TaxTMI 
TaxTMI 
2026 (1) TMI 609
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....in denying the exemption claimed under section 54F without appreciating that there was no whisper about the said exemption claimed in the reason recorded and there was no addition made on the basis of reasons and therefore the only addition in regard to denial of exemption under Section.54F which is beyond the reasons is bad in law." 3. The Learned Authorized Representative for the Assessee challenged the addition made by the Assessing Officer by denying exemption claimed by the Assessee under Section 54F of the Act and the validity of reassessment proceedings under Section 147 of the Act. It was submitted by the Learned Authorized Representative for the Assessee that the Assessing Officer had initiated reassessment proceedings for the issues/reasons recorded for reopening assessment which did not contain any reference to exemption claimed by the Assessee under Section 54F of the Act. Whereas, while passing the Assessment Order, dated 11/12/2019, under Section 143(3) read with Section 147 of the Act, the Assessing Officer has made solitary addition of INR.83,43,016/- by disallowing exemption claimed by the Assessee under Section 54F of the Act. No addition/disallowance was made ....
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....nvested in the name of Devi M Shah/ Rupali K Shah wherin Devi M Shah is joint holder and the address is same for all investors. The investment of Rs. 1.42 lakhs is in the name of Kevin Shah though CITIBANK SB A/c 5529353008, Fort,Mumbai. The investment of Rs. 30 lakhs is in the name of Devi M Shah thorugh CITIBANK SB A/c 5529270005, Fort Branch. The investment of Rs 11 lakhs is in the name of Rupali K Shah through CITIBANK, Fort SB A/с 5529354004. During investigation, it was found that the assessee is having income from Salary,House Property, Income from Capital Gains and Income from other Sources for A.Y 2012-13 and returned income is Rs. 39,11,667/-. On further perusal of bank statement of a/c 5529353008 with CITI Bank, it is noticed that Kevin Shah is holding joint a/c with Devi Shah and Rupali Shah. A number of transctions related to investments are notices from the bank statement including Rs. 50 lakhs invested on 12/10/2011 and Rs. 72 lakhs invested on 16/08/2011 in TATA Floater Fund Growth. It is seen from the submissions that Kevin Shah is Managing Director of Company M/s Kevin Enterprises P Ltd and holds 30% shareholding. He is also joint holder in....
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....f the I.T Act, 1961 are applicable to the facts of this case and the assessment year in consideration is deemed to be a case where income chargeable to tax has escaped assessment. 7. In this case, more than four years have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice u/s 148 of the Act has been obtained separately from the Pr. Commissioner of Income Tax as per the provisions of sec 151 of the Act." 7. On perusal of the reasons recorded we find that the same do not make any reference to the exemption claimed by the Assessee under Section 54F of the Act. In Paragraph 4 of the reasons recorded a reference has been made to the income of INR.2,52,000/- declared by the Assessee under the head 'Income from House Property' and that too in the context of sufficiency of source of income for making investment of INR.9,75,50,000/-. Therefore, we accept the contention of the Assessee and hold that the Assessing Officer had made addition/disallowance in respect of exemption claimed by the Assessee under Section 54F of the Act even though the same was not one of the issues/reasons for reopening the assessment. It is admitted ....
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....g the Learned Departmental Representative had relied upon the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Sun Engineering Works (P) Ltd. [198 ITR 297 (SC)] relied upon by the Learned CIT(A) and Explanation 3 to Section 147 of the Act. 10. On perusal of judgment of Hon'ble Bombay High Court in the case of Commissioner of Income-tax-5, Mumbai vs. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bombay) we find that the Hon'ble High Court has taken into consideration the judgment of Hon'ble Supreme Court in the case of Sun Engineering Works (P) Ltd. (Supra) [in paragraph 12 of said judgment] as well as Explanation 3 to Section 147 of the Act, while decided the issue raised for consideration in favour of the Assessee holding as under: "16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escap....
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....g aware of the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147(1) as they stood after the amendment of 1-4-1989 continue to hold the field. 18. In that view of the matter and for the reasons that we have indicated, we do not regard the decision of the Tribunal in the present case as being in error. The question of law shall, accordingly, stand answered against the revenue and in favour of the assessee. The appeal is, accordingly, dismissed. There shall be no order as to costs." (Emphasis Supplied) 11. By way of the above judgment, it was held by the Hon'ble High Court that in case after issuing a notice under Section 148 of the Act, assessing officer accepts the contention of assessee and holds that the income which the assessing officer had initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it shall not be open to him to independently assess some other inco....