TMI Blog2022 (9) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... unication claim that the Assessing Officer had not considered of the sale deed before allowing the deductions under Section 48 of the I.T. Act. Respondents will have to stand or fall based on the reasons recorded by the Assessing Officer at the time of issuing impugned notices for the reopening of the assessment. Those reasons nowhere referred to any concealment of documents by the Petitioners or concealment of sale deed by the Petitioners. The record fairly bears out that there was no concealment. After taking up the Petitioners' cases for limited scrutiny, the Assessing Officer considered the material on record and allowed the deductions under Section 48 of the I.T. Act. Therefore, the Respondents cannot now be permitted to add to the reasons recorded by the Assessing Officer at the time of issuing notices for reopening the assessment. There appears to be no merit in the claim of the concealment of documents like the sale deed or MOU. After the Petitioners' cases were selected for limited scrutiny, particularly on the aspect of the claim for deductions on capital gains, the Petitioners have stated on oath that all documents, including the sale deed and the MOU, were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. Whether investment and income relating to properties are duly disclosed. 5. The Petitioners claim to have responded to the above notice dated 11.08.2017 by submitting all documents about the income for Assessment Year 2016-2017. In particular, the Petitioners claim that they furnished the documents relating to the sale transaction of the property, including the MOU dated 30.08.2007, the sale deed dated 14.07.2015, and the MOU dated 30.03.2016. 6. The Assessing Officer vide his order dated 19.12.2018 accepted the Petitioners returned income and consequentially the explanation furnished by the Petitioners that were backed with the relevant documents as aforesaid. In particular, the computation sheet appended to the Assessment Order dated 19.12.2018 shows that the deductions to the extent of Rs. 1,64,45,000/- claimed by the Petitioners under Section 48 of the I.T. Act, were allowed by the Assessing Officer. 7. On 27.03.2021, the Petitioners were served with impugned notices under Section 148 of the I.T. Act seeking to reopen the assessment for the Assessment Year 2016-2017. By communication dated 01.04.2021, the Petitioners sought reasons for reopening of assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le computing the capital gain the assessee has reduced the same from full value of sales consideration by treating it as expenditure. 4. However, the compensation should not be treated as expenditure for the purpose of acquiring the property and same cannot be allowed as deduction. Under the head capital gains only direct expenses relatable to transfer of property are allowed as deduction. Therefore, Cancellation/compensation expenses should not be held to be incurred either for acquiring the property of for transfer of property. Moreover the damages/ compensation cancellation charges paid by assessee is only by way of penalty for breach of terms and conditions of the agreement. The penalty in nature and penalty cannot be allowed as deduction. Hence the assessee is not entitled to get deduction of Rs. 1,64,45,000/- from the full value of consideration. In assessee' case only 50 % of compensation (Rs.82,22,500/-) paid has to be disallowed and brought to tax under the head capital Gain. Remaining 50% of expenditure (Rs.82,22,500/-) claimed has to be disallowed and tax in the assessee's spouse name i.e. Smt. Indira Bai Shrikant. 5. In view of the above facts, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the Respondents, submits that there is no infirmity in the issue of impugned notices. She offers that the Petitioners never disclosed the sale deed and the MOU at the time of initial assessment under Section 143(3) by the Assessing Officer. She submits that these two documents constitute fresh or tangible material sufficient for reopening the assessment under Section 147 of the I.T. Act. 13. Ms Linhares submits that the clauses of the sale deed and the MOU make it clear that there was no liability on the property sold; therefore, the compensation of Rs. 1,64,45,000/- was not some expenditure incurred wholly and exclusively in connection with the sale or transfer. She submits that during the initial assessment, the Assessing Officer was unaware of the sale deed and the MOU and, in any case, had no occasion to apply his mind to these aspects. She, therefore, submits that there is no legal infirmity in the issue of impugned notices. She relies on Gruh Finance Ltd. Vs Joint Commissioner of Income Tax (Assessment) (2000) 243 ITR 482 in support of her contentions. 14. The rival contentions now fall for our determination. 15. The record clearly bears out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections, the objections were disposed of by order/communication dated 07.03.2022. In this order/communication, there was a reference made to the Petitioners concealing the fact of the sale deed. The order/communication claim that the Assessing Officer had not considered para 7, page 17 of the sale deed before allowing the deductions under Section 48 of the I.T. Act. 20. Ms Linhares contended that where material concealment resulted in a mistake, the Assessing Officer is always entitled to reopen the assessment by invoking Section 147/148 of the I.T. Act. She submitted that the original assessment order does not show any conscious application of mind by the Assessing Officer to the Petitioners' claim for deductions under Section 48 of the I.T. Act. 21. In GKN Sinter Metals Ltd. (supra), the Division Bench of this Court took note of the catena of decisions beginning with Hindustan Lever Limited Vs R. B. Wadkar (268 ITR 332) that the notice for reopening of assessment would stand or fall based on the reasons recorded at the time of issuing a notice for reopening of assessment. The reasons cannot be improved by substitution, addition, or deletion. The reasons cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the proviso to Section 147 stipulates that there must be a failure on the assessee's part to disclose fully and truly all material facts necessary for assessment as a result of which income chargeable to tax has escaped assessment. But, that is not to say that within four years, the power of the Assessing Officer to reopen an assessment is untrammelled. Even within four years, it is now a settled principle of law that an assessment cannot be reopened based on a mere change of opinion. The Supreme Court has emphasized that the Assessing Officer has no power to review, but his power is the power to reassessment. If a mere change of opinion cannot furnish a ground for reopening an assessment, then, under the garb of reopening an assessment, a review would not equally be permissible. Consequently, the test is that there should be tangible material to conclude that there is an escapement of income from assessment. 25. In Commissioner of Income Tax Vs Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), the Hon'ble Supreme Court has held that post 01.04.1989, the power to reopen is much broader. However, one needs to give a schematic interpretation to the words reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of Section 114 of the Indian Evidence Act, judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong. 29. The Full Bench of Delhi High Court also considered the nature of jurisdiction conferred by Section 147 in the claim of the I.T. Act. It held that the Assessing Officer has no jurisdiction to review his own order. Therefore, the powers under Section 147 cannot be used, like the powers of review to reopen the reassessment. The observations of the Full Bench of Delhi High Court were approved and accepted by at least two Benches of this Court in Asteroids Trading Investment P. Ltd. Vs Deputy Commissioner of Income Tax (2009) 308 ITR 190 and Asian Paints Ltd. Vs Deputy Commissioner of Income Tax (2008) 308 ITR 195. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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