Income Tax Appellate Tribunal - Panji
Mahesh Kumar Agarwal, Jaipur vs Ito, Jaipur on 23 August, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 132/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2008-09
Shri Mahesh Kumar Agarwal, cuke The ITO,
Prop. M/s Goodwill Construction Co., Vs. Ward-2(2),
2B-27, Suraj Nagar (W), Ajmer Jaipur.
Road, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No.: ABHPA3070C
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrhdh vksj ls@Assessee by : Shri Manish Agarwal (C.A.)
jktLo dh vksj ls@Revenue by : Shri S.L. Chandel (Addl.CIT)
lquokbZ dh rkjh[k@Date of Hearing : 21/08/2017
?kks"k.kk dh r kjh[k@Date of Pronouncement: 23/08/2017.
vkns'k@ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of Ld. CIT(A), Jaipur dated 02.12.2015 for A.Y. 2008-09 wherein the assessee has taken following grounds of appeal are as under:-
"1. That learned CIT(Appeals) has erred in holding that the Assessing Officer was justified in reopening the assessment u/s 147 of the Act. The said finding is illegal and unjustified.
2. That there was no justification for initiating proceedings u/s 147 of the IT Act in this case. The initiation of proceeding and completion of assessment under the provisions of section 148 is illegal and unjustified.
3. That learned CIT(Appeals) has erred in holding that on examination of the facts it is apparent that transaction of purchase of property from M/s AIAL is not beyond doubt. The said finding is illegal and unjustified.ITA No. 132/JP/16
Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur
4. That learned CIT(Appeals) has erred in holding that that Assessing Officer was justified in rejecting the deduction claimed by the appellant u/s 54F of the IT Act and it failed to satisfy the necessary ingredients required for allowing deduction u/s 54F of the Act. The said finding is illegal and unjustified. The assessee was clearly entitled to get deduction u/s 54F of the Act.
5. That learned CIT(Appeals) has erred in confirming the action of the Assessing Officer in charging interest u/s 234B, 234C and 234D and withdrawing interest granted u/s 244A of the IT Act. the said finding is illegal and unjustified."
2. Briefly the facts of the case are that the appellant had filed his return of income on 07.10.2008 declaring an income of Rs. 34,00,610/-. The assessment was thereafter completed u/s 143(3) of the Act vide order dated 13.12.2010 and the total income was determined at Rs. 34,10,140/-. In the return of income, the appellant had clubbed income of his minor daughter, who had earned long term capital gains from the sale of shares of M/s SEMCO Electric Pvt Ltd, for a sale consideration of Rs. 90,19,429/-. Out of the sale proceeds, a sum of Rs. 50 lacs was shown as invested in REC Bonds and a sum of Rs. 25,00,000/- was shown as invested in purchase of house property on which the appellant had claimed exemption u/s 54F of the Act. In the assessment order passed under section 143(3) of the Act, the Assessing officer has acknowledged the fact that the assessee has disclosed long term capital gains on sale of shares of the company M/s SEMCO Electric Pvt Ltd. However, the assessment was completed without making any adjustment/disallowance in relation to such long term capital gains and claim of deduction under section 54EC and 54F of the Act. Subsequently, a notice u/s 148 was issued to the assessee on 21.03.2014 and the reasons for reopening recorded were as follows:
"On perusal of the record it revealed that the assessee has claimed deduction u/s 54F of Rs. 24,83,898/- As per agreement dated 01.08.2008 with Ace India 2 ITA No. 132/JP/16 Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur Adobes Ltd, Ajmer Road, Jaipur, the assessee purchased plot H-72 in colony Platinum Green village Mahela, Jharna, Maujamabad Dist. Jaipur for 25,00,000/- and claimed deduction u/s 54F of Rs. 24,83,898. This agreement did not reflect the completion of house within the prescribed limit u/s 54F of the IT Act, 1961. Assessee failed to fulfil the condition as per sec 54F, hence the deduction u/s 54F of Rs. 24,83,898/- is not allowable.
In view of above, I have reason to believe that the income to the extent of Rs. 24,83,898/- escaped assessment within the meaning of sec 147 of the IT Act, 1961 and this is a case fit for issue of notice u/s 148 of the Act"
3. We now refer to the relevant findings of the Ld. CIT(A) which are under challenge before us. The same are reproduced as under:-
"3.1.2 Determination
(i) I have carefully perused the submissions of the appellant, the assessment order, re-assessment order and the material placed on record. It is noted that in the original assessment proceedings, the AO vide its letter dated 19.04.2010 required the appellant to file details of long term capital gains of Rs. 33,83,145/- and he has not raised any query regarding its claim of deduction u/s 54F of the Act. It is evident from the letter dated 03.09.2010 of the appellant to the AO that it had filed relevant evidence for purchase of house from Ace India Abode Ltd., Jaipur (AIAL) on its own. However, it does not mean that the AO has raised queries about its claim of deduction u/s 54F of the Act. The appellant has not placed on record any material which may even suggest that in the original assessment proceedings, the matter was enquired and looked into by the AO. Even in the original assessment order, there is no murmur about the justification of deduction claimed by the appellant u/s 54F of the Act. In view of these facts, it is, therefore, held that the AO has not formed any opinion about the claim of the appellant u/s 54F of the act in the original assessment proceedings and thus no question of change of opinion as alleged by the appellant.3 ITA No. 132/JP/16
Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur
(ii) It was the contention of the appellant that its case was respond after 4 years of the assessment year under consideration, therefore, in view of the proviso to section 147 of the Act, the instant case under consideration could be respond by reason of failure on the part of the assessee to disclose truly and fully all material facts necessary for its assessment. it was submitted that it has disclosed all material facts truly and fully which were required for its assessment and in the reasons to believe for reopening the case, there is no mention of such failure on the part of the appellant.
(iii) I have gone through the reasons recorded by the AO for reopening the assessment u/s 147 of the Act and observed that though AO has not specifically mentioned that there was failure on the part of the appellant to disclose truly and fully all material facts necessary for its assessment, however, it is discernible from the reasons recorded by the AO that there was failure on the part of the appellant to disclose all material facts truly and fully required for its assessment as agreement dated 01.08.2008 with AIAL did not reflect the completion of house within prescribed time u/s 54F and the appellant did not file certificate from appropriate authority for completion of the house. Moreover, the AO mentioned "Assessee failed to fulfil the conditions as per section 54F" and "he had reason to believe that the income to the extent of 24,83,898/- escaped assessment within the meaning of section 147 of the IT Act." It may be mentioned that proviso to section 147 is also a part of section 147 of the Act. Therefore, in view of the above discussion, this contention of the appellant has not weight and deserves to be rejected.
(iv) It is therefore, held that AO was justified in reopening assessment u/s 147 of the Act. Hence, this ground of appeal is rejected."
4. During the course of hearing, the Ld. AR submitted that from the reasons so recorded, it is evidently clear that there was no new information that came into the possession of the Ld. AO based on which it could be held that the income has escaped assessment. The agreement with Ace India Adobes Ltd., which was on the file of the Ld. AO, clearly mentioned at page 4 that the appellant had purchased the said plot of land of land of 391.2 sq. yards, with 1050 sq. feet of constructed area. Thus it is emphasized that, 4 ITA No. 132/JP/16 Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur deduction u/s 54F was claimed for the purchase of house property and not construction and therefore the basic reason narrated by the Ld. AO, for reopening was itself formed on incorrect interpretation of already available and considered facts. There was no need on the part of the appellant to file any certificate from appropriate authority, to claim the said deduction, as the purchase agreement clearly mentioned, the investment made in purchase of a house property by the appellant.
5. It was further submitted that the reopening was initiated after four years of the end of the relevant assessment year and the original assessment was completed u/s 143(3) of the IT Act, 1961. Thus the case of the appellant clearly falls under the first proviso of sec 147 of the Act, which provides that, no re-opening could be made in such cases unless, any income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to make a return u/s 139 or in response to a notice u/s 142(1) or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.
6. It was further submitted that, "reason to believe" is different from "reason to suspect" or from "to have an opinion". It has been held consistently, that reason to believe can be said to exist only when the Assessing Officer comes into possession or "discovers" "some material", or "gets a new insight subsequent to the conclusion of the original proceedings. Some "information"/event after the original assessment would normally be required to form a belief that the income chargeable to tax has escaped assessment. Such material or insight must be bona-fide and must be capable of leading to the "formation of bona-fide belief"
7. It was further submitted that, in reply to the query letter dated 19.04.2010 issued by the AO, all the material facts as regards the deduction u/s 54F, claimed by the appellant [i.e. copy of agreement with Ace India 5 ITA No. 132/JP/16 Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur Adobes Ltd] was filed vide his letter dated 03.09.2010, and the same was already on records of the Ld. AO as filed during the original assessment proceedings. The assessment u/s 143(3) was thus made after being satisfied with the eligibility of the claim made by the appellant. It is pertinent to mention here that, the appellant had requested for the copies of order-sheet of the original assessment proceedings from the file of the Ld. AO, vide his letter dated 29.08.2016, but the same were not provided till date, for the reasons best known to the Ld. AO. There was no new fact/information brought on record by the Ld. AO now from which he could form a belief that certain income had escaped assessment, due to the failure on the part of the appellant to produce any document regarding the claim of exemption u/s 54F of the Act. Thus, the formation of belief had flown from the documents and facts already available on records of the Ld. AO which were duly dealt with during the original assessment proceedings, and the notice issued u/s 148 was issued merely for a change of opinion or for reconsideration of the matter already decided in the original assessment proceedings. It was submitted that in light of the facts stated above and various judicial pronouncements, notice u/s 148 cannot be issued on the basis of a mere change of opinion or reconsidering a matter. Hence, as per the proviso to section 147, reopening after four years of the end of the relevant assessment year, in a case where original assessment was made u/s 143(3) of the Act, where complete details were duly available on records, was indeed unjust, bad in law, illegal and liable to be held so, and the appellant prays that the assessment framed in consequence to such a notice may kindly be held void ab initio and thus be quashed/annulled.
8. In support, the ld AR placed reliance on the following decisions:
• A Raman & Co 67 ITR 11(SC):
• CIT Vs. Kelvinator India Ltd [320 ITR 561 SC] • ACIT Vs. ICICI Securities Primary Dealership [348 ITR 299 SC] 6 ITA No. 132/JP/16 Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur • Hindustan Petroleum Corporation Limited Vs. Deputy Commissioner of Income Tax, (2010) 328 ITR 534 (Bom) • Jai Hotels Co. Limited Vs. Asst. DIT, (2009) 24 DTR 37 (Del): • Commissioner of Income Tax Vs. Eicher Limited, (2007) 294 ITR 310 (Del) • CIT vs. Usha International Limited [2012] 25 taxmann.com 200 (Delhi)
9. The ld DR is heard who has vehemently argued the matter and relied on the order of the lower authorities.
10. In order to appreciate the contentions of the ld AR, we refer to the notice issued by the AO seeking information from the assessee vide its letter dated 19.04.2010 in the course of original assessment proceedings u/s 143(3) of the Act. In the said notice, the AO raised following specific questions to the to the assessee relating to long term capital gains:
"4. Details of income from other sources declared at Rs 125,184.
5. Details in respect of short term capital gain declared at Rs (-) 21,42,498 along with D-mat account along with copy of your account in the books of your broker.
6. The details of long term capital gain declared at Rs 33,83,145.
10. Details in respect of minor child declared at Rs 42,69,262 and Rs 12,56,381 respectively."
11. Apparently, the above notice is a specific notice issued by the AO after going through various sources of income offered by the assessee in his return of income and the computation of income. In the computation of income which is available at APB 42-45, it is noted that the asseessee has disclosed income from capital gains at Rs 33,83,145. The said figure of capital gains has been computed after taking into consideration short term capital loss of Rs 21,42,498 and long term capital gains in the hands of his minor son of Rs 42,69,262 and long term capital gains in the hands of his minor daughter of 7 ITA No. 132/JP/16 Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur Rs 12,56,381. It is this long term capital gains of Rs 12,56,381 in the hands of the minor daughter wherein the assessee while working out the net capital tax liable for taxation has shown and claimed deduction of Rs 24,83,898 (out of total investment of Rs 25,00,000) under section 54F of the Act. All these figures of sale consideration and claim of deduction under section 54F are clearly apparent on the face of tax computation filed by the assessee during the course of original assessment proceedings.
12. We now refer to the reply filed by the assessee dated 3.9.2010 in response to AO's query letter dated 19.04.2010 filed during the course of original proceedings. In its reply, the assessee has inter alia stated as under:
"6. The details of long term capital gains income earned by the assessee are as under:-
a. By the assessee--- NIL b. By the minor son Nikunj Agarwal before attaining majority Rs. 42,69,262/-
c. By minor daughter Aditi Agarwal Rs. 12,56,381/-
7. During the year under consideration the minor son and daughter of the assessee has sold shares of SEMCO Electric Pvt. Ltd. on which they have earned long term capital gain. These shares were gifted by the Grand Mother (Nani) of the children. These shares acquired by the grand mother in 1999-
2000 at cost price of Rs. 10/- per share by way of allotment. We are enclosing herewith confirmation of the grand mother (Nani) Smt. Sarla Mittal residing at A-66-B, Yashoda Path, Shyam Nagar, Jaipur.
8. The above shares so acquired by gift were sold through M/s DCP Merrill Lynch, Mumbai for a sale consideration of Rs. 90,19,428/- each. Copy of related documents are enclosed herewith.
9. Out of the above sale consideration Nikunj Agarwal has invested/purchased house No. 49, Vidhyut Nagar-C, Vaishali Nagar, Jaipur for Rs. 45 Lacs. Copy of agreement and details of payments are enclosed herewith.
8 ITA No. 132/JP/16Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur
10. Miss Adita Agarwal has purchased REC Bond for Rs. 50 Lacs and also invested Rs. 25 Lacs for purchase of house from Ace India Abodes Ltd. Ajmer Road, Jaipur. Copy of related eviddnces for above investment are enclosed herewith."
13. On perusal of the above reply dated 3.9.2010 of the assessee which is in response to specific queries raised by the AO, it is noted that at point 10, the assessee has stated clearly that Miss Adita Agarwal has invested Rs. 25 Lacs for purchase of house from Ace India Abodes Ltd. Ajmer Road, Jaipur and copy of related evidence for above investment was also submitted before the AO. This is the same transaction in respect of which the deduction under section 54F has been claimed while working out the capital gains. It is thus clear that relevant information and related evidence in support thereof was submitted and taken on record by the AO during the course of original assessment proceedings. Given the fact that the same was submitted in response to the specific query raised by the AO, we are left with no other view but to hold that the same was duly considered by the AO during the course of original assessment proceedings.
14. In light of above discussions, we are of the view that it is clearly a case of change of opinion by the Assessing officer where he has allowed the deduction under section 54F during the course of original assessment proceedings and on the same pieces of information, he has reinitiated the proceedings by issuance of notice u/s 148 of the Act. Further, we donot see any failure on the part of the assessee to disclose relevant particulars during the course of original assessment proceedings as we have noted above. In the result, the reopening of assessment proceedings u/s 147 is not justified. We accordingly allow the ground no. 1 and 2 which are connected.
15. Given the fact the reassessment proceedings have been set-aside, we donot think it would be relevant to examine other grounds of appeal raised by the assessee. Hence, the same are dismissed as infructious.
9 ITA No. 132/JP/16Sh. Mahesh Kumar Agarwal Vs. ITO, Jaipur In the result, the appeal of the assessee is disposed off with above directions.
Order pronounced in the open Court on 23/08/2017.
Sd/- Sd/-
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(Kul Bharat) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 23/08/2017
Santosh
vkns'k dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Mahesh Kumar Agarwal, Prop. M/s Goodwill Construction Co., 2B-27, Suraj Nagar (W), Ajmer Road, Jaipur.
2. izR;FkhZ@ The Respondent- ITO, Ward-2(2), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT,
6. xkMZ QkbZy@ Guard File (ITA No.132/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.10