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2023 (9) TMI 1321 - HC - Income TaxReopening of assessment u/s 147 - petitioners are partners in a partnership firm engaged in the business of developing housing projects - whether petitioners have offered “interest on capital” and “remuneration”, in case of the partnership firm “My Home Developers”, where the assessment of the firm was sought to be reopened on similar grounds? - HELD THAT:- On the issue of reopening on the count in these three petitions on the ground that the petitioners have offered “interest on capital” and “remuneration”, in case of the partnership firm “My Home Developers”, where the assessment of the firm was sought to be reopened on similar grounds, the Division Bench of this Court in the petitions at the behest of the firm, on appreciation of the clauses in the partnership deed held as, the clauses contained partnership deeds are only enabling provision not mandatory in nature so as to lead to an inference that, the assessee had to pay interest on capital and remuneration to its partners. It provided for interest on partner's capital and remuneration, the same is subject to their mutual agreement. Even after 01.04.2009, interest on capital as well as the remuneration were not to be paid to the partners. We do not find any material on record to indicate that, the writ applicant has actually received any interest on capital and remuneration from the partnership firm. Record further indicates that, for the assessment year 2010-11, deduction under Section 80 IB(10) was claimed without paying any interest on capital and remuneration to partners and such claim was not disturbed by the assessing officer. In this view of the matter, the conclusion arrived at by the assessing officer that, the assessee has claimed deduction without providing interest on capital and remuneration to partners as per the clause 6 and 7 of the deed, has escaped assessment on account of failure on the part of the assessee in filing of the return of income disclosing fully and truly all material facts are contrary to law and without jurisdiction. Petitioner sold immoveable property but no capital gain was offered in the return of income - As property sold was owned by “Lavjibhai Ambaliya HUF”. The Balance-sheet of HUF of the preceding year submitted showed the property on the asset side. No description or situation of the property purchased was given. Sale consideration of Rs. 32,28.800/- was received by cheque. LTCG of Rs. 23,99,559/- duly reflected as is evident from the relevant Statement of Long Term Capital Gain. The reassessment was also therefore based on suspicion. As pointed out factors that indicate that income has escaped assessment consists of facts which if established will have a cause and effect relationship, whereas factors which indicate a suspicion about income escaping assessment which would warrant a further inquiry. This is not what is contemplated under section 148 of the Act. The jurisdiction cannot be used to carry out a roving inquiry. Even when the order disposing of the objections is read, certain observations made on gain made on sale of property and change in amount of interest were not reflected in the reasons for reopening of assessment which also makes the exercise vulnerable. Petition allowed.
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