TMI Blog2023 (2) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... by reason of the failure on the part of the assess to disclose fully and truly all material facts necessary for assessment. The affidavit clearly evinces that the department has purported to reopen the assessment only on the basis of change of opinion. The reasons do not spell out failure on the part of the assessee to disclose fully and truly all material facts. The Petitioner has disclosed all primary facts. We are required to consider whether the pre-condition for issue of a valid notice u/s 148 has been fulfilled or not. We are satisfied that the reopening is sought on the basis of change of opinion as apparent from the reply and there is nothing in the reasons to indicate that reopening is sought on the ground of failure on the part of the Petitioner to disclose truly and fully all material facts. This case is clearly covered by the judgement of this Court in the case of Ananta Landmark Pvt. Ltd [ 2021 (10) TMI 71 - BOMBAY HIGH COURT ] and we are in agreement with the same. - Decided in favour of assessee. - DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. For the Petitioner : Mr. Vipul Joshi a/w Ms. Dinkle Hariya i/b. Ms. Rashmi Vyas. For the respondents : Ms. Sushma Nagaraj a/w Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain (LTCG) after deducting the indexed cost of acquisition, payments made to their sisters, expenses including the cost of furniture left and as per exemptions available under Section 54(2) by depositing the balance amount in the Capital Gains Accounts Scheme and under Section 54EC under by investing in Bonds. 4. A notice u/s 143(2) was given on 20th September 2016 and notice u/s 142(1) was given on 11th July 2017. The Petitioner submitted responses thereto dated 18th September 2017 and 22nd September 2017 with all relevant details and documents. The Assessment u/s 143(3) was completed on 25th September 2017. The notice to reopen the assessment has been issued on 31st March 2021 i.e. more than four years after the end of the relevant assessment year viz. A.Y. 2015-16. 5. The Petitioner s case had been selected for scrutiny under CASS, on the issue of (i) Sale of Property mismatch, mismatch Income/Capital Gain on sale of land and building, (ii) Deduction claimed under head of Capital Gain. The Petitioner reconciled the differences with the AIR provided to him by the Respondent and after due examination the assessment was completed u/s 143 (3) of the IT Act on 25th September 2017 ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part of the assessee to disclose fully and truly all material facts in the return of income, in terms of provisions of section 147 of the Income Tax Act. 12. In this case, return of income was filed for the year under consideration and scrutiny assessment u/s 143(3) of the Act was made on 25.09.2017. Since more than 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceedings u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of the failure on the part of the assessee to disclose fully and truly all material facts of the case are covered by the Explanation 1 to section 147 of the Act. 13. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraphs 1 to 12). I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee have not fully and truly disclosed the material facts necessary for the assessment for the year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee to disclose fully and truly all material facts for its assessment which the first respondent had failed to assert and prove. He submitted that the first respondent was required to specifically point out which material facts were not truly and fully disclosed by the petitioner. He submitted that the petitioner had not only disclosed the particulars of capital gains but also the corresponding claim of exemption under Section 54EC and 54(2) of the Act in his return of income hence there was no such failure. He submitted that the Petitioner had also placed on record all relevant material and explanation during the course of scrutiny of the original assessment taken up to investigate the issue of capital gain. He submitted that the AO had not found any adverse material or any discrepancy and had fully verified this aspect. 10. The learned counsel submitted that a mere bald and mechanical averment in the reasons recorded could not fulfill the important jurisdictional condition and would render the initiation ex facie bad, illegal and without jurisdiction. In support of his contention, he relied upon the following judgments: (i) Ipca Laboratories Ltd. v/s. DCIT (2001) 251 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad wished to bequeath her right and interest in the land to her two sons and only a formal writing remained to be executed during her lifetime. (ii) The daughters had orally released their rights. (iii) Consequently, after death of Subhadra, her husband, in his capacity as Administrator of her Estate, took out the procedure to transfer the property in the name of the two sons, which ultimately resulted into the society transferring the share certificate in favour of the two sons and changes in property card. (iv) Most importantly, the building was constructed by the sons after the death of the mother, Subhadra, which was constructed in their own name and our their own efforts and funds. (v) Even all agreements of tenancy/sale were executed by the sons alone. (vi) The formal release by the daughters in 2014 was only for the sake of good order . 14. He accordingly submitted that there was no tangible material available with the first respondent to initiate the reassessment proceeding, and consequently, the initiation of reassessment was bad in law and without jurisdiction. In support of his contention, he relied upon the following decisions; (i) CIT v/s. Kelvinator of India (2010) 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out of transfer of property of the assessee s 1/5th share would be construed as long term capital gain. 18. The learned counsel submitted that the return of income was processed u/s 143 (1) of the Act. Subsequently, the case was selected for scrutiny under CASS Limited Scrutiny for examining issues with regard to mismatch of the Sale of Property, Income/Capital Gain on sale of land and building and deduction claimed under the head Capital Gain. He submitted that the assessment was completed u/s143 (3) of the Act, after the Petitioner reconciled the differences with the AIR provided to him by the respondent on 25th September 2017 accepting the returned income of ₹ 1,22,980/-. 19. The learned counsel submitted that internal audit vide appeal memo no. CIT (Audit)-2 Mumbai/2018-19/ITO Audit 2(10) 10805 dated 18th March 2019, had raised the objection based on their working of capital gains according to which the Petitioner was liable for Short Term Capital Gains (STCG) of ₹ 6,16,40,000/-. It was submitted that on account of a remedial action to settle the major audit objection, reopening of assessment by action u/s 148 of the Act was done after taking due approval from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t were canvassed and brought on record by the petitioner were neither disputed / controverted in the reasons recorded. 25. The position in law as contended by the Petitioner is not in dispute. By virtue of a proviso to section 147, no action can be taken for reopening after four years unless the AO has reason to believe that income has escaped assessment by reason of the failure on the part of the assess to disclose fully and truly all material facts necessary for assessment. The affidavit clearly evinces that the department has purported to reopen the assessment only on the basis of change of opinion as stated on page nos. 164 and 167 of the reply. The reasons dated 28th August 2021 at page nos. 110 to 114 of the Petition do not spell out failure on the part of the assessee to disclose fully and truly all material facts. The Petitioner has disclosed all primary facts. 26. We are required to consider whether the pre-condition for issue of a valid notice u/s 148 has been fulfilled or not. We are satisfied that the reopening is sought on the basis of change of opinion as apparent from the reply and there is nothing in the reasons to indicate that reopening is sought on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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