TaxTMI 
TaxTMI 
2016 (5) TMI 408
X X X X Extracts X X X X
X X X X Extracts X X X X
....ursuant to the proceedings initiated under section 147/148 of the Act. 2. That the reassessment proceedings initiated under section 147/148 of the Act was without jurisdiction, illegal and void ab initio and therefore the impugned assessment order passed by the Income tax Officer on 23.10.2009 under section 143(3) of the Act was also null and void." 3. The brief facts of this case are that the assessee filed its return of income for the assessment year 2005-06 on 22-7-2005 with a returned total income of Rs. 3,65,670/-. The case was processed u/s. 143(1) on 31-7-2006 on a total income of Rs. 3,65,670/-. The Learned AO observed that the assessee has claimed exemption u/s. 54F on purchase of land. Since the exemption of Rs. 8,41,360/- u/s. 54F is granted for buying of house or construction of house, the case of assessee was reopened u/s. 147 on 17-9-2008. The reasons were recorded and statutory notice u/s. 148 dated 17-9- 2008 was issued and duly served upon the assessee on 3-10-2008. In response thereto the ld.AR of the assessee submitted a letter and requested to treat the original return as return filed in response to notice u/s. 148. 3.1 The ld.AO observed that on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....disputed by the Learned Income-tax Officer. b) That the assessee sold 8000 shares of Scintilla Comm. through M/s Rajendra Prasad Shah and the Contract Note for the same was submitted at the time of hearing. c) That the net consideration of Rs. 8,81,520/- received on 14-06-2004 was fully invested in land (Rs.2,87,760/-) and to the Developer for construction of House (Rs.6,17,000/-) by 07- 06-2005 and that this was well within the time allowed by section 54F. d) That the assessee never claimed exemption u/s 54F on purchase of land as purported by the Learned Income Tax Officer. What was claimed was for the amount invested in purchase of land coupled with initial payment made to Developers, M/s Spring Valley Developers Pvt Ltd for construction of a residential Garden Home comprising of a 2-storied structure having a total built-up area of about 3800 square feet. A letter dated 21st July, 2009 along with requisite evidences was submitted. Copy of the letter was enclosed as Annexure A. e) That the contention of the learned Income Tax Officer that there was no firm commitment on the part of the assessee to construct a house on the purchased land is bas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....habad bank confirming the submission of the ld.A/R, hence this ground of the appeal is decided against the appellant." 7. Aggrieved, the assessee is in appeal before us on the issue of validity of reassessment proceedings initiated u/s. 147/148 of the Act as well as on the merits of the additions made on re-assessment proceedings. 8. The Ld. AR first argued on the validity of re-assessment proceedings. He stated that from the reasons recorded by the ld.AO for re-opening of assessment it is evident that the ld.AO did not possess any fresh tangible material or information that has been received by him subsequent to the date of intimation issued u/s. 143(1) of the Act dated 31-07-2006. The reasons recorded by the ld.AO are very categorical in the sense that on "scrutiny of the assessment folder, however, it revealed that .........." . He placed reliance on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Orient Craft Ltd reported in 29 Taxmann. Com 392(Del), which is directly applicable on the point. Without prejudice to the same, he also argued that even assuming if the version of the ld.AO that the assessee has not constructed the residential house within....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion u/s. 54F is. available for construction of residential house only. Moreover, construction .of residential house is not permissible on a Sali land. So, the amount of Rs. 8,41.360/- has escaped .assessment within the meaning of section 147. Issue notice u/s. 148. Sd/- Chandan Datta Income-tax Officer Ward-7(1), Kolkata 7.1 From the reasons recorded by the ld.AO we find that the ld.AO merely reviewed the assessment folder and tried to arrive at different conclusion that income has been escaped assessment, without bringing any tangible material on record, which has admittedly come to his possession subsequent to the date of intimation issued u/s. 143(1) of the Act. This action of the ld.AO has been held impermissible as per law by the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Orient Craft India Ltd(supra), wherein it has been held as under:- "Finality of intimation under section 143(1) can be disturbed only if Assessing Officer has 'reason to believe' . The assessee's contention that even an assessment made under section 143(1) of the Act can be reopened under section 147 if the Assessing Officer has '....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression 'reason to believe ' in cases where assessments were framed earlier under section 143(3) and cases where mere intimations were issued earlier under section 143(1) may well lead to such an unintended mischief. It would be discriminatory too. An interpretation that leads to absurd results or mischief is to be eschewed. [Para 13] * The Supreme Court in Rajesh Jhaveri Stock brokers (P.) Ltd.'s case (supra) has held that the strict requirements of section 147 can be compromised. On the contrary, from the observations it would appear clear that the court reiterated that 'so long as the ingredients o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 54F(4) of the Act is reproduced herein below:- Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. ) 54F (1) *** *** *** *** *** *** (a) *** *** *** *** *** *** (b) *** *** *** *** *** *** (2) to (3) *** *** *** *** *** *** (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139 , shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of assessee for furnishing the return of income under sub-section(1) of section 139] in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, fra....