TMI Blog2016 (5) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no scope for making any addition in A.y 2005-06. Hence, there could not be any reason to believe that income has escaped assessment for the A.y 2005-06. - Decided in favour of assessee - ITA No. 206/Kol/2013 - - - Dated:- 29-3-2016 - Shri M. Balaganesh, Accountant Member, and Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant: Shri A.K.Tibrewal,FCA AR For The Respondent: Shri Rajat Kr. Kureel, JCIT, ld.Sr.DR ORDER SHRI M.BALAGANESH, AM This appeal of the assessee arises out of the order of the Learned CIT(A), VIII, Kolkata in Appeal No. 169/CIT(A)-VIII/Kol/09-10 dated 19-09-2012 against the order of assessment framed for the Asst Year 2005-06 u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. The first issue to be decided in this appeal is with regard to the validity of reassessment proceedings initiated u/s. 147 of the Act. In this regard the assessee has raised the following grounds:- 1. That the learned Commissioner of Income Tax (Appeals) erred in dismissing the first ground of appeal before him relating to validity of the Assessment order passed by the Assessing officer under section 143(3) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars, in that event, exemption u/s. 54F shall be granted. Hence, the ld.AO denied the benefit of exemption u/s. 54F to the assessee to the tune of ₹ 8,41,360/-. Apart from this, the ld.AO also made addition towards deemed dividend u/s. 2(22)(e) of the Act to the tune of ₹ 3,40,049/-. 4. On 1st appeal before the ld.CIT(A) the assessee submitted that the assessee is an individual. During the year the assessee had income from Salary, income from long term capital gain on shares and interest income. Prior to the assessment the Learned Income Tax Officer made detailed investigation and enquiries with regard to transactions in shares entered into by the assessee and required the assessee to submit. contract notes, D-mat Statements showing quantitative information of shares IN and OUT, details of investment in land and also payments made to the Developer for construction of a residential house. The assessee gave detailed explanation with cogent evidence with regard to the same. The assessee also submitted as follows:- a) That the assessee has purchased shares, sold the shares, that the shares were long term-capital asset and the payments have been received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den to prove that the assessee is entitled to exemption is on assessee (CIT Vs. Ramakrishna Deo (1959) 35 ITR 312(SC). (vi) In the present case the appellant has failed to discharge his burden hence I am of the considered view that the appellant is not entitled for exemption under section 54F of the Act. And this ground of appeal is, thus, decided against the appellant. 6. With regard to the addition made towards deemed dividend the ld. CIT(A) held as under:- 5.3 The ld.AR has submitted that Allahabad Bank at its own has transferred ₹ 15,93,000/- to the saving bank account of the appellant from cash credit account of Hollywood Textiles P.Ltd and hence the transaction cannot be termed as loan or advance. I have carefully considered the submission of the appellant and perused the facts of the case. Though the ld.AR has filed the letter of the appellant and the company before the AO in support of the above submission but has not produced any letter from Allahabad Bank who as per the ld.AR has at its own has transferred the aforementioned funds. Since the appellant has failed to produce any documentary evidence from Allahabad bank confirming the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this, the ld.DR argued that the original assessment was completed only u/s. 143(1) of the Act. He further stated that the reasons recorded indicate on scrutiny of the assessment folder and not scrutiny of the return of the assessee. Hence, it goes to prove that some other material might have been there in the assessment folder, which triggered the reassessment proceedings. 7. We have heard the rival submissions and perused the materials available on record. At the outset, we find that the reasons recorded by the ld.AO are as below:- Mahesh Pal Arora A.Y.2005-06 17-9-2008 The assessee filed return of income for the A.Y. 2005-06 on 20- 07-2005 Declaring total income of ₹ 3.65.670/-. It was processed u/s. 143(1) on 31.7.2006 on the same return Income. It is noticed that the assessee had a long term capital gain of ₹ 8,41 360/- and availed exemption of that u/s. 54F of I.T. Act, 1961. Scrutiny of the assessment folder however revealed that the assessee purchased a Sali land at a consideration of ₹ 5.28.000/- and also made an advance of ₹ 6.17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312 / 320 ITR 561 (SC), it was observed that after 1-4-1989 the Assessing Officer has power to reopen provided there is 'tangible material' to come to the conclusion that there is escapement of income. The judgment has laid emphasis on two more aspects: that there can be no review of an assessment in the guise of reopening and that a bare review without any tangible material would amount to abuse of the power. [Para 12] The assumption of the Revenue that somehow the words 'reason to believe' have to be understood in a liberal manner where the finality of an intimation under section 143(1) is sought to be disturbed is erroneous and misconceived. There is no warrant for such an assumption because of the language employed in section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore, it is not permissible to adopt different standards while interpreting the words 'reason to believe' vis-a-vis section 143(1) and section 143(3). [Par 13] An assessee in whose case the return was processed under section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that they do not meet the standards set in the various judicial pronouncements [Para 14] In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income on going through the return of income filed by the assessee after he accepted the return under section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer. The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words reason to believe vis- -vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the Assessing Officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section.147.[Para 15] 7.2 We also find from the provisions of section 54F(4) of the Act that in any case the claim of exemption u/s. 54F could not be disturbed in A.y 2005-06 even if the construction of residential house ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) The amount that would not have been so charged had the amount actually utilized by the assessee for the purchase or construction of the new asset within the period specified in subsection (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) The assessee shall be entitled to withdraw the unutilized amount in accordance with the scheme aforesaid. 7.3 We also find that the decision of the Hon ble Delhi High Court as relied upon by the assessee in the case of CIT Vs. Kuldip Singh (supra) is well placed, wherein it has been held as under:- The basic purpose behind section 54 is to ensure that the assessee is not taxed on the capital gains, if he replaces his house with another house and spends money earned on the capital gains within the stipulated period[Para 12] The view taken gets support from sub-section (2) to section 54. The aforesaid sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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