asset in the partnership firm, then the value of capital asset recorded in the books of account of the firm is to be considered as the full value consideration for the purpose of computing capital gain. In the present case, we find that no any amount was credited by the firm in the account of the assessee as a consideration for the land in question during the year AY 2009-10. The record further indicates that the full value of consideration of the transfer of said land being recorded was NIL. Under such circumstances, we are of the view that since the transfer of land as a part of capital contribution the partnership firm took place in the year 2008, the same can be assessed only in the AY 2009-10 and not in the AY 2011-12. Therefore, for the year under consideration no amount of capital gain could be said to have taxable. Reasons lack validity and the AO had proceeded on erroneous premise and there was no sufficient material before the AO to take a prima-facie view that income of the assessee for the year under consideration has escaped assessment. Information received by the AO is too vague and he proceeded for further verification of the land transactions and income received by the Firm and the assessee from the sale of the constructed flats. Therefore, the reopening of the assessment to carryout roving and fishing enquiry is not permissible in law. No hesitation to hold that the reasons recorded for the reassessment for the year under consideration could not said to have led to formation of any belief that income had escaped assessment within the meaning of Section 147 - Decided in favour of assessee.
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