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2020 (5) TMI 119 - AT - Income TaxReopening of assessment u/s 147 - requirement of supplying the reasons - as per assessee instead of providing copy of the signed reasons originally recorded by the then AO at the time of issue of notice u/s 148, a printout was provided by the incumbent AO which also contained queries raised by him and the same is in violation of the procedure laid down - HELD THAT - Where the reasons so recorded were duly supplied to the assessee even though not in the original format as recorded by the AO, there is no infirmity in the action of the Assessing officer. The essence and substance of the requirement as laid down in GKN DRIVESHAFTS (INDIA) LTD. 2002 (11) TMI 7 - SUPREME COURT is to allow the assessee to have access to the contents of the reasons so recorded for reopening the matter and where the assessee so desire, he has the liberty to submit his objections against such reopening - requirement of supplying the reasons has been duly complied with by the AO and thereafter, where the assessee has chosen not to object to such reopening after receiving the copy of the reasons so recorded, it has not caused any prejudice to the rights of the assessee and the contentions so advanced cannot be accepted. Assessment was reopened on the ground that the assessee has made time deposit - In the instant case, the assessee has not filed any return of income and only pursuant to notice u/s 148, the return of income has been filed and the assessment proceedings for the impugned assessment year have been initiated. It is therefore a case of assessment and not-reassessment - where AO is ceased of the information that the assessee had made time deposit of ₹ 10 lacs in his bank account and such time deposits remains undisclosed to the Revenue authorities, there is clearly tangible information in the possession of the Assessing officer basis which a prima facie view has been formed that the income has escaped assessment - We believe that necessary nexus has been established between the information and formation of belief that the income has escaped assessment. Capital gains on sale of property - cost of acquisition of the property - Whether entirely long term or is partly long term on assessee s portion/share in the property inherited from his father and partly short term on portion/share of property received from his mother and sister by way of relinquishment without consideration - after the death of his father, the assessee got 1/4th share in the property and thereafter, as per the family settlement and relinquishment deed dated 7.01.2010, his mother and sister relinquished their respective shares in the property in favour of the assessee - HELD THAT - Relinquishment of share of the property in favour of the assessee without any consideration pursuant to family settlement deed amounts to transfer of the share of the property through gift. In the instant case, the previous owner is the deceased father of the assessee who had initially purchased the property in the year 1967, therefore, the assessee shall be liable to tax on the share of the property, acquired through relinquishment of rights by his mother and sister, as long term capital gains after providing requisite indexation of cost of acquisition and cost of improvement on similar lines as done in case of share of property acquired through inheritance and will be chargeable to tax as long term capital gains. Since Mr. Mody had held the property since 1968 and since the coowners by release deeds in pursuance of love and affection to the assessee had relinquished their right in the property in favour of the assessee which has already been held as gift, therefore, in view of the decision of MANJULA J. SHAH 2011 (10) TMI 406 - BOMBAY HIGH COURT we find merit in the submission of the learned counsel for the assessee that the cost of acquisition of the property should be calculated by taking the value of the property as on 01-04-1981. Unexplained deposits in bank account - HELD THAT - Assessee has deposited a sum in his bank account and the source of the same has been explained as gifts received from his brother, sister and mother and in support, has submitted affidavits from his family members, family settlement and relinquishment deed and copy of return of income filed by his brother, Shri Ajay Kumar and his bank statement. Amount as shown as gift received by assessee from his brother which is an existing income tax assessee and in the affidavit so submitted, he has explained that he has gifted the said amount to the assessee for purchase of residential property and the source of such money is income from his business, past savings, etc. Further, he has explained that he has withdrawn an amount from his bank account on 8.5.2009 and 4.02.2010 and the same has been gifted to the assessee. We therefore find that the assessee has substantially discharged the initial onus cast on him and in absence of any contrary material on record, the source of deposit. Remaining deposit the source of the same has been explained as gift received from assessee s mother and sister supported by their respective affidavits. Given the quantum of amount involved and the fact that household savings by the women in our society is a norm rather than an exception, we believe that the assessee has reasonably discharged the onus cast on him in terms of explaining the nature and source of such deposit as received from his mother and sister. - Decided in favour of assessee.
Issues Involved:
1. Reopening of assessment under section 147 of the Income-tax Act, 1961. 2. Sustenance of addition as short term capital gains from the sale of property. 3. Sustenance of addition as unexplained deposit in the bank account. Issue-Wise Detailed Analysis: 1. Reopening of Assessment under Section 147: The assessee challenged the reopening of the assessment under section 147 of the IT Act. The AR argued that the reopening was based on a time deposit of ?10,00,000 and that the reasons recorded were not properly communicated to the assessee, violating the procedure laid down by the Supreme Court in GKN Driveshafts (India) Limited vs. ITO. The AR contended that there must be "reasons to believe" and not "reasons to suspect" that income has escaped assessment, citing CIT vs. Maniben Vilji Shah. The DR countered that the reasons were duly supplied, and the reopening was justified as the assessee had not filed a return of income. The Tribunal found that the reasons were adequately communicated, and the reopening was based on credible information. The ground of appeal was dismissed, upholding the reopening of the assessment. 2. Sustenance of Addition as Short Term Capital Gains: The assessee objected to the addition of ?3,29,302 as short term capital gains, arguing that the assessment was reopened on the grounds of a time deposit but the addition was made towards capital gains and other sources. The AR cited Ranbaxy Laboratories Limited vs. CIT and other cases to argue that the AO cannot assess other escaped income if the income for which the assessment was reopened was not assessed. On merits, the AR contended that the property was inherited and the relinquishment of shares by family members should be treated as a gift, thus qualifying for long term capital gains with indexed cost of acquisition from the previous owner. The Tribunal agreed with the assessee, stating that the relinquishment amounted to a gift and the indexed cost of acquisition should be computed from the date the previous owner held the asset. The ground of appeal was allowed, treating the gains as long term capital gains. 3. Sustenance of Addition as Unexplained Deposit in Bank Account: The assessee challenged the addition of ?4,30,000 as unexplained deposits, arguing that the deposits were gifts from family members supported by affidavits and a family settlement deed. The AR claimed that the AO failed to make further inquiries and did not consider the affidavits. The DR argued that the gifts from non-assessees and the low income of the brother raised doubts about their creditworthiness. The Tribunal found that the assessee had substantially discharged the initial onus by providing affidavits and other supporting documents. Given the norm of household savings, the Tribunal accepted the explanation for the deposits and directed the deletion of the addition. The ground of appeal was allowed. Conclusion: The appeal filed by the assessee was allowed, with the Tribunal upholding the reopening of the assessment but directing the deletion of the additions made under short term capital gains and unexplained deposits. The order was pronounced on 28/04/2020.
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