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2015 (7) TMI 574 - ALLAHABAD HIGH COURT

2015 (7) TMI 574 - ALLAHABAD HIGH COURT - [2016] 380 ITR 257 - Addition on transaction of long term capital gains as income from other sources - the said information came to the knowledge of the assessing officer after initiation of proceedings under Section 147 - appellant claimed exemption under Section 54-F on the income shown under the head "long term capital gains" indicating that the amount was invested in the construction of a house - Held that:- The issue relating to long term capital ga .....

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me up as an issue for the first time during reassessment proceedings under Section 147 of the Act nor can it be said that such issue came to the knowledge or notice of the assessing authority subsequently in the case of reassessment proceedings. The assessing officer in the reassessment order under Section 147 of the Act has clearly indicated that the matter was discussed and examined in detail in the block assessment order and an addition of ₹ 36,60,072/- was made on a protective basis in .....

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ute about the assessability of a particular sum either in relation to the assessment year and/or in relation to the assessee.

The amount which is alleged to have escaped assessment was duly indicated by the assessee in his return under Section 139 of the Act and was also considered in the block assessment order under Section 158-BC. In the block assessment order the assessing authority had assessed this amount on long term capital gains as undisclosed income. The block assessment orde .....

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r of assessee. - Income Tax Appeal No. 137 of 2015 - Dated:- 9-7-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani,JJ. ORDER (Per: Tarun Agarwala,J.) The appellant is an individual by status and is a Doctor by profession, running a clinic. The appellant alleges that he was filing his return regularly. For the assessment year 2002-03 the appellant filed his return under Section 139 (1) of the Income Tax Act (hereinafter referred to as the "Act") disclosing an inc .....

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t at the appellant's residence and business premises. Based on this search operation, block assessment proceedings under Section 158BC was initiated for the block period commencing from the assessment year 1997-98 till the date of the search, i.e., 14.12.2002. The block assessment proceedings covered the assessment year 2002-03 in which extensive query on the sale of shares and purchases of shares was inquired and discussed. The assessing authority passed an assessment order dated 28.9.2004 .....

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der dated 28.4.2006. The appellate authority held that the amount of ₹ 36,60,072/- could not be added as an undisclosed income of the assessee as it was not based on the material seized during the course of search and seizure operation under Section 132 of the Act and, therefore, the said amount was liable to be deleted. The revenue, being aggrieved by the appellate order dated 28.4.2006, preferred an appeal which was dismissed by the Tribunal by an order dated 23.5.2008. The Department di .....

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d in the hands of the appellant as deemed dividend under Section 2(22)(e) of the Act. Based on the aforesaid notice issued under Section 148 of the Act reassessment, an order under Section 147 of the Act was passed on 27.3.2006. In this reassessment order, the assessing officer made the additional dividend of ₹ 1,65,000/- under the head "deemed dividend" on the account of advance received from M/s Shivani Hospitals Private Limited. The assessing officer further added an amount of .....

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of the Act, the assessee preferred an appeal, which was allowed by the appellate authority by its order dated 30.4.2012. The appellate authority held that the addition of ₹ 36,60,072/- which was treated as income from other sources was beyond the purview of re-assessment proceeding under Section 147 of the Act as all the facts relating to the transaction of shares were already in the knowledge of the assessing officer even before initiation of the proceedings under Section 147 of the Act b .....

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n is made thereon, other issues which surface during the course of assessment proceeding can also be examined and addition could be made accordingly. The Tribunal held, that the assessment was reopened on the issue of deemed dividend and during the course of re-assessment proceeding, the assessing officer had examined the issue on long term capital gains and the claim of exemption under Section 54-F, which was within the permissible jurisdiction of the assessing officer to examine and pass order .....

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owledge of the assessing officer after initiation of proceedings under Section 147 of the Act on 30.3.2005 ?" We have heard Sri Ashish Bansal, the learned counsel for the appellant and Sri Ashok Kumar, the learned counsel for the appellant. Since no disputed facts are involved and all the materials have been filed along with the memo of appeal, with the consent of the parties, the appeal is being decided at the admission stage itself. In order to proceed further, it could be relevant to pro .....

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r 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 section 148 to 153 referred to as the relevant assessment year) : Provided .... Provided .... Provided .... Explanation 1....... Explanation 2....... Explanation 3. - For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which .....

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by which Explanation 3 to Section 147 of the Act was inserted w.ef. 1.4.1989. Relevant paragraph is extracted hereunder:- "Clarificatory amendment in respect of reassessment proceeding under section 147 The existing provisions of section 147 provides, inter alia, that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess such income after recording reasons for re-opening the assessment. Furt .....

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legislative intent. With a view to further clarifying the legislative intent, it is proposed to insert an Explanation in section 147 to provide that the Assessing Officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, not withstanding that the reason for such issue has not been included in the reasons recorded under sub-section (2) of section 148. This amendment will take effect retrospectively from 1s .....

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namely, that the assessing officer may assess or re-assess the income in respect of any issue which comes to his notice, subsequently in the course of proceedings under Section 147 of the Act notwithstanding that the reasons for such issue has not been included in the reasons recorded under sub-section (2) of Section 148 of the Act. Explanation 3 to Section 147 of the Act and the Explanatory Note issued by the CBDT makes it apparently clear that even though the notice that had been issued under .....

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e is clear and there is no ambiguity, namely, that the issue which is being assessed and which has escaped assessment must come to the notice of the assessing officer subsequently in the course of reassessment proceeding under Section 147 of the Act, which in the instant case was lacking. The issue relating to long term capital gains was already declared by the appellant in his returns filed under Section 139 of the Act. This issue was discussed in detail in the block assessment proceedings by t .....

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the assessing authority subsequently in the case of reassessment proceedings. The assessing officer in the reassessment order under Section 147 of the Act has clearly indicated that the matter was discussed and examined in detail in the block assessment order and an addition of ₹ 36,60,072/- was made on a protective basis in order to protect the interest of revenue. It is apparently clear, that this issue relating to long term capital gains had not come to the notice of the assessing offic .....

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