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2016 (11) TMI 1066 - ITAT KOLKATA

2016 (11) TMI 1066 - ITAT KOLKATA - TMI - Validity of reopening of assessment - Held that:- AO has reviewed the assessment order which is not allowed under the Act. The ld. AO did not bring any tangible material on record to show that the income has escaped assessment. Therefore, considering the above factual position and the case law, we allow the appeal filed by the assessee. - ITA No. 01/Kol/2014 - Dated:- 19-10-2016 - Shri K. Narasimha Chary, JM And Dr. A. L. Saini, AM Assessee by : Shri A.K .....

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the assessee are that the assessee s income tax return for assessment year 2004-05 was assessed by AO u/s.143(3) of the Act. Subsequently, the AO detected that the assessee invested in a property and not shown the amount of capital gain of ₹ 13,45,760/-. Therefore, the AO presumed that there was an excess claim of ₹ 13,45,760/- U/s.54F of IT Act. Hence, believing the reason that income chargeable to tax escaped assessment for the year, the AO has issued notice u/s.148/147 of the IT .....

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remand report. The A.O. sent the remand report on 16.09.13 which was received on 17.09.2013 which is as under:- "In compliance, the A.R. of the assessee appeared and made submission stating that as per I. T. Act, exemption U/s. 54F is available if the assessee invested the consideration of L. T. Capital Gain amount for a residential property one year before or 3 year after the Long Term Capital Gain and the I. T. Act nowhere stated that the consideration of L..T. Capital Gain should be appr .....

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u/s. 143(3}/147 dated 29.12.2010. Considering the above submission and facts of the case, it is appeared that there is no such irregularity in this submission of the assessee." 3.4 The additional evidences admitted under Rule 46A of the I. T. Rules after giving proper opportunity to the A.O. The copy of the Remand Report given to the A/R for rejoinder. The A/R filed rejoinder which is as under:- "In the said Remand Report, the learned assessing officer stated ''that there is n .....

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sessment order. The learned Assessing Officer has finalized his assessment order u/s. 147/143(3) on 29.12.2010 in hurry without giving proper attention to the merit of the assessment. However, the learned Assessing Officer, at the time of passing his assessment order u/ s. 143 dated 17.11.2006, has mentioned in the 2nd and 3rd paragraphs on his order that the assessee has earned Long Term Capital Gain of ₹ 13,45,760/- and claimed deduction U/s. 54F by investing the same in the residential .....

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ssee. " The assessee has claimed the deduction u/ s. 54F for the amount invested in the Residential Flat during the period i.e. one year before and two year after the date of transfer of long term capital asset as per the time limits stipulated in the said section. Therefore, we request you to please allow the exemption of ₹ 13,45,760/ - to our client as provided in section 54F of Income tax Act, 1961. 3.5 I carefully considered the assessment order, submission of the appellant, addit .....

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lant which is as under:- 'The company has made arrangement for delivery of possession of the above mentioned flat along with one covered car parking space to you. The keys of the said flat are lying with the site-supervisor. On production. of this letter, the said site-supervisor will handover you the keys of the flat. You are therefore, requested to kindly issue a letter (copy of which is enclosed) regarding your obtaining delivery of the peaceful possession. You shall abide by the followin .....

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h) 5) All balcony grills at upper part to be maintained as per our drawing. 6) Do not carry any heavy material in the elevator. 7) Do not make any elevator / windows/ sewerage lines/pipelines. addition/ alteration in outer elevator/windows / sewerage lines/pipelines. From the above letter it established that the appellant takes possession after 10.01.2007. The registration of this property also held on 23.02.2007. The exemption u/s. 54F entitled:- "Subject to the provisions of sub-section ( .....

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ferred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say:- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the not consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same .....

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entitled the exemption u/s. 54F of the I. T. Act. Therefore, I confirm the addition made by the A.O. of ₹ 13,45,760/- by rejecting the claim u/s 54F of the I. T. Act. This ground of appeal is not allowed. Not being satisfied with the order of CIT(A), the Assessee is in further appeal before us. 4. Although in this appeal the assessee has raised multiple grounds of appeal but at the time of hearing the solitary grievance of the assessee has been confined to the issue that reassessment u/s. .....

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lable before the AO at the time of original assessment u/s.143(3), hence, the AO did not bring any new or cogent evidence on record to show that the income has escaped assessment. It is merely a change of opinion because the entire information was available at the time of original assessment and, therefore, based on the fact of opinion, the assessment cannot be reopened. However, the assessee did not raise this ground properly before the ld. CIT(A). In addition to this, the Ld. AR has relied on .....

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ow:- Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. ) 54F (1) *** *** *** *** *** *** (a) *** *** *** *** *** *** (b) *** *** *** *** *** *** (2) to (3) *** *** *** *** *** *** (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which transfer of the original asset took place, or which is not utilised by him for the purchase .....

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he Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and for the purposes of sub-section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilized wholly or partly for the purchase or construction of the new asset within the period sp .....

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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:- &bu .....

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ecified account. It further states that the amount, if already utilized for purchase or construction of the new asset, the amount so deposited will be deemed to be cost of a new asset subject to the proviso. The word purchase is used in subsection (2) and indicates that the said word is not restricted or confined to registered sale deed or even possession but has a wider connotation. • The proviso supports the aforesaid interpretation and stipulates that the amount deposited but not utilize .....

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gains is not to be brought to tax, but the unspent amount/figure is taxed. [Para 13] • In view of the aforesaid position, no substantial question of law arises and thus the present appeal is dismissed. [ Para 14] 7.4 Hence, we are convinced that there is no case for the ld.AO to disturb the claim of exemption u/s. 54F of the Act in A.Y 2005-06. Accordingly, the basic reason on an issue for which the assessment was re-opened fails. Hence, any addition made other than the reason for which the .....

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proceedings. We also find that in view of provisions of section 54F(4) r.w. proviso thereon, there 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. Accordingly, ground nos. 1 & 2 raised by the assessee are allowed. The assessee also relied on the following judicial pronouncements :- i) Dhadda Exports Vs. ITO, [2015] 58 taxmann.com 176 (Rajasthan); ii) CIT Vs. M/s EIH Ltd., ITA No.6 of 2 .....

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