TMI Blog2021 (9) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... on is required under section 263 of the Act. Reopening was made on the allegation that the assessee has understated the amount of sale consideration of the property and therefore the AO framed the assessment under section 143(3) read with section 147 of the Act considering the sale consideration declared by the assessee viz a viz the value adopted for the stamp duty purposes under section 50C of the Act. As such, there was no issue in the re-assessment proceedings with respect to the provisions of section 54B of the Act. Now the controversy arises whether the learned Principal CIT can widen the scope of the assessment which was framed under section 147 of the Act by including any other income chargeable to tax which has escape assessment. We note that such power for expanding the scope of the proceedings under section 147 of the Act does not lie with the Principal Commissioner of Income Tax. Therefore, in our considered view the learned Principal CIT cannot expand the scope of the proceedings under section 47 of the Act by raising the issue of deduction under section 54B of the Act. Thus, in the case on hand, we find that there was no issue with respect to the exemption/dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.05.2009 5,32,645/- 8,63,020/- 27,36,980/- 23.12.2014 36,00,000/- 2 Survey No. 91 Paiki Khoraj Agri Land 17217/2014 1,20,00,000/- 23.03.2001 18,200/- 2,74,979/- 23,54,097/- 23.12.2014 24,00,000/- 3 Survey No. 81 Paiki Khoraj Agri Land 17221/2014 9,20,00,000/- 25.07.1983 31,750/- 2,74,919/- 1,81,25,021/- 23.12.2014 1,84,00,000/- 3.1 However, the Ld. Pr. CIT found that the property bearing survey no. 91/khata no. 1489 admeasuring 12393 sq. mtrs. was jointly sold by the assessee along with her father. The impugned property was purchased in two instalments. Firstly, it was purchased by the father of the assessee Shri Krishnakant G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout filing any supporting documents which was also allowed by the AO without carrying out any enquiry/ investigation during the assessment proceedings. Thus, the Ld. Pr. CIT proposed the order passed by the AO u/s 143(3) r.w.s 147 of the Act, by issuing show cause notice dated 10/02/2020, as erroneous in so far prejudicial to the interest of Revenue. 3.6 The assessee in response to the show cause notice vide letter dated 24/02/2020 submitted that she had made payment for the purchase of property bearing survey no. 91/khata No. 1489 for ₹ 5,32,645/- against the total cost of purchase at ₹ 35.20 lacs. Thus, the investment made by her in the property under consideration comes only at 5.71% only. Accordingly, the assessee has taken share in the sale consideration of the impugned property at 5.71% out of the total consideration. 3.7 Furthermore, remaining amount of sale consideration was declared by her father in his return of income after claiming the proportionate cost of acquisition. 3.8 All the facts for the purchase and sale of impugned property were duly verified by the AO during the assessment proceedings and thereafter the claim of the assessee was ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been borne by the assessee. However, in the sale deed for ₹ 6,30,00,000/-, the assessee's name appeared for the amount of ₹ 36,00,000/- for her share of land of 2340 sq.mtrs. out of total land of 12393 sq.mtrs. The rate of sale per sq.mtj-. has been worked out to ₹ 5083.51 and the assessee would be entitled to receive an amount of ₹ 1,18,95,425/- as against she received ₹ 36,00,000/- and her father received ₹ 5,94,00,000/- for the remaining land of 10053 sq.mtrs. Further, since the A.O. has adopted total sale consideration at ₹ 6,38,23,950/- for 12393 sq.mtrs. for which the average rate of sale consideration has been worked out to ₹ 5150/- per sq.mtr. and accordingly, the assessee's share in the sale consideration for 2340 sq.mtrs. of land is worked out at ₹ 1,20,51,000/- which is further required to be replaced by ₹ 1,20,49,962/- as proposed in the show cause notice so as to arrive at the logical figure of sale consideration based on the facts now appraised afresh. 3.4 Considering the above facts as appraised on a fresh perusal of the records now made available, the capital gain in the hands of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporate total long term capital gain at ₹ 2,99,45,774/- as against that declared by the assessee at ₹ 2,32,16,098/- and of ₹ 2,35,27,746/- as decided by the A.O. in the re-assessment order passed on 26.09.2019. The A.O. will tax the amount of long term capital gain of ₹ 91,98,317/- on protective basis with a direction to tax the same on substantive basis in the case of Shri Krishnakant G. Vakharia, father of the assessee as he has paid the entire cost of acquisition of land as mentioned above. In respect of other properties, the A.O. shall call for the copies of purchase deeds as mentioned in the above tables and ascertain the persons who had borne the cost of land originally purchased/acquired with quantification of the amounts paid by the respective persons and allow the share of the assessee in acquiring the lands so purchased with other family members and allow the cost of acquisition accordingly with the benefit of indexation. 4. So far as the claim of deduction u/s 54B of the Act is concerned, it has been reascertained that the assessee has claimed deduction of ₹ 21,04,500/- in respect of the property purchased. In the balance-sheet an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. had erroneously allowed the deduction of ₹ 21,04,500/- which is directed to be withdrawn while giving effect to this order u/s 263 of the Act. 5. Since the assessee has quoted judicial pronouncements in support of the contention that the revisionary proceedings ought not to have been initiated u/s 263 of the Act as the A.O. had examined all the issues and decided the same and there cannot be second opinion on the issues so verified. 4. Being aggrieved by the order of the Ld. Pr. CIT, the assessee is in appeal before us. 5. The Ld. AR before us filed a paper running from pages 1 to 109 and submitted that both the assessee and her father have filed their income tax return declaring income chargeable to tax at the maximum marginal rate. Therefore, if any income is enhanced in the hands of the assessee then the effect of the same should also be given in the hands of the father of the assessee by reducing the corresponding income. Accordingly, it was contended that the entire exercise of making the revisions under section 263 of the Act would be tax neutral. Likewise, even if any error is pointed out in the assessment order but the same will not cause any prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required under section 263 of the Act. 7.1 Let us understand the effect on the revenue, assuming the order passed by the learned principle CIT is correct under the provisions of law. The necessary working on the tax liability stands as under: As per assessee Krishnakant Avani Total Sales consideration 8,41,99,949 24400000 10,85,99,949 Cost of acquisition 1,48,41,099 1183902 1,60,25,001 Deduction 54B 1,25,00,000 2104500 1,46,04,500 LTCG 5,68,58,850 2,11,11,598 7,79,70,448 Tax @ 20% 1,13,71,770 42,22,320 1,55,94,090 After giving effect of learned Pr CIT finding Krishnakant Avani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be revised under section 263 of the Act. 7.4 Moving to the 2nd allegation raised by the learned Pr. CIT under section 263 of the with respect to the deduction claimed by the assessee under section 54B of the Act. In this regard we find that the order which is under revision under section 263 of the Act was passed under section 143(3) read with section 147 of the Act. The proceedings under section 147 of the Act was initiated on account of difference in the amount of sale consideration shown by the assessee viz a viz the value determined for the purpose of the stamp duty under the provisions of section 50C of the Act. In this connection, we refer the reasons recorded under section 147 of the Act which are reproduced as under: In this case the return of income filed by the assessee on 29.09.2015 declaring total income at ₹ 2,33,83,360/-. Thereafter, the case was selected to scrutiny and order u/s.143(3) was passed on 18.08.2017 in which the total income of ₹ 2,33,83,360/- was determined. 2. Subsequently, on verification on records, it is found that (a) The Assessee in co-ownership of her father Sh. Krishnakant Gulabchand Vekharia has sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - 18342382 In view of the above, the LTCG in respect of the above land is to be computed at ₹ 1,83,42,982/- as against ₹ 1,81,24,Q21/-, Hence, there is under assessment of ₹ 2,18,961/- (₹ 1,83,42,982 - ₹ 1,81,24,021). 3. In view of the above facts, I have reason to believe that income chargeable to tax has escaped assessment of ₹ 3,12,648/-(₹ 44,347 + ₹ 49,340 + ₹ 2,18,961) within the meaning of Section 147 of the IT Act and the assessee has also not disclosed fully and truly all relevant facts and materials necessary for the assessment Therefore, I am satisfied that it is a fit case for re-opening the assessment u/s.147 of the IT Act for the A.Y.2015-16. 7.5 The reopening was made on the allegation that the assessee has understated the amount of sale consideration of the property and therefore the AO framed the assessment under section 143(3) read with section 147 of the Act considering the sale consideration declared by the assessee viz a viz the value adopted for the stamp duty purposes under section 50C of the Act. As such, there was no issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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