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Shri Umrao Singh, S/o Shri Radhey Lal Singh Versus ITO, Ward 1 (5) , Faridabad And Vice-Versa

Reopening of assessment - Non Providing opportunity of being heard - determination of capital gain and/ or imposition of tax and interest with reference thereto - Held that:- We are of the considered view that without going into the merits of the case, proper opportunity of being heard is required to be provided to the assessee by the AO, who being a quasi judicial authority was under obligation to follow the rule of natural justice. Resultantly, cross appeal filed by the revenue is also not sus .....

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icial Member The aforesaid appeal filed by the assessee as well as cross appeal filed by the revenue are being disposed by way of consolidated order to avoid repetition of discussion. 2. Appellant, Shri Umrao Singh (hereinafter referred to as the assessee ), by filing the present appeal sought to set aside the impugned order dated 07.03.2012 passed by the Commissioner of Income-tax (Appeals), Faridabad qua the assessment year 2007-08 on the grounds inter alia that :- 1.0. That on the fact and in .....

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oid-ab-initio, erroneous, unjustified, wholly arbitrary and bad in law, on the following grounds: (each grounds/facts is prejudice to each other):- 1.1 That the notice issued u/ s 148 of the Act was not served to the assessee. 1.2 That while supplying the reasons to believe to the counsel of the assessee, no time limit or due date was prescribed for filing return of income or for appearing before Ld. AO. 1.3. That Ld. AO has erred in ignoring the procedure of assessment by not taking the matter .....

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ismissal the appeal of the appellant that when all the primary facts necessary for assessment were fully and truly disclosed in the income tax return, which was duly submitted with the department and there were also no new facts which came to the possession of the Ld. AO, then it is no open for the department to commence the assessment proceedings u/s 148 of the Act. 3(b) That on the facts and in the circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not ju .....

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g to the appellant to explain its case before passing the ex-parte order. 5.0. That on the fact and circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the claim of the appellant on deduction on account of expenses on transfer of land amounting to ₹ 8,50,000/-. 6.0 That on the fact and, circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the claim of the app .....

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of ₹ 1,56,72,879/- u/ s 54F of the Act. 8.0 That the appellant craves leave, to add, to amend, to modify, to rescind, supplement or alter any ground stated herein above either before or at the time of hearing of the appeal. GROUNDS RAISED BY THE REVENUE IN THE CROSS APPEAL : 1. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in allowing the deduction of ₹ 4,47,994/- for indexed cost of acquisition while computing the LTCG even wh .....

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uot;On the facts and in the circumstances of the ease, the Ld. CIT(A) has erred on facts and in law in allowing the deduction of ₹ 48,78,450/- u/s 54B even when no claim was made by the assessee though more than sufficient opportunity was given and there is no provision in the Income Tax Act as to allow the deduction/ exemption which was not claimed in the return of income as held by the Hon'ble Apex Court in the case of Goetze India Ltd vs CIT (284 ITR 323) (SC)." 3. "That L .....

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duction u/s 54B of the Act on the investment made in purchase of residential land as the land measuring 960 Square Yards purchased for ₹ 19,96,800/- (including registration charges) is residential land as certified by the Sub Registrar, Palwal on the registered sale deed and not agricultural land as claimed by the assessee and allowed by the Ld. CIT(A). Hence, deduction u/s 54B is not available for this investment." 5. "That Ld. CIT(A) has allowed deduction u/s 54B of the Act eve .....

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." 7. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in allowing the deduction of ₹ 1.25 crores u/s 54F on the basis of estimation only. Ld. CIT(A) has held that 'however, since the appellant has not furnished bills in support of entire investment and it cannot be inferred that the amount withdrawn from the bank account was invested in construction only, I deem it fair to estimate the investment of ₹ 1.25 crores in the c .....

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d. CIT(A) has estimated the investment in construction is from a private architect and not from an approved architect. Further, the architect has certified that the constructed building is a farm house and not a residential house .. The intent of the legislature behind exemption u/s 54F is only to satisfy the housing needs of the general public and not for the farm houses for leisure of the assessee." 9. "That Ld. CIT(A) has allowed deduction u/s 54F of the Act even when there is no ev .....

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ot paid capital gain tax on account of transfer of land to BPTP Limited and its group concern and as per Registration Certificate No.28/R.C. dated 13.02.1990 issued by Registrar, Ballabhgarh, assessee has received sale consideration of his land to the tune of ₹ 2,24,87,500/- from M/s. Super Belts Pvt. Ltd., M-11, Middle Circle, Connaught Circle, New Delhi and has not declared his return of income declaring the said capital gain. So, the assessee has undisclosed income of ₹ 2,24,87,50 .....

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₹ 2,24,87,500/- be not added to the total income of the assessee. The assessee was called upon to furnish necessary documents on 18.12.2009 but none appeared on behalf of him nor filed any written reply. Consequently, the AO came to the conclusion that the assessee has received the amount of ₹ 2,24,87,500/- on account of sale of land to M/s. Green Valley Housing & Development Pvt. Ltd. M-11, Middle Circle, Connaught Circle, New Delhi. Hence, addition of ₹ 2,24,87,500/- is m .....

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of ₹ 1.25 crores u/s 54F on the basis of estimation only, filed the present cross appeal. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 7. During the appellate proceedings before the Bench, the assessee has moved an application for admission of additional grounds to the following effect :- 1) That neither inti .....

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sence of issuance and service of notice u/sec. 143(2) of the Act is non-est in law. 2) That the notice alleged to have been issued sec. 143(2) of the Act dated 14.12.2009 fixing the date of hearing for 18.12.2009 is not valid in law since:- i) At the time of issuance of said notice, he had no return of income was available in the assessment record of the appellant. ii) If the said notice is issued on the basis of return of income filed by the appellant on 08.01.2009, then as per the proviso to s .....

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inter alia that ld. CIT (A) has erred in returning the findings that the return of income filed by the assessee with Income-tax Officer, Ward 2(4), Faridabad on 08.01.2009 is invalid as he has no jurisdiction to entertain the same; that the AO has erred in reopening the assessment u/s 148 without service of notice and without examining the return filed by the assessee on 08.01.2009; that notice u/s 148 of the Act was never served upon the assessee; that during the assessment proceedings, the ass .....

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ht of the findings returned by the ld. CIT (A) in para 6 at page 45 of the impugned order which is reproduced for ready reference as under :- ……It is correct that the assessee filed his return of income but the said return was filed with Income Tax Officer, Ward 2 (4), Faridabad on 08.01.2009 whereas the jurisdiction over the case of assessee vested with Income Tax Officer, Ward 1 (5), Faridabad. Hence, the return filed with wrong jursidcition has to be treated as non-est, invalid .....

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heard to the assessee by filing return of income with the competent revenue authority or he would have transferred the return of income dated 08.01.2009 to the competent revenue authority for further necessary action. AO in the assessment order has proceeded on the premise that no return of income was filed by the assessee and proceeded to reopen the assessment u/s 148 of the Act. So, the impugned order passed by the CIT(A) by treating the income-tax return filed by the assessee, though with ITO .....

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the assessee by the AO u/s 143(1)/143(2) is concerned, the same is not sustainable because in case the assessment is completed u/s 144 of the Act, as in the instant case no notice is required to be issued u/ss 143(1)/ 143(2). 13. The next contention raised by the ld. AR for the assessee that during the assessment proceedings, the assessee sought one month time to file the requisite documents but the AO without providing opportunity of being heard completed the assessment within four days by cond .....

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