Gujarat High Court
Nitish Ishvarlal Champaneria vs Income Tax Officer on 21 December, 2015
Author: Akil Kureshi
Bench: Akil Kureshi, Mohinder Pal
C/SCA/14600/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 14600 of 2015
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NITISH ISHVARLAL CHAMPANERIA....Petitioner(s)
Versus
INCOME TAX OFFICER....Respondent(s)
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Appearance:
MR TUSHAR P HEMANI, ADVOCATE for the Petitioner(s) No. 1
MS VAIBHAVI K PARIKH, ADVOCATE for the Petitioner(s) No. 1
MR SUDHIR M MEHTA, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE MOHINDER PAL
Date : 21/12/2015
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Petitioner has challenged a notice dated 19.01.2015, as at Annexure-A to the petition, filed by the respondent-Assessing Officer under section 148 of the Income-tax Act, 1961 ("the Act" for short) seeking to re-open the assessment of the petitioner for the assessment year 2008-2009.
2. Brief facts are as under:
Petitioner is an individual. For the assessment year 2008- 09, petitioner filed return of income on 31.03.2009 declaring total income of Rs.1.26 lacs (rounded off). Such return was taken under Page 1 of 5 HC-NIC Page 1 of 5 Created On Thu Dec 24 01:09:10 IST 2015 C/SCA/14600/2015 ORDER scrutiny. Assessing Officer framed scrutiny assessment under section 143 (3) of the Act on 24.09.2010. To re-open such assessment, the assessing officer issued the impugned notice. At the request of the petitioner, he supplied in communication dated 07.04.2015 the reasons he had recorded for issuing the notice. Such reasons read as under:
"The reasons for re-opening the assessment is as under:
The assessee filed its return of income for A.Y.2008-09on 31.3.2009 declaring income of Rs.1,26,678/- The assessment under section 143(3) was finalized on 24.09.2010 accepting the returned income.
On verification of the records, it was noticed that in A.Y.2008- 09 the assessee sold a land on 29.03.08, consequent to which he had earned long term capital gain of Rs.78,38,565/- The assessee claimed deduction of Rs.50,00,000/- u/s.54 EC on investment in Rural Electrification Corporation which was allotted on 30.09.08 and deduction of Rs.28,77,429/- u/s 54 F on residential property which was purchased on 29.11.08.
The assessee being an individual was required to file his return of income for A.Y.2008-09 by 31.07.2008 and the unutilized amount was required to be deposited as specified in section 54F. As the unutilized amount was not deposited before the due date of filing of return i.e. 31.07.2008 the deduction of Rs.28,77,429/- u/s 54F could not be allowed.
According to section 54F capital gain on transfer of certain capital assets not to be charged in case of investment in residential house subject to the provisions of sub-section (4) which states that where the amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset take place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139 shall be deposited by him before furnishing such return/such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be Page 2 of 5 HC-NIC Page 2 of 5 Created On Thu Dec 24 01:09:10 IST 2015 C/SCA/14600/2015 ORDER deemed to be in the cost of the new asset.
Under section 54F r.w.s. sub-section 4 of the section, the assessee was required to deposit the amount not utilised by him for the purchase or construction of the new asset before the due date of furnishing the return of income under section 139, in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, framed in this behalf and such return shall be accompanied by proof of such deposit.
On verification of the records, it is seen that the unutilized amount was not deposited before the due date of filing of return i.e. 31.7.2008 hence the deduction of Rs.28,77,429/-u/s 54F could not be allowed."
3. The petitioner objected to the notice of re-opening. The assessing officer, however, rejected such objection by order dated 13.5.2015. Hence this petition.
4. Having heard learned counsel for the parties and having perused the materials on record, it appears that during the year under consideration, the assessee had sold his immovable property and had earned long term capital gain of Rs.78.38 lakhs (rounded off). The assessee had claimed deduction of Rs.50 lakhs under section 54-EC of the Act on investment in Rural Electrification Corporation. Further deduction of Rs.28.77 lakhs was claimed under section 54-F of the Act on purchase of residential property which was done on 29.11.2008. According to the revenue, this investment of Rs.28.77 lakhs for purchase of residential unit did not qualify for deduction since such purchase was made after the last date for filing the return.
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5. In the present petition, we are not concerned with the validity of the revenue's objection. It is on account of the fact that the notice for re-opening has been issued beyond the period of four years of the relevant assessment year in case of assessment which was originally framed after scrutiny. In that view of the matter, the twin conditions that the income chargeable to tax had escaped assessment and that the assessee failed to disclose truly and fully all material facts for such assessment must be satisfied. It is on account of the latter requirement that we need to peruse the materials on record.
6. The reasons recorded by the assessing officer reproduced above do not even suggest that the income chargeable to tax had escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts. The revenue has not, even if possible to do so, demonstrated any such failure on the part of the assessee. In fact, counsel for the petitioner rightly pointed out that not only that all such declarations were in the returns filed, during the assessment also this issue had come up for consideration. The petitioner in communication dated 03.09.2010 had pointed out to the assessing officer the investments made with the Rural Electrification Corporation and in purchase of immovable property. In such letter, the assessee had produced the following documents: Page 4 of 5
HC-NIC Page 4 of 5 Created On Thu Dec 24 01:09:10 IST 2015 C/SCA/14600/2015 ORDER "(3) Photocopy of the investment in bond - Rural Electrification Corporation Limited and house property - documentary evidence is filed. The capital gain bond "REC" and house is purchased odut of the sale consideration received as per column 2 to get the benefit u/s.54EC & 54F of the Income Tax Act, 1961. Same is shown in capital gain computation."
7. Thus, quite apart from the reasons recorded by the assessing officer not indicating any failure on the part of the assessee to disclose truly and fully all material facts, even the record suggests to the contrary.
8. In the result, the impugned notice dated 19.01.2015 is quashed. Petition is disposed of accordingly.
(AKIL KURESHI, J.) (MOHINDER PAL, J.) KMGThilake) Page 5 of 5 HC-NIC Page 5 of 5 Created On Thu Dec 24 01:09:10 IST 2015