TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 1066
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....ssessment for the year, the AO has issued notice u/s.148/147 of the IT Act. The AO observed that the assessee has invested in a property and thus claimed the excess amount of Rs. 13,45,760/- as an exemption U/s.54F of the Act. Therefore, based on the above reasoning, the AO added Rs. 13,45,760/- to the total income of the assessee. 3. Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the ld. CIT(A), who has also confirmed the addition made by the AO observing as under :- "3.3 The additional evidences sent to the A.O. for remand report. The A.O. sent the remand report on 16.09.13 which was received on 17.09.2013 which is as under:- "In compliance, the A.R. of the assessee appeared and made submission stating that as per I. T. Act, exemption U/s. 54F is available if the assessee invested the consideration of L. T. Capital Gain amount for a residential property one year before or 3 year after the Long Term Capital Gain and the I. T. Act nowhere stated that the consideration of L..T. Capital Gain should be appropriated for purchasing of residential property which was the reason for the initiating such proceeding u/ s. 148 of the Act. In the in....
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....n u/ s. 54F for the amount invested in the Residential Flat during the period i.e. one year before and two year after the date of transfer of long term capital asset as per the time limits stipulated in the said section. Therefore, we request you to please allow the exemption of Rs. 13,45,760/ - to our client as provided in section 54F of Income tax Act, 1961. 3.5 I carefully considered the assessment order, submission of the appellant, additional evidences filed by the appellant and copy of the remand report and its rejoinder. I found that the capital gains arise of Rs. 13,45,760/- out of sales of shares of various companies. The appellant shown the investment in flat. The appellant given the advances to the M/s. TOLLY Nirman Private Ltd. On going through the details and evidence filed by the appellant, I found that the appellant taken the possession after 10th January, 2007. Tolly Nirman Pvt. Ltd. written a letter to the appellant which is as under:- 'The company has made arrangement for delivery of possession of the above mentioned flat along with one covered car parking space to you. The keys of the said flat are lying with the site-supervisor. On production. of th....
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....m the above, it proved that the flat was completed on 10.01.2007 and the appellant also not taken the possession of the flat before 10.01.2007. Hence, it established that the appellant purchased the flat beyond 2 year from the capital gain arised. The case law relied upon by the appellant are not related to the purchase of property within stipulated time. Hence, the appellant is not entitled the exemption u/s. 54F of the I. T. Act. Therefore, I confirm the addition made by the A.O. of Rs. 13,45,760/- by rejecting the claim u/s 54F of the I. T. Act. This ground of appeal is not allowed." Not being satisfied with the order of CIT(A), the Assessee is in further appeal before us. 4. Although in this appeal the assessee has raised multiple grounds of appeal but at the time of hearing the solitary grievance of the assessee has been confined to the issue that reassessment u/s.147/148 was without jurisdiction, illegal and without any tangible material. 5. Ld. AR for the assessee has submitted that reopening u/s.147 of the Act and belief of the AO that the income has escaped assessment is entirely wrong. The AO believed that the assessee invested in property and capital gain thereof Rs.....
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....for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) The amount by which- (a) The amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) The amount that would not have been so charged had the amount actually utilized by the assessee for the purchase or construction of the new asset within the period specified in subsection (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) The assessee shall be entitled to withdraw the unutilized amount in accordance with the scheme aforesaid." 7.3 We also find that the decision of the Hon'ble Delhi High Court as relied ....
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.... 8. Respectfully following the aforesaid judicial precedents, we have no hesitation to quash the re-assessment proceedings on the ground that there was no tangible material with the ld.AO for initiation of re-assessment proceedings. We also find that in view of provisions of section 54F(4) r.w. proviso thereon, there is no scope for making any addition in A.Y 2005-06. Hence, there could not be any reason to believe that income has escaped assessment for the A.Y 2005-06. Accordingly, ground nos. 1 & 2 raised by the assessee are allowed. The assessee also relied on the following judicial pronouncements :- i) Dhadda Exports Vs. ITO, [2015] 58 taxmann.com 176 (Rajasthan); ii) CIT Vs. M/s EIH Ltd., ITA No.6 of 2014 (Calcutta High Court); iii) Shree Sayan Vibhag Sahakari Vs. DCIT, [2016] 69 taxmann.com 245 (Gujarat) iv) CIT Vs. Kelvinator of India Ltd., [2010] 187 TAXMAN 312 (SC) and v) CIT Vs. m/s Telaijan Tea Co. Ltd., ITA No.49 of 2008 (Cal HC) The sum and substance of all the judgments cited above, is that ld. AO merely reviewed the assessment order and tried to arrive at different conclusion that income has been escaped assessment without brining any tangible mate....