TaxTMI 
TaxTMI 
2017 (9) TMI 477
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....come. The Assessing Officer (AO) completed the assessment u/s. 143(3). Later on, he issued a notice u/s. 148 of the Act on 28/3/2011, as he was of the opinion that taxable income had escaped assessment. In response to the said notice, the assessee vide its letter, dt. 31/3/2011, requested AO to consider the original return as return filed in response to the notice. On the request of the assessee, he communicated the reasons of re-opening. The assessee filed objection in that regard and challenged the reopening. As per the AO objections raised by the assessee were rejected by him, vide order, dt. 15/12/2011. During the reassessment proceedings, the AO observed that the assessee had sold a plot of land, that it had received sale consideration of Rs. 7. 80 crores, that it had failed to invest the sale consideration of the immovable property as per the provisions of section 11(5) of the Act. He held that it was not entitled to get benefit of accumulation as per the sub clause(b) of section 11 (2) of the Act. As a result, sale consideration of Rs. 7. 80 crores, received by the assessee, was added to the total income of the assessee for the year under appeal. 3. Aggrieved by the order ....
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....d about the investment made by it in bank fixed deposits, that it had mentioned the fact that entire sale consideration was invested in another the capital asset i. e. the bank fixed deposit, that details of sale consideration and fixed deposits made for exemption from capital gains were enclosed along with the computation of income for the year under consideration, that the AO had made further enquiries about the sale of develop-ment rights, that it had furnished the sanction letter of the Charity commissioner for sale of the property, that the AO had made enquiries about the names and addresses of the partners of the purchaser, that it had filed extract of bank statement for payment received from Valentine Developers Ltd. (VDL)along with the bank book giving details narration of all receipts and payments, that after considering the details filed by the assessee the AO had passed the order u/s. 143 (3)of the Act, that there was no failure on part of the assessee to disclose the material facts, that assessee had agreed for assignment of the development rights in the part property at Mumbai to VDL subject to the sanction of the Charity Commissioner, that after getting the sanction o....
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....pital gains in the original assessment, that he had not formed any opinion, that the reconciliation chart showing amounts received prior to AY. 2004-05 and the use of funds for mutual fund was given only in the reassessment proceedings, that furnishing of details were mentioned in the return of income would not tantamount to full and complete disclosure facts, that for reopening a completed assessment what was to be seen was the escapement of income, that an action u/s. 147 of the Act was possible despite complete disclosure of material facts, that the AO could form reason to believe that income had escaped assessment by examining the very documents, that reassessment can be initiated if taxable income has escaped taxation due to oversight or inadvertence or a mistake committed by the AO during the original assess - ment proceedings, that there was no need for getting information from external sources, that for issuing notice u/s. 148 information could be obtained from the return of income. He referred to the cases of Praful Chunilal Patel(236 ITR 832), Stock Exchange (227ITR906), Rajesh Jauhari Stockbrokers Private Limited(291 ITR 500), Zuari Real Estate Development and Investment....
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....e FOR's has also been withdrawn as premature closing. The deposit for the period of not less than 3 years kept with SBI or any subsidiary Bank or any Nationalized Bank as per provision of I. T. Act is not allowable for exemption. Thus, investment pattern as per section 11 (5) of the I. T. Act applied by the trust is not correct and exemption as claimed by the trust is not allowable. Without prejudice to the above, under the provision of section 11(lA) of the I. T. Act, where capital asset being property held under trust wholly for charitable/religious purposes is transferred and the whole or any part of the net consideration is utilized for acquiring another capital asset being property to be so held then capital gain arising from the transfer shall be deemed to have been applied to charitable/religious purposes. Since the net consideration have not been utilized by the assessee for another capital asset being property, therefore, exemption claimed by the assessee is not correct. In view of the above, assessee is not entitled for exemption on the sale consideration of Bandivili (Mumbai)/Yerawada (Pune )[for 05-06] property. However in the assessment order the assessee's....
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.... income and should not be extraneous or irrelevant, otherwise they will be considered as invalid since they do not meet the statutory prerequisites. The policy of law is that there should be finality in all legal proceedings. Thus, stale or irrelevant issues should not and cannot be a ground to reactivate closed and concluded proceedings. Formation of rational belief that income chargeable to tax had escaped assessment is a condition precedent for validly initiating reassessment proceed - ings. In short, the validity of the reassessment proceed -ings has to be tested on the basis of the underlying reasoning stated and recorded for opening of the reassessment. 5. 2. In GKN Driveshafts (India)Ltd. (259 ITR 19), the Hon'ble Supreme Court has laid down that when a notice u/s. 148 of the Act, is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The AO is bound to furnish reasons within a reasonable time. On receipt of the reasons, the noticee is entitled to file objections to issuance of notice and the AO is bound to dispose of the objections by passing a speaking order. Explanation 1 to section 147 lays d....
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....sment is challenged, the burden is on the Revenue to establish that the jurisdictional requirement stands satisfied. So far as reason to believe on the part of the AO is concerned, at the stage of issuing the notice only a prima facie and not a conclusive case of income escaping assessment should be established to turn down a challenge to the reopening notice. 5. 5. Now, we would like to refer to some of the cases that deal with reopening. First, we are referring to the case of Nitish Surendrabhai(387 ITR 99) of Hon'ble Gujarat High Court. In that matter the Hon'ble Court has held as follow: ".... . in the notice for reassessment the reasons started with narration 'on verification of the case record . (emphasis by us) . . ' Thus, the conclusions of the Assessing Officer were based on verification of the case record. In other words, there was no material outside the assessment proceedings which enabled the Assessing Officer to conclude that income chargeable to tax had escaped assessment. This element would be crucial since notice for reopening had been issued beyond a period of four years from the end of the assessment year. Quite apart from the assessee's placing full materi....
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....48 by the AO after the expiry of a period of four years from the end of the relevant assessment year. The reasons as recorded by the AO, to reopen the assessment, even when they were read in its entirety did not indicate that the assessee had not disclosed fully and truly all the material facts. Therefore, ex facie on this ground alone the notice could be said to lacking in its foundation for any further enforcement......the reopening notice was issued by the AO on the basis of the letter of the Commissioner (Appeals), wherein he had extracted the very information as furnished by the assessee in regard to the nature of its business in shipping. This disclosure was in fact identical to the disclosure as made by the assessee in response to the notice of the AO u/s. 142(1) which raised various queries in the course of assessment proceedings for the assessment year 2000-01. Therefore, the AO's attempt to reopen the assessee's assessment on the assessee's own disclosure could in no manner be termed an appropriate exercise of his jurisdiction and authority u/s. 147 so to reopen the assessment beyond the period of four years as this could in no manner be said to be any failure on the ....
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..... s was dealt with by the AO in great details in the original assessment. A perusal of page no. s 14 and 84 of the PB. clearly reveal that the assessee had filed various details of the transaction including the details of FDR. s on 02. 08. 2006 and 20. 09. 2006 before the AO. As per page 3 of the paper book the note in the computation of income for the year under appeal contained the details about the transaction. The note read as under: "We have sold development rights of immovable property being Bandivali Property, Mumbai for an amount of Rs. 7, 80, 00, 000/- vide Agreement for Sale dated 26th November, 2002 read with Development Agreement dated 30th December, 2003. The above property was purchased on 27thJanuary, 1976. We have spent further amounts from time to time and the proportionate cost of above property in our books on 30th December, 2003 was Rs. 25, 99, 435/-. We have invested the above sale consideration of Rs. 7, 80, 00, 000 in the bank fixed deposits with Development Credit Bank Ltd as per statement attached, ....... . since the entire sale consideration is invested in other capital asset being the bank fixed deposit, the capital gain is exempt. " Pg. 5 of the PB c....