9911796707
TMI Blog2021 (9) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer during the course of original assessment sought for certain clarifications on the claim of the petitioner / assessee under Section 54F of the Act. The petitioner also furnished details and informations regarding the queries raised by the Assessing Officer. Elaborate adjudications are made with reference to the capital gains as well as the claim regarding exemption and finally, the assessment order was passed on 22.12.2011 under Section 143(3) of the Income Tax Act. In view of the fact that the Assessing Officer has granted exemption in respect of one property out of three properties purchased by the petitioner, the petitioner preferred an appeal before the Commissioner of Income Tax (Appeals) who in turn allowed the appeal in entirety in order dated 11.07.2012. Against the order passed by the Commissioner of Income Tax (Appeals), the Assistant Commissioner of Income Tax filed further appeal before the Income Tax Appellate Tribunal in I.T.A.No.1837/Mds/2012. The Income Tax Appellate Tribunal elaborately considered the grounds raised by the Department as well as the defence placed by the assessee and confirmed the order of assessment passed by the original Assessing Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Senior Standing counsel appearing on behalf of the respondent disputed the said contentions raised on behalf of the petitioner by stating that as per Explanation 1 to Section 147, mere production of documents, book of accounts etc., may not be a ground to seek exoneration from the reopening proceedings. Even if such book of accounts and documents are produced, the authority is empowered to reopen the assessment if they could arrive at a conclusion that income chargeable to tax, escaped assessment due to the failure on the part of the assessee or due to the non-disclosure of material facts truly and fully under the proviso clause to Section 147 of the Act. In the present case, there was non- disclosure during the relevant point of time before the Assessing Officer regarding certain details which provided cause for the respondent to reopen the assessment. Thus, the petitioner is bound to participate in the reassessment proceedings. 5. The learned Senior Standing counsel is of an opinion that the petitioner has erroneously sought for exemption under section 54F of the Income Tax Act and the said informations and materials were not considered by the original Assessing Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The Income Tax Authority itself has mentioned in the notice under section 148 of the Act that such information was available only in the valuation report. Giving the information in this manner shall be of no help to the appellant as the Assessing Officer was not expected to go through the said information available in the valuation report for the purpose of ascertaining the actual construction of the plot." 9. Relying on the above Judgments, the learned Senior Standing counsel reiterated that the petitioner has not fully and truly disclosed the materials which provided cause for the Assessing Officer to reopen the assessment and thus, the Writ Petition has to be rejected. 10. Considering the arguments as advanced by the respective learned counsel for the petitioner and the learned Senior Standing counsel for the respondent, it is not in dispute that mere filing of documents, book of accounts etc., would not be sufficient to grant exoneration from reopening proceedings from the assessee under Explanation 1 to Section 147 of the Act. Explanation 2 to Section 147 enumerates various circumstances wherein the cases are to be treated as deemed cases for reopening of assessment. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed under Section 143(3) of the Act, the petitioner / assessee filed an appeal before the Commissioner of Income Tax (Appeals) who in turn considered the grounds raised by the petitioner / assessee and allowed the appeal in entirety. The Income Tax Department preferred further appeal before the Income Tax Appellate Tribunal and the Income Tax Appellate Tribunal adjudicated the issues with reference to the exemption claim made by the assesse and confirmed the assessment order passed by the original Assessing Officer. It is pertinent to note that Income Tax Appellate Tribunal independently appointed the Inspector of Income Tax to conduct an inspection and submit a report and the said report was categorically considered by the Income Tax Appellate Tribunal and it is relevant to extract the portion of the findings in this regard from and out of the order passed by the Income Tax Appellate Tribunal, which reads as under: "14. The assessee relying on the memorandum explaining the provisions of section 54F as reported in 184 ITR (Statue) submits that provision is intended to benefit an assessee that invests in acquisition of residential house. According to the assessee, this paramete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound development leveling work. About 3½ acre land is being under leveling work. Most of the area of the land is marshy with bushes, plants, ponds unyielding coconut trees. The nearby inhabitants informed that the property had been kept idle by the purchaser after it was purchased till one month back. The property have large commercial or business importance in the area because of emergence of eco-backwater tourism in Alappuzha. Muhamma is lying in western side of the Vembanad lake in Allapuzha District. Many resorts are functioning successfully for years in this area. It is evident that the purchaser spent huge amount for buying this land with an intention to make a huge return from either running a resort or from resale of the land. Earlier before the advent of tourism the cost was only Rs. 20,000/- for a cent of land. But as this area become a major tourist attraction in the world, the land price in this area has gone up substantially. My findings in brief in the light of questionnaire envisaged in the letter of Hon.ITAT Chennai are as under:- 1. The very intention behind deduction u/s.54F is fully defeated as the assessee neither constructed any building in the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within two years. Here, you had acquired two more houses on the same date. The exemption u/s 54F is required to be withdrawn for violation of condition under sub section(2) of section 54F. This was not considered while completing the assessment u/s 143(3) by the Assessing Officer and consequently by CIT (A) in his order dated 11.07.2012. If this is considered, there would be an additional tax demand of Rs. 46,20,782 (excluding interest u/s 234B)." 18. The assessee filed her objections which was disposed of by merely stating that "in the instant case, as the tax effect that escaped income is more than Rs. 0.1 Lakh Rupees and the notice under Section 148 is issued on 29.03.2016 which is within time limitation is 06 years, the reopening proceedings is in order in letter and spirit as per the relevant provision of the Income Tax Act and valid in law" . . . . . In the instant case the fact in contention here is the eligibility of claim u/s 54F of the IT Act. Even in the face of the claim of the assessee that there was no failure on her part to disclose fully and truly all material facts regarding the claim u/s. 54F, the specific facts related to the acquiring of total three houses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of withdrawal of the exemption granted under Section 54F, the assessment is reopened. Such a reopening cannot be construed as based on new tangible material. If at all any lapse committed during the original assessment proceedings or erroneous consideration based on the opinion formed by the Assessing Officer during the relevant point of time, the other possible opinion if at all raised for reopening of assessment is to be construed as change of opinion and cannot be considered as new materials for the purpose of reopening of assessment. 22. However in the event of tracing out new tangible material or informations which were not at all adjudicated during the original assessment may be a good ground for reopening of assessment. As Explanation 1 to Section 147 enumerates that mere book of documents is insufficient to grant exemption from reopening proceedings. However, in the present case, admittedly the assessee had submitted all the documents pertaining to the purchase of the three properties and all those documents were placed before the Assessing Officer and the Assessing Officer considered all those three documents and formed an opinion that, the petitioner / assessee is el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner / assessee. In the present case, the sale document pertaining to all the three properties were placed before the Assessing Officer by the assets. Even the return of income filed by the assessee would reveal that the details regarding the capital gains are clearly mentions that it is not disputed by the Assessing Officer and its correctness is also not questioned by the authorities. This being the factum established, this Court of an opinion that the Writ Petition on hand is a case of change of opinion wherein an interference is called for. Admittedly, the reopening proceedings are initiated beyond the period of four years and thus, the conditions stipulated in proviso clause to Section 147 is to be complied with. The respondent has not established that the petitioner had not furnished all material facts fully and truly for the assessment. Further, the materials produced for the assessment for claiming exemption are not disputed by the respondent. 26. In view of the fact that non-disclosure on the part of the assessee has not been established in this case, and thus the case of the petitioner deserves merit consideration. Accordingly, the impugned order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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