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2022 (2) TMI 33 - AT - Income TaxValidity of reopening of assessment u/s 147 - assumption of jurisdiction by the ld. AO u/s.147 - exemption u/s.11 of the Act claimed by the assessee is denied in view of violation of provisions of Section 13 of the Act and claim of exemption u/s.10(38) and 10(34) of the Act was also rejected by the ld. AO - claim of exemption u/s.10(34) in respect of dividend on investments in shares / units derived by the assessee trust - HELD THAT:- As at the time of recording the reasons, the ld. AO indeed had the benefit of the Tribunal order passed in the case of Jasubhai Foundation[2015 (4) TMI 305 - BOMBAY HIGH COURT]. Despite this, the ld. AO sought to take a divergent stand in respect of claim of exemption u/s. 10(34) of the Act for the dividend income and sought to reopen the assessment. Since, this issue is squarely covered by the decision of the Hon’ble Jurisdictional High Court on merits also, the reopening made by the ld. AO for the purpose of consideration of the taxability of the dividend income is bad in law and is hereby quashed. Hence, we hold that the ld. AO could not have had a reason to believe that income of the assessee had escaped assessment in respect of this issue. Hence, reopening made in this regard is quashed. Claim of deduction of the assessee trust u/s.11(1)(a) being 15% of gross income - We find that out of the gross receipts of ₹ 43,28,77,779/- during the year under consideration, assessee trust had duly applied for charitable purposes of ₹ 38,77,22,817/- as against the mandated application as per law at 85% of ₹ 36,79,46,112/-. This goes to prove that assessee was statutorily entitled to accumulate 15% of gross receipts year after year for future application of funds for charitable purposes. This 15% accumulation of funds works out to ₹ 6,49,31,667/- which has been accumulated or set apart for charitable purposes by the assessee. There is absolutely no error in this regard. All these facts were duly reflected in the computation of income which was also filed along with the return of income. All these facts were indeed available before the ld. AO in the course of original assessment proceedings itself. Hence, there cannot be any failure in any manner whatsoever for making full and true disclosure of these particulars before the ld. AO in the course of original assessment proceedings. In any case, on this issue in the reasons recorded by the ld. AO, we find that the ld. AO had neither placed reliance on any tangible material nor recorded the fact that there is any failure on the part of the assessee in accordance with first proviso to Section 147 of the Act. Hence, it could be safely concluded that the ld. AO had clearly resorted to only change of opinion in this regard. The law is very well settled that no re-assessment could be framed based on change of opinion. Hence, the re-assessment proceedings on this issue is quashed. Capital Gains on Transfer of Capital Asset and Re-investment in Unquoted Shares - main grievance of the ld. AO seems to be that assessee had not reflected the capital gains in the income and expenditure account and in the computation of income - Admittedly the assessee had reflected the movement in investments in its balance sheet directly and the said balance sheet has been filed along with return of income. Infact, the balance sheet is a mandatory enclosure along with return of income u/s.139(9) of the Act. Hence, it cannot be said that there is a failure on the part of the assessee to disclose the capital gains on sale of TCS shares and re-investment made in preference shares of Tata Sons Ltd. We find with regard to the issue of capital gains on sale of TCS Ltd shares and re-investment in preference shares of Tata Sons Ltd., the ld. AO did not have any tangible material which enable him to form belief that income of the assessee had escaped assessment. He had categorically stated in the reasons that from the records these transactions were found. That itself goes to prove that the ld. AO had gone into the assessment records again and had sought to entertain the change of opinion on the same set of facts available in the records.Hence, the reopening of assessment in respect of capital gain on sale of TCS Ltd. shares and re-investment in preference shares of Tata Sons Ltd., is declared as bad in law. Thus the issues for which reasons were recorded for reopening the assessment completely fails and hence, no re-assessment could have been validly framed by the ld. AO consequently. Hence, the entire re-assessment proceedings framed are hereby quashed and declared void ab initio and hence, quashed - Decided in favour of assessee.
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