TMI Blog2014 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to disclose fully and truly all material facts that are necessary for its assessment. Relying upon CIT & Anr. Vs. Foramer France [2003 (1) TMI 101 - SUPREME Court] - Revenue was not able to show that there is a failure on the part of the assessee to disclose fully and truly all material facts in the assessment finally made - there is no failure on the part of the assessee to make return or to disclose fully and truly all the material facts necessary for assessment - notice issued by the AO on 27/11/2009 u/s 148 of the Act being issued after 4 years from the end of the relevant AY i.e. 2004- 05 is barred by limitation - Decided in favour of Assessee. - ITA No. 999/Hyd/2013 - - - Dated:- 20-5-2014 - Shri D. Manmohan And Shri Chandra Poojari,JJ. For the Petitioner : Shri Y. Ratnakar For the Respondent : Shri D. Sudhakar Rao ORDER Per Chandra Poojari, A. M. This appeal of the assessee is directed against the order of the CIT(A)-III, Hyderabad dated 30/04/2014 for the AY 2004-05 wherein the assessee has raised the following grounds of appeal: 1. The order of the learned Commissioner of Income tax(Appeals)III, Hyd. dt. 30-4-2013 is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above legal aspect. The learned CIT(A) did not act judiciously in referring to the contentions raised by the appellant. 8. The appellant further contends that the order of the learned Commissioner of Income tax does not deal with the various authorities placed before him and also amendment to the Statute with effect from 1-10- 2009 making the provisions of section 50C of the IT Act applicable to unregistered documents prospectively after 1-10-2009 and not with any retrospective effect. The document giving rise to the capital gain was in fact an unregistered document. The learned Commissioner of Income tax being appellate authority should have considered the submission instead of ignoring the same even if he found it to be inconvenient. In any event, the order of the learned Commissioner of Income tax upholding the reopening of assessment u/s 148 of the IT Act is biased and capricious and on the face of it perverse in nature. 9. The appellant contends that the provisions of Section 50C of the IT Act are not applicable for the purpose of computing capital gains of the appellant. F or the purpose of computing the capital gains, the sale consideration derived at Rs.30,50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer. 15. It is contended that the company has paid Rs.3,95,00,000/- to LIC Group Gratuity Fund towards liability for employees who retire upon superannuation. The above amount is paid based on the calculation by LIC Group Gratuity Fund on actuarial principles. The appellant has furnished during the course of assessment proceedings itself that the payment is made to LIC Group Gratuity Fund. The assessing officer ignored the said letter presumably by over sight. and there was therefore no necessity for the CIT(A) to have remitted back the matter to the assessing officer instead of deleting the disallowance of Rs.3,16,00,000/- straightaway on the facts obtaining in the case. 2. In Ground Nos. 2 to 8, the assessee challenged the reopening of the assessment by the assessing officer through the assumption of jurisdiction under section 147 of the Income Tax Act. 3. Briefly the facts relating to this ground are that for the assessment year 2004 - 05 the appellant company filed its return of income on 30/10/2004. The case was selected for scrutiny and an order under section 143(3) of the Income Tax Act was passed on 28/12/2006. Vide this order long-term capital gains were deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in equal instalments for each of the four immediate succeeding previous years. But the full amount of 3.95 crores as claimed as deduction instead of actual allowable of Rs. 79 lakhs. Yours faithfully, Sd/- (M Naveen) Asst. Commissioner of Income tax Circle'2(3) . Hyderabad. 4. On appeal, before the CIT(A), the appellant has argued that the proviso to section 147 of the Income Tax Act comes into force once the period of 4 years from the end of the assessment year elapses. In this case that period elapsed on 31/3/2009 whereas notice under section 148 of the Income Tax Act was issued on 27/11/2009. The proviso to section 147 states as below :- Provided that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of 4 years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to notice issued under sub - section(1) of section 142 or section 148 or to disclose ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings for the assessment year 2005-06 it was noticed by the assessing officer that the appellant had sold land in Bangalore to some developers vide agreement dated 28/06/2003. As per this agreement, the land was originally divided into two blocks namely A and B. Block A was transferred during the financial year relevant to the current assessment year and the appellant offered capital gains accordingly. The appellant neither provided any estimate of the market value, nor the valuation and nor any other relevant details regarding the property transactions in question. It was only during the assessment proceedings for the next assessment year that the assessing officer investigated and found that the value at which sale was made by the appellant was far less than the sub registrars value. A full and true disclosure would involve placing the relevant information in the file so that the assessing officer could decide on the course of action. The assessing officer is not expected to doubt each and every piece of information placed by an assessee in its return of income. In the present case, the assessing officer had no inkling and there were no material facts before him which woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into other merits on valuation of land, it is submitted that Sec.5OC of the IT Act can be invoked only in respect of agreements executed and registered and not in respect of unregistered documents. 7.5. It is submitted that in view of the fact that Sec. 5OC of the IT Act was inapplicable to unregistered documents, the said section 50C of the I. T Act is now amended with prospective effect from 1- 10-2009 to facilitate invoking the said section even in respect of transactions which are not registered with the Stamps Registration Authorities. Clause-25 of the Finance (No.2) Act has brought about this amendment effective from 1-10-2009. 7.6 The learned AR invited our attention to the memorandum explaining the provisions of the Finance (No.2) Bill, 2009 reported in 314 ITR (Stat.) P.214 (copy enclosed). In this memorandum, the position of the existing law, the reasons for amendment of statute effective from 1-10-2009, have clearly been spelt out. The amendment is applicable in relation to the transactions undertaken on or after 1 October, 2009. He, therefore, submitted that in view of the above, since sec.50C of the IT Act does not apply to the transaction relating to the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmunicated in the communication dt. 22-7-2010. The said communication contains no such allegation of any omission. It is settled law that the reasons recorded as communicated should refer to the omission on the part of the assessee. If there is no such allegation at all on that very ground itself, the reopening is held to be illegal. For this proposition the learned AR relied on the following case laws: 1. Dulichand Singhania Vs. ACIT, 269 ITR 192 (P H) 2. Haryana Acrylic Manufacturing Co. Vs. CIT Anr., 308 ITR 38 (Del.) 3. JSRS Udyog Ltd. Anr. Vs. IT), 313 ITR 321 (Delhi.) 4. Sitara Diamond (P) Ltd. Vs. DCIT, 345 ITR 91 (Bom.) 5. Dynacraft Air Controls Vs. Smt. Sneha Joshi Othrs., 355 ITR 102 (Bom.) 7.12. Learned AR invited our attention to the recent judgment of the Hon'ble High Court of Andhra Pradesh in Techumseh Products Pvt. Ltd. Vs. Asst. Commissioner of Income tax Another reported in 361 ITR 429. The Hon'ble High Court held in the above judgment that the reasons for reopening the assessment should reflect in the notice uls 148 itself. If these reasons are not reflected in the notice, the notice is illegal. Similar view was expressed by Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etirement scheme. Hence section 35DDA is inapplicable. This information was on record and it consequential order dt. 11-9-2013, the said addition in the reassessment was deleted. 7.17 The learned AR submitted that in any event, on the basis of reasons furnished, it is evident that there was no failure on the part of the assessee to disclose fully and truly all material facts. Even if there is any such allegation, such allegation being justifiable and open to judicial scrutiny, cannot survive on the facts of the case. It is all the more pertinent to note that all information was there in the record itself and the reopening of assessment was with reference to the material already available on record. On this very premise itself, it is clear there was no failure on the part of the assessee to disclose fully and truly all material facts. 7.18. The learned AR submitted that the very notice u/s 148 of the IT Act being illegal, the consequential action also becomes illegal and the assessment order passed u/s 143(3) read with section 147 of the IT Act dt. 13-12-2010 is illegal and deserves to be annulled as nonest. 7.19 The learned AR, therefore, submitted that if the basic conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the section says is that in a case where the assessment is sought to be reopened after the period of four years, the only reason available to the AO is the nondisclosure on the part of the assessee. 9.4 So long as the assessee has furnished full and true particulars at the time of original assessment and so long as the assessment order is framed under section 143(3) of the Act, it matters little that the assessing officer did not ask any question or query with respect to one entry or note but had raised queries and questions on other aspects. 9.5 On perusal of record, we find that there was no failure on the part of the assessee to disclose fully and truly all material facts that are necessary for its assessment. As contended by the learned AR the reopening of assessment u/s 148 is illegal for the following reasons: (a)the assessment for this AY 2004-05 was earlier completed u/s 143(3) of the IT Act on 28/12/2006. (b)the assessment is sought to be reopened beyond a period of four years from the end of the relevant assessment year as notice u/s 148 was issued on 27/11/2009 which is beyond a period of 4 years from the end of relevant AY. (c) lastly there is no failur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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