TaxTMI 
TaxTMI 
2025 (7) TMI 186
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....he notice dated 21.04.2020 issued under Sec. 148 of the Income Tax Act, 1961 (for short 'the Act') as well as the Assessment Order dated 27.03.2022 passed under Sec.147 read with Sec.144B of the Act. 5. The brief facts of the case are that the petitioners are the legal heirs of one Kamalbhai Ramniklal Shah, who expired on 12.03.2013. After the death of late Shri Kamalbhai Shah, the petitioners filed return of income for the Assessment Year 2013-14 declaring total income at Rs. 15,64,200/- on 05.08.2013. In the return of income, capital gains arising out of the property situated at Plot No.4617 Arignar, Anna Nagar, Mullam village, Chennai, Tamil Nadu, was disclosed after availing the benefit under Sec. 54F after placing the fixed deposits in name of the legal heirs under the Capital Gain Accounts Scheme with the IDBI Bank amounting to Rs. 90 lakhs on 03.1.2013 and Rs.95 lakhs on 08.1.2013. 5.1 It is the case of the petitioners that late Kamalbhai Ramniklal Shah, along with three brothers were gifted with the aforesaid property in equal proportion i.e. 25% each by their mother through Settlement Deed dated 18.08.2009 and the said property was sold for a consideration of Rs. 13,....
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....at the property which was sold was a gifted property and the date of acquisition of the previous owner is required to be considered and hence, the petitioners have considered the trade market value as on 01.04.1981. Thereafter, the respondent No.1 passed the impugned order dated 23.03.2022 by only restricting the addition under Sec. 54 to Rs. 2,10,00,000/- instead of Rs. 2,95,75,000/- and thereby making an addition of Rs. 85,75,000/- under the head of Capital Gains. 6. Learned advocate Mr. Hardik Vora for the petitioners submitted that the impugned notice issued under Sec. 148 which has culminated into the Assessment Order is without jurisdiction, and therefore, the petitioner, instead of filing an appeal before the CIT(Appeals) challenging the impugned assessment order has preferred this petition invoking extraordinary jurisdiction of this Court under Article 227 of the Constitution of India. 6.1 It was submitted that the petitioners have categorically intimated the respondent-Assessing Officer that after the sad demise of Kamalbhai Shah, the petitioners have filed the return of income and investments for claiming deduction under Sec. 54 was made in the name of the petitione....
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....essing Officer only on the ground that the same was invested in the name of the legal heirs of the assessee whose return of income was filed by the petitioners in the capacity of the legal representative. 6.6 It was therefore submitted that the impugned notices as well as the Assessment Order are liable to be quashed and set aside. In support of his submission, reliance was placed on the decision of the Hon'ble High Court of Andhra Pradesh in the case of Mir Gulam Ali Khan vs. Commissioner of Income-Tax., reported in [1987] 165 ITR 228 (Andhra Pradesh). It was submitted that in the facts of the said case the exemption on profits arising out of sale of residential house by making investment as a legal heir representative within stipulated period of one year was considered valid for granting the deduction under Sec. 54 of the Act. 7. On the other hand learned Senior Advocate Mr. Karan Sanghani submitted that, admittedly, the petitioners have filed the return of income on 06.08.2013 after the sad demise of late assessee Shri Kamalbhai Ramniklal Shah. Therefore, the petitioners were aware about the facts and the petitioners cannot plead that the impugned order was passed against ....
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....under consideration. Secondly, the onus lies on the assessee/legalheir to inform the department about the death of the assessee. Further, it is evident from the record of the office that no such update / information was filed by the assessee/legal heir. The department came to know of the death of the assessee only when during the course of assessment proceedings after having granted ample opportunities to the assessee vide notices issued u/s. 148/u/s 142(1) of the Act to file details /explanation /information relevant to the escapement of income, the assessee / legal heir in his second submission filed on 21.12.2021 stated that the assessee has expired on 12.03.2013. It is pertinent to mention here that notice u/s 148 of the Act was issued 21.4.2020. Moreover, in the entire assessment proceedings and till its finalization, the assessee / legal heir has never challenged the issue of notice u/s 148 of the Act. Further, on the knowledge of the death of the assessee, the NeFAC had finalized the assessment u/s 147 r.w.s. 144B with the following remarks: "After due consideration of reply and facts of the case, it is relevant to mention here that a return for the year under consi....
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....eath of assessee viz. cancelling PAN etc. It is evident from the record of the office that no such update/information was filed by the assessee/legal heir. Further, the assessee/legal heir informed department about the death of the assessee in his second submission which was filed on 21.12.2021 only and that too after the department had already granted ample opportunities vide notices dated 21.04.2020, 29.09.2020, 19.03.2021, 27.09.2021, 23.11.2021 and 09.12.2021 u/s 148 u/s142(1) of the Act calling for information relevant to the escapement of income." 7.2 Referring to the above, it was submitted that no interference may be made by the Court while exercising extraordinary jurisdiction and the petitioners may be relegated to prefer an appeal before the CIT(Appeals). 8. Having heard the learned advocates for the respective parties and having considered the facts of the case and the material placed on record, it is not in dispute that the late Kamalbhai Ramniklal Shah expired on 12.03.2013, and thereafter, the petitioners who are the legal heirs have made investments in the Capital Gains Accounts Scheme as well as the REC and NHAI bonds for Rs. 90 lakhs in their names being leg....
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....apital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. Explanation : For the purposes of this sub-section, 'long term capital asset' means a capital asset which is not a short-term capital asset." Relying upon the expression 'assessee' occurring in section 54, it is contended by the department that in order to claim the exemption, the person who sold the house must be the same as the person who purchased the house, that is, the assessee must be one and the same person. The identity must be the same. We are unable to accept this contention. The object of granting exemption under section 54 is that a person who sells a residential house for the purpose of purchasing an other convenient house must be given exemption so far as capital gains are concerned. As long as the sale of the house and purchase of another house are part of the same scheme the lapse of some time between the sale and purchase makes no difference. The word '....