TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 492
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....on 147 vide order dated 03/06/2008 by accepting income returned of income of Rs. 6,62,638/-. The assessment so completed was again reopened u/s 147 vide notice dated 19/07/2011 issued u/s 148 of the Act for the reason that assessee has sold a property for Rs. 1,95,00,000/- on 30/11/2004, which was jointly purchased with Smt. Manjula D. Shah and others. In the case of Manjula Shah, it was found that the assessee has received capital gains in FY 2003-04 relevant to AY 2004-05 and the investment in purchase of the said property was claimed as exemption u/s 54. AO noted that as per the provisions of section 54(1)(ii) of the IT Act, if the property on which exemption u/s 54 was claimed is sold within three years, the amount of capital gains claimed as exemption should be reduced from the cost of the asset. Accordingly, in case of Smt. Manjula D. Shah assessment for the AY 2005-06 was reopened and assessment was completed by computing capital gains to tax. On the aforesaid basis, AO was of the view that as the assessee has also made similar claim of exemption u/s 54 of the Act and has sold the property within three years, exemption claimed u/s 54 amounting to Rs. 31,41,007/- has to be re....
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....sideration received of Rs. 1,95,00,000/- and the computation of capital gains. Assessee also submitted the copies of the sale deeds of the property sold and the new property purchased by him. The CIT(A) further noted that the ITO thereafter informed the concerned AO vide letter dated 26/03/2010 that the assessee along with some others had purchase a property at 8-2-701/1, Road No. 12, Banjara Hills, Hyderabad for Rs. 1,95,00,000/- on 27/02/2004 and had sold on 30/11/2004 for the same amount , but, exemption u/s 54 had been on the basis of the purchase of this property. Therefore, the cost of acquisition needed to be reduced to the extent of exemption u/s 54 claimed earlier and resultant capital gains needed to be brought to tax. Since the jurisdiction over the case again was referred back to the ITO, in the meanwhile on 26/03/2011, the ITO, who became the AO again issued a notice u/s 148 on 19/07/2011. The CIT(A), therefore, was of the opinion that notice dated 21/11/2007 issued by the ITO and the consequential replies dated 24/12/2007 and 17/03/2008 filed before the ITO was not in the capacity as AO as the AO at that time was the ACIT. The CIT(A) further noted that the original as....
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....ion u/s 54 of the IT Act there is no reason why the AO should have sat over the matter taking any action and only took action after expiry of 4 years. In the aforesaid circumstances, it was submitted that reopening of assessment is invalid and bad in law. 7. The learned DR, however, supporting the order of CIT(A) on the issue and justifying the reopening of assessment submitted that the assessee having not disclosed fully and truly all material facts relating to sale of property and relating to claim of exemption u/s 54 of the Act, there is escapement of income, hence, proceeding initiated u/s 147 after expiry of 4 years is valid. 8. We have heard the submissions of the parties and perused the materials on record as well as the orders of the revenue authorities. Before procedding to decide the issue, it is necessary to bear in mind certain dates, which have a crucial bearing on the outcome of the case: 1. 01/08/2005 - return of income filed by the assessee 2. 01/08/2005 - return was processed u/s 143(1) of the Act. 3. 17/01/2008 - first notice u/s 148 of the Act for reopening of assessment u/s 147. 4. 03/06/2008 - assessment completed u/s 143(3) read with section 147 of the A....
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.... reassessment proceeding, in response to a notice u/s 142(1) dated 21/11/2007 has furnished the details with regard to the sale of property and in another letter dated 17/03/2008 has computed capital gain. As can be seen from the observation of the CIT(A) at paras 4.6 & 4.7 of the order, the said information is also available in the assessment record. Therefore, once the information relating to sale of property on which assessee has claimed exemption u/s 54 was available in the assessment record during the first reassessment proceeding, neither it can be said that there is failure on the part of the assessee in disclosing fully and truly all material facts relating to assessment nor it can be said that the information relating to sale of the property subsequently came to the notice of the AO. Though in para 4.8 of the order, CIT(A) refers to the letter dated 26/03/2010 of the ITO informing the ACIT (who was the then AO) about the sale of property and the issue of reduction of exemption claimed u/s 54 of the Act from the cost of acquisition, however, fact remains that information relating to the sale of property was available before the AO at the time of completion of the first asse....