TMI Blog2015 (2) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... a figure. Counsel doing some guess work submitted that the said figure may have been indicated in the sale deed itself or may have been the amount on which necessary stamp duty for the purpose of registration of the gift deed might have been computed. In absence of any provision in the Act enabling the Assessing Officer to adopt either of the said figures as the cost of acquisition of the property on the date of gift, simply cannot be accepted. - Decided in favour of assessee. - Special Civil Application No. 12763 of 2014 - - - Dated:- 2-2-2015 - Jayant Patel And S. H. Vora,JJ. For the Appellant : Mr S N Divatia, Adv. For the Respondent : Mr Nitin K Mehta, Adv. JUDGMENT (Per : Honourable Mr. Justice Jayant Patel) 1. Rule. Mr.Mehta, learned Counsel for the respondent, waives service of notice of Rule. 2. The learned Counsel appearing for both the sides are heard for final disposal. 3. The short facts are that on 27.7.2008, return of income was filed by the Assessee for the assessment year of 2008-09, declaring the total income of ₹ 90,540/-. Notice under Section 143(2) of the Income Tax Act (hereinafter referred to as the Act ) was issued, comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was expressed that as per the provisions of Explanation 3 to Section 48 of the Act, the cost index of 2006-07 i.e. the year in which the property was acquired by 'Will' by the Assessee was to be considered as the basis and thereafter the long-term capital gain was to be computed. 7. We may record that for invoking the powers under Section 147 of the Act, it is necessary for the competent authority to record the reasons for arriving at the opinion that there was escapement of income for assessment. Such powers could be exercised within the outer limit of four years, but if the power is to be exercised beyond the period of four years, then as per the proviso (1) to Section 147, reasons are also required to be recorded that there was failure on the part of the Assessee to declare true and material facts for the assessment. No such reasons are specifically recorded by the respondent. 8. At this stage, we may record that this Court in the case of Sky Diamonds Vs. Assistant Commissioner of Income Tax in Special Civil Application No.18004 of 2014 decided on 21.1.2015 had observed thus:- 1. xxx 2. The only question which may arise for consideration in the present mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: 147. Income escaping assessment. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): 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 four 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 a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure was not made by the assessee to come out from the bar of four years as provided by first proviso to section 147 of the Act. Once the bar operates upon the power by express statutory provision, the action can be said as without jurisdiction. If the action of issuance of notice is without jurisdiction, it would be a case for interference under Article 226 of the Constitution. 12. In view of the above, we find that the impugned action under section 147 of the Act and consequently issuance of notice under section 148 of the Act (AnnexureE) including disposal of the objection dated 10.10.2014 (Annexure-I) may not stand in the eye of law. Hence, they are quashed and set aside. 13. The petition is allowed to the aforesaid extent. Rule made absolute accordingly. Considering the facts and circumstances, no order as to costs. 9. In our view, unless it is specifically found by the competent authority that there was failure on the part of the Assessee to declare true and full disclosure of the material facts for assessment, the assessment already made cannot be reopened after a period of four years. 10. Apart from the above, our attention is brought to the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f computation - The income chargeable under the head Capital gains shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto. Xxx Explanation - For the purpose of this section : xxx (iii) indexed cost of acquisition means an amount which bears to the cost of acquisition the same proportion as the Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later. 7. Under section 48 of the Act, thus capital gain is computed by deducting from the full value of the consideration received or accruing as a result of the transfer, the amounts of expenditure incurred wholly and exclusively in connection with such transfer, the cost of acquisition of the asset and the cost of any improvement thereto. Term cost of acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous owner of the property acquired, as increased by any cost of improvement of the assets incurred or borne by the previous owner or the assessee as the case may be. If the interpretation of the counsel for the Revenue was correct, this later reference to the cost of improvement borne by the assessee would not have been necessary since section 48 itself would take care of any improvement on the capital asset to be included for the cost of acquisition. It is precisely because such improvement referred to in section 48 would have reference only to that made by the previous owner that the additional provision had to be made in the deeming fiction provided in sub-clause (1) of section 49. Further the interpretation sought to be given by the Revenue would be unacceptable because there is no provision under which the cost of acquisition in the hands of the assessee in cases such as gift on the date of acquisition of the property can be made and found in the Act. A Serious road-block would be created if such property is acquired through Will and would therefore have no reference to its actual cost on the date of operation of the Will. 9. There is nothing on record to show on what ..... X X X X Extracts X X X X X X X X Extracts X X X X
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