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TMI Blog2018 (4) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the said Act ) on 29.12.2010 accepting the returned income. Proceedings under Section 147 of the said Act were initiated and notice under Section 147 was issued to the respondent assesee on 27.2.2014. The said notice was duly served on the respondent assessee on 10.3.2014. 3. Section 147 of the said Act provides as follows: "Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under 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 sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on allowance or any other allowance under this Act has been computed; (ca) where a return of income has not been furnished by the assessee or a return of income has been furnished by him and on the basis of information or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;] (d) where a person is found to have any asset (including financial interest in any entity) located outside India. 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 has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4. For the removal of doubts, it is hereby clarified that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,327). The assessee claimed to have purchased another plot of 5,784 sq.ft. at Krishnan Karanai Village for Rs. 34,88,000/- out of consideration of Rs. 35 lakhs received. It is noticed that the cost included cost of development of land for Rs. 1,94,545/- spent for forming roads and fencing. Under the circumstance of exemption of Rs. 28,83,670/- for capital gain requires to be considered and clarified subject to classification, addition demand of Rs. 9.17 lakhs would arise. Incidentally, the document for sale of Siruthavur land reveals receipt of Rs. 25 lakhs from the purchaser for the sale of this land. The balance Rs. 10 lakhs attracts provision of section 56(2)(v) of the Act (Deemed gift from non-relative). The assessment of Rs. 10 lakhs would result in additional demand of Rs. 3,18 lakhs excluding interest and penalty. In addition though the assessee claimed to have spent Rs. 34,88,000/- out of Rs. 35 lakhs for purchase of new plot the actual investment is Rs. 3,84,470/- (Rs.3,47,040 x 109% +5,199). The details of investment of balance of about Rs. 31 lakhs may be looked into and income there from brought to Tax. Tentatively Rs. 1.20 lakhs (at the rate of 4%) is assessabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een enquired into before finalization of the original assessment proceedings. The Assessing Officer had deputed the Inspector of Income Tax to conduct site verification and local enquiry. The report of the Inspector of Income Tax dated 08.10.2009, which was on record, was also re-produced in the Appellate Commissioner's order and the same is extracted herein below: "The Joint Commissioner of Income-tax, Salary Range-VI, has directed to verify the land situated at in Siruthavoor Village in the case of Smt.Vatchala Santhosh Kamat (PAN: AAKPK5000G). We visited to the above place on 22.12.2010 and identify the land an extent of 1 acre by designated as Field-III, Green Piece comprised on old Survey No.421/10(part), 421/5(part), 421/2(part) & 421/4(part), New Survey No.421/143 as per patta 352, situated at 124, Siruthavoor Village, Chingleput Taluk, Kancheepuram District. During our visit on 22.12.2010 the said land is vacant position only and nothing cultivated in this land. The land is not situated within the Thiruporur Town Panchayat or Mahabalipuram Town Panchayat. Further, Thiruporur is not notified by the CBDT as an urban land. As per Adangal copy issued by VAO of the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the decision of the Supreme Court in CIT v. Kelvinator of India Limited, reported in (2010) 320 ITR 561, where the Supreme Court categorically held that mere change of opinion could not per se be the reason to initiate re-assessment proceedings. The Assessing Officer has the power to re-assess, but no power to review. The Appellate Commissioner rightly held that the ratio of Kelvinator, supra, was squarely applicable to the facts of the instant case. 16. In the instant case, re-assessment proceedings had not only been initiated upon the change of opinion for the reasons observed above, but after the expiry of four years from the end of the assessment year in question. This could only have been done in circumstances specified in the proviso to Section 147 of the said Act. None of the aforesaid circumstances exist. There were no new materials before the Assessing Officer at the time of re-assessment which were not available before the Assessing Officer at the time of formation of original opinion and/or making of the original assessment order. 17. Once an order of assessment has been passed, the Assessing Officer has no jurisdiction to open reassessment after expiry of 4 year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the clear language appearing in proviso to section 147. This view finds support from the judgment of the Supreme Court in Gemini Leather Stores v. ITO, reported in (1975) 100 ITR 1(SC). 20. In Parashuram Pottery Works Co. Ltd. v. ITO, reported in (1977) 106 ITR 1(SC), the Supreme Court held that failure on the part of the Assessing Officer to allow correct depreciation to the assessee was not a valid ground for initiation of reassessment proceedings. The Supreme Court held that when on the basis of facts on record the Income Tax Officer determines the amount of depreciation allowable to the assessee. erroneously, the responsibility for that mistake cannot be ascribed to be an omission or failure on the part of the assessee. The Supreme Court quashed the initiation of reassessment after expiry of 4 years from the end of the relevant assessment year. 21. In CIT v. Cholamandalam Investment & Finance Co. Ltd., reported in (2009) 309 ITR 110 (Mad.), the Madras High Court held that after expiry of 4 years from the relevant assessment year, where the assessee had disclosed fully and truly all primary facts in relation to his claim for depreciation, the initiation of reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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