TaxTMI 
TaxTMI 
2022 (10) TMI 726
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....entirely invested in the purchase of an apartment No. 302, Hiranandani Palace Gardens, Devon Phase I, in Senthamangalam Village, Chengalput Tk. and furnished details of payment vide letters of HIRCO and payment of cheques on 28.08.2012, within a period of 3 years from the date of sale. The total cost if the apartment is Rs.1,22,46,054/- and as on the date, the property is yet to be registered. In the circumstances, the Assessing Officer observed that the capital gain on sale of the property has been exempt. 2.1 Subsequently, the Assessing Officer issued notice under 148 of the Income Tax Act, 1961["Act" in short] on 07.03.2016 on the ground that there is an escapement of income. The reasons recorded and communicated to the assessee are extracted as under: "During the relevant previous year, the assessee sold 35% of UDS of the land owned by him to M/s. Doshi Housing Ltd. for a sale consideration of Rs.75,79,210/- through sale deed dated 10.09.2009. The assessee has purchased Flat for a consideration of Rs.1,12,37,097/- on 04.05.2012 and claimed exemption u/s 54F of the Act. As per section 54F, the assessee has to construct a house within 2 years from the date of sale. Whereas, in....
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....able on record and gone through the orders of authorities below. In this case, the assessment was completed under section 143(3) of the Act dated 31.01.2013 and by considering all the materials, the Assessing Officer has held that the capital gains on sale of the property is exempt from tax. Subsequently, on the same facts and materials available on record, the Assessing Officer came to conclusion that there is an escapement of income, that is capital gains on sale of property is not exempt. On perusal of the orders of authorities below, we find that no new material or any fresh information was brought on record. We also find that the subsequent reopening on the same set of facts with no failure on the part of the assessee to disclose material facts would tantamount to mere "change of opinion". In this regard, the Hon'ble Supreme Court in CIT v. Kelvinator of India [2010] 320 ITR 561 (SC) has observed and held as under: (quote)"Therefore, post 1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open as....
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....ashed the notice. The head-notes of the above judgement are reproduced as under: Mere escape of income is insufficient to justify the initiation of action under section 147 of the Income-tax Act, 1961, after the expiry of four years from the end of the assessment year. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Unless the condition in the proviso to section 147 of the Income tax Act, 1961, is satisfied, the Assessing Officer does not acquire jurisdiction to initiate any proceeding under section 147 of the Act after the expiry of four years from the end of the assessment year. Thus, in cases where the initiation of the proceedings is beyond the period of four years from the end of the assessment year, the Assessing Officer must necessarily record not only his reasonable belief that income has escaped assessment but also the default or failure committed by the assessee. Failure to do so would vitiate the notice and the entire proceedings. If the Assessing Officer chooses to entertain the belief that the assessment has b....
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....taken from that account, the extent of the amount utilised from that account, as also the closing balance as on March 31, 1989. All the information required in relation to the account had been placed before the Assessing Officer. The assessee could not have done anything more. The utilisation of the Modvat credit results in the payment of the excise duty on the final products to the extent of the credit utilised. The description given by the assessee to the payment so made as excise duty paid was the correct and normal term to describe the payment and no fault could be found with the assessee for using that term and not bifurcating that amount into the amount paid through the deposit account and the amount paid by adjustment of the Modvat credit. There was no failure on the part of the assessee to disclose truly and fully any fact in relation to the Modvat account or the amount of excise duty paid. The notice was liable to be quashed. 6.2 In the case of Hindustan Lever Ltd. v. R.B. Wadkar, ACIT (1) 268 ITR 332, the Hon'ble Bombay High Court has held as under: "Held, that the notice was clearly beyond the period of four years. The reasons recorded by the Assessing Officer nowhe....
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....eals) and the Tribunal held that the invocation of the proviso to section 147 to be invalid and set aside the reassessments under section 147/148. On appeal: Held, dismissing the appeals, that the findings of the Tribunal was that all the relevant facts were available on record and that it could not be said that at the time when the assessee filed the returns, he had failed to disclose fully and truly all material facts necessary for the assessments because the amendment which was introduced retrospectively was not there. The law cannot contemplate the performance of an impossible act. Thus, the Tribunal rightly concluded that the proviso to section 147 could not be invoked merely because there was an amendment in the future which was introduced retrospectively and covered the period in question." 6.5 Over and above, way back in 1976 itself, the Hon'ble Apex Court has predominantly laid down the law that the impugned notice issued after four years of the end of the relevant assessment year is not sustainable in law and is liable to be quashed, when there was not even a whisper in the reasons that there was any omission or failure on the part of the assessee in disclosing fully a....
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.... one of the creditors of the respondent had since confessed that he was doing only name-lending; and (ii) that N.M., D.K.N., B.S. and others, whose names too were mentioned in the list of the creditors of the respondent, were known name-lenders. The respondent thereupon filed a writ petition claiming that there was no material before the Income-tax Officer on which he could have reason to believe that income chargeable to assessment for the year had escaped assessment by reason of the respondent's failure to disclose material facts, and stated that he had produced all books of account, bank statements and other necessary documents in connection with his return. The High Court, by a majority, held that the pre-conditions for the exercise of jurisdiction under section 147 were not fulfilled. On appeal: Held, affirming the decision of the High Court, on the facts, (i) that the second ground could not have led to the formation of the belief that the income of the respondent chargeable to tax had escaped assessment for the assessment year 1958-59 because of failure of the assessee to disclose fully and truly all material facts; CHHUGAMAL RAJPAL V. S. P. CHALIHA [1971] 79 ITR 603....