TaxTMI 
TaxTMI 
2025 (11) TMI 570
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....copy of the approval obtained u/s 151 of the Act, and did not provide the assessee any opportunity to file "Objections" and consequently no order disposing "objections" was passed. That the proceedings carried out u/s 147/148 without complying with the guidelines of the Hon'ble Supreme Court laid down in "G K N Drive shaft (India) Ltd", vitiate the proceedings, rendering them bad in law, liable to be quashed. 2. That proceedings u/s 147/148 initiated after more than four years from the end of the assessment year to which the proceedings relate, without showing that there was failure on the part of the assessee in making a true and complete disclosure of all material facts in the return filed, render the proceedings bad in law, liable to be quashed. 3. That the Ld Assessing Officer has erred on facts and in law in computing the income of the assessee chargeable to tax at Rs. 80,68,487 as against return filed declaring income at Rs. 33,18,623 after making addition/disallowance aggregating Rs 47,49,864 to the income declared on erroneous and illegal grounds, untenable in law. 4. That no notice u/s 143(2) was issued by the Ld AO, a statutory requ....
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....he assessee, on merits, further submitted that the assessee and his two brothers Shri Deepak Garg and Shri Vishal Chand Garg had jointly inherited residential property No R-2/192, Raj Nagar, Ghaziabad in FY 1978-79. The property was sold on 27.04.2011. The assessee and his two brothers computed their 1/3rd share each in the LTCG on sale of the property and included the same in their tax returns filed for the year. The assessee computed his 1/3rd share of LTCG on sale of the property at Rs. 15,47,900/- as under: (a) Gross sale value of the property Rs. 2,19,60,000 (b) Less indexed cost of the property Rs. 28,41,700 (c) Gross capital gain (a)-(b) Rs. 1,91,18,300 (d) Less indexed cost of improvement (-) Rs. 26,61,600 (e) Less transfer expenses (-) Rs. 2,25,000 (f) Capital gain chargeable to tax(c-d-e) Rs. 1,62,31,700 (g) One third share of the assessee Rs. 54,10,570 (h) Exemption claimed by the assessee u/s 54 Rs. 38,62,639 (i) Amount chargeable to tax included in the income in the return filed (g-h) Rs. 15,47,931 (j) Amount rounded off to Rs 15,47,900 6.1. Assessee further claimed deduction u/s 54 and thereafter reflected....
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.... under consideration the assessee had sold property for the sale consideration of Rs. 2,19,60,000/- and it needed to be verified whether the transaction had been incorporated with the income declared by the assessee. 4. Enquiries made by the A.O. as sequel to information received: After receiving the information, notice u/s 133(6) of the Income Tax Act, 1961 was issued on 17.09.2018 to the assessee calling for information regarding filing of return of income for A.Y.2012-13, whether the assessee has disclosed capital gain from selling of property and paid taxes as due or incorporated the capital gain while computing income for A.Υ.2012-13. 5. Findings of the A.O: The assessee has filed reply in response to the notices issued u/s 133(6) of the I.T. Act, 1961 vide letter dated 13.11.2018. The assessee has submitted that during the year under consideration he has sold a property for Rs. 2,16,00,000/-. The assessee furnished computation of LTCG wherein he had claimed exemption u/s 54 of the IT Act 1961 for Rs. 38,62,639/- and paid taxes on LTCG of Rs. 15,47,900/. But he failed to furnish the requisite documents regarding the cost of acquisiti....
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.... Act may kindly be accorded as per the provisions of section 151 of the Act." 10. We find that the assessee has filed his return of income on 31.07.2012 which was processed u/s 143(1). We now take up each of the grievance of the assessee one by one. First is that the AO while recording reasons, recorded that no return of income was filed. From the perusal of the 'reasons' recorded, we find that the AO has recorded thrice the fact of assessee filing the RoI for AY 2012-13 at a total income of Rs 33,18,620/- at para 1, 3 and para 7 of the Reasons. The AO has also mentioned in para 7 that no scrutiny u/s 143(3) was made for AY 2012-13. It is also seen that at para 7 the AO has mentioned that no return is filed by the assessee. In the context of facts narrated in the 'reasons' recorded as narrated above, it appears to be typographical/inadvertent error. 10.1 The second challenge is to the mechanical grant of approval by the PCIT. We find that the PCIT, while granting approval, has recorded the following: "In view of the reason recorded by the AO, I am satisfied that this is a fit case for issue of notice u/s 148. Signed Seema Raj, PCIT, Ghaziabad dt. 26.03.2019.....
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....ed by the Assessing Officer, that it was a fit case for issuance of such notice, where the notice was issued beyond expiry of 4 years. There is no requirement for the Commissioner to record his own reasons and it would suffice that he records the satisfaction regarding the reasons recorded by the Assessing Officer. 12. In N C. Cables (supra) the High Court of Delhi held in para 11, that: "It is not as if the Commissioner of Income-tax (Appeals) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner." (sic para 11) This is in consonance with our finding in the previous paragraph. " In view of the discussion as above, we hold that the there was no mechanical approach by the PCIT in granting approval u/s 151(2) of the Act. 10.3 The third challenge is to the non-compliance by the Assessing Officer while recording his reasons, in not complying with the proviso 1 of section 147 regarding escapement of income by reason of failure to disclose truly and fully all material facts. We find that in the instant case, the return filed by the asses....
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....n FY 1978-79. The property was sold on 27.04.2011. The assessee and his two brothers computed their 1/3rd share each in the LTCG on sale of the property of Rs. 54,10,570/- and included the same in their tax returns filed for the year. We find that in the case of co-owners, the 1/3rd share of LTCG of Rs 54,10,570/-, including the index cost of improvement and Expense on sales, has been accepted by the Department u/s 143(3) of the Act. In the above factual matrix, we find that the decision of the hon'ble Gujrat High Court in the case of Surat Trade and Mercantile Limited vs Principal Commissioner of Income Tax Surat 1 & Anr (Gujarat HC) Judgment C/SCA/9157/2024 dated 01.10.2024 is squarely applicable. The hon'ble Gujrat High Court has held that once indexed renovation expense of co-owner accepted, the assessee is not required to produce any documents to prove his share of indexed renovation expense. Accordingly, allowance should be granted even without proof. No contrary decision has been cited before us. In view of the discussion therefore, the cost of acquisition and cost of improvement for computing 1/3rd LTCG by the assessee is directed to be allowed. 12. The issue that remain....