TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 1332
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....ns under Section 139(1) for the Assessment Year 2016-2017. This was followed by a revised return of income on 18.01.2017, declaring a total income of Rs. 1,17,69,130/-. On 11.08.2017, their cases were considered for limited scrutiny, and a notice under Section 143(2) was issued to them. 4. Notice dated 11.08.2017 stated that the following issues have been identified for examination: "i. Whether value of consideration for computation of capital gains has been correctly shown in the return of income. ii. Whether deduction from capital gains has been claimed correctly. iii. Whether investment and income relating to properties are duly disclosed." 5. The Petitioners claim to have responded to the above notice dated 11.08.2017 by submitting all documents about the income for Assessment Year 2016-2017. In particular, the Petitioners claim that they furnished the documents relating to the sale transaction of the property, including the MOU dated 30.08.2007, the sale deed dated 14.07.2015, and the MOU dated 30.03.2016. 6. The Assessing Officer vide his order dated 19.12.2018 accepted the Petitioners returned income and consequentially the explanation furnished by the Petitioners t....
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.... alternative buyer viz Kiran Thakur who offered a better price for the said property and the assessee canceled the sale deed agreement of earlier buyers viz Resicom Homes pvt Itd and D Souza estate Holdings Pvt Ltd by paying compensation for breach of agreement. Accordingly, the assesee had paid Rs. 91,95,000/- and Rs.72,50,000/- to the earlier buyer, as compensation. The compensation amount cannot be linked with the sale of the impugned property. Further, the asset is capital asset and taxed under the head capital Gains but not business income while computing the capital gain the assessee has reduced the same from full value of sales consideration by treating it as expenditure. 4. However, the compensation should not be treated as expenditure for the purpose of acquiring the property and same cannot be allowed as deduction. Under the head capital gains only direct expenses relatable to transfer of property are allowed as deduction. Therefore, Cancellation/compensation expenses should not be held to be incurred either for acquiring the property of for transfer of property. Moreover the damages/ compensation cancellation charges paid by assessee is only by way of penalty for breac....
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....ome Tax MANU/MH/0902/2018, Jainam Investment Vs Asst. Commissioner of Income Tax MANU/MH/2533/2021, Idea Cellular Ltd. Vs Deputy Commissioner of Income Tax & Ors. 2008 SCC OnLine Bom 1445, GKN Sinter Metals Ltd., Vs Ramapriya Raghavan & Ors. MANU/MH/1482/2015, Commissioner of Income Tax Vs Kelvinator of India Ltd. (now known as Whirlpool of India Ltd.) 2002 SCC OnLine Del 1515, Oracle Systems Corporation Vs Asst. Director of Income Tax 2015 SCC OnLine Del 13013 in support of his contentions. 12. Ms Linhares, learned counsel for the Respondents, submits that there is no infirmity in the issue of impugned notices. She offers that the Petitioners never disclosed the sale deed and the MOU at the time of initial assessment under Section 143(3) by the Assessing Officer. She submits that these two documents constitute fresh or tangible material sufficient for reopening the assessment under Section 147 of the I.T. Act. 13. Ms Linhares submits that the clauses of the sale deed and the MOU make it clear that there was no liability on the property sold; therefore, the compensation of Rs. 1,64,45,000/- was not some expenditure incurred wholly and exclusively in connection with the sale or tr....
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....g or concealing the deed of sale or MOU. The reasons referred to record and based on the records suggested that the Assessing Officer may have erred in deducting Rs. 1,64,45,000/- because there was no reason to pay Resicom Homes Pvt Ltd. and D'Souza Estate Holidays Pvt. Ltd., any compensation. From the reasons furnished, it is apparent that this is a case of change of opinion and not a case of any concealment or suppression of material facts. 19. However, after the Petitioners raised the objections, the objections were disposed of by order/communication dated 07.03.2022. In this order/communication, there was a reference made to the Petitioners concealing the fact of the sale deed. The order/communication claim that the Assessing Officer had not considered para 7, page 17 of the sale deed before allowing the deductions under Section 48 of the I.T. Act. 20. Ms Linhares contended that where material concealment resulted in a mistake, the Assessing Officer is always entitled to reopen the assessment by invoking Section 147/148 of the I.T. Act. She submitted that the original assessment order does not show any conscious application of mind by the Assessing Officer to the Petition....
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....e time of issuing notice for reopening the assessment, the reasons do not refer to any alleged concealment of documents or suppression of documents. 24. In NYK Line (India) Ltd. (supra), the Division Bench speaking through D. Y. Chandrachud, J (as His Lordship then was) has explained that the power of the Assessing Officer to reopen an assessment within four years of the relevant assessment year is undoubtedly wider than where four years have elapsed. Once four years have elapsed, the proviso to Section 147 stipulates that there must be a failure on the assessee's part to disclose fully and truly all material facts necessary for assessment as a result of which income chargeable to tax has escaped assessment. But, that is not to say that within four years, the power of the Assessing Officer to reopen an assessment is untrammelled. Even within four years, it is now a settled principle of law that an assessment cannot be reopened based on a mere change of opinion. The Supreme Court has emphasized that the Assessing Officer has no power to review, but his power is the power to reassessment. If a mere change of opinion cannot furnish a ground for reopening an assessment, then, unde....
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....similar argument was also rejected in NYK Line (India) Ltd. (supra) after relying upon the observations in paragraph 10 of Idea Cellular Ltd. (supra). 28. The Full Bench of Delhi High Court in Kelvinator of India Ltd. (supra) also rejected an identical contention by observing thus in paragraph 42:- "42.................When a regular order of assessment is passed in terms of the said sub-section (3) of Section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of Section 114 of the Indian Evidence Act, judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong." 29. The Full Bench of Delhi High Court also considered the nature of jurisdiction conferred by Section 147 in the claim of the I.T. Act. It held that the Assessing O....