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TMI Blog2016 (8) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded following reasons: " In this case the assessee filed the return of income on 15.10.2010 showing total income at Rs. 1,41,95,110/. An order u/s. 143(3) of the IT Act passed on 18.01.2013 determining total income at Rs. 1,41,95,110/. Subsequently, on verification of details it is noticed that the assessee has claimed deduction u/s. 54EC of the IT Act at Rs. 1,00,00,000/for investment made in Bonds of Rural Electrification Board. The deduction was claimed against long term capital gain arising on sale of plots for Rs. 1,67,48,181/. The assessee has shown the sale of various plots and worked out long term capital gain on such sale treating the plots sold as capital assets. However, on verification of details filed during the course of assessment proceedings it is noticed that infact the assessee is engaged in the business of real estate. Further scrutiny of accounts also shows that the land sold by the assessee is part of closing stock and therefore the same has to be treated as business income. The maintenance of accounts also shows that the assessee is doing the business of purchase and sale of land. Therefore the net result of sale/purchase of land requires to be tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction to reopen the assessment. 7. We have reproduced the reasons recorded by the Assessing Officer for reopening the assessment. The reasons rely on only one factor viz. assessee's claim of deduction under section 54EC of the Act, on a sum of Rs. 1 crore invested by the assessee in Rural Electrification Bond. This investment was made by the assessee from out of the sale proceeds of Rs. 1.67 crores from a plots of land. The assessee thus, claimed such receipt as a long term capital gain and claimed deduction under section 54EC of the Act concerning the specified investment. The Assessing Officer however believed that this income was business income and no deduction under section 54EC of the Act was therefore allowable. 8. With this background, we may peruse the original assessment proceedings, in which, the Assessing Officer had under a letter dated 30.07.2012, raised various queries, relevant portion of which, reads as under: "1. Brief note on the nature of activities undertaken by you, and the main source of your income during the year under consideration." ... "12. Please furnish the details of LTCG on sale of Land alongwith documentary evidence." In response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that the assessee has shown the profits earned thereon under the proper heads of income. 3. The assessee has claimed deduction u/s.54EC in respect of Long Term Capital Gain earned on the sale of land at village Vavdi, Survey No.21, Plot No.16 to 18 and 5, consisting of land admeasuring 1946.14 sq.meters. It is seen that the assessee has earned Long Term Capital Gain of Rs. 4412635/on the sale of the impugned Property which he has in turn invested in the Bond of Rural Electrification Corporation Limited. Necessary details and evidence in this regards have been furnished by the assessee. He claim of the assessee for deduction u/s. 54EC has been verified. Details like copy of bank account statements, confirmation of depositors etc. are filed. Personal Books of accounts were also produced by the assessee's AR and the same were test checked. He case was also discussed with the AR of the assessee." 11. In the order of assessment also thus, the Assessing Officer referred to the fact that the assessee had sold various plots of land, receipts of which were shown either as long term capital gain or business profit. In this context, the Assessing Officer noted that he had verified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control whatsoever. Whether the Assessing Officer allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceedings, does not reject such a claim, but chooses not to give any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve large number of complex claims, voluminous material, numerous exemptions and deductions. If the Assessing Officer is burdened with the responsibility of giving reasons for several clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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