2021 (10) TMI 914 - AT - Income Tax

Reopening of assessment u/s 147 - deduction u/s. 54F on account of purchase of residential house - HELD THAT - Assessee has claimed deduction u/s. 54F of the Act on account of purchase of residential house for an amount of ₹ 18,00,000/-. There was a cash deposit in the bank account. It was only while examining the bank account that the issue of credit entry amounting to more than ₹ 98,00,000/- was notice by the AO - addition under the head long term capital gain was based on the information obtained from the bank account of the assessee. But after going through the assessment order and the reasons, it is found that it is not reopened on this issue only and the cash deposits in the bank account are related to this long term capital gain which was for purchase of residential house. Assessing Officer has rightly made addition and the CIT(A) has rightly confirmed the addition. Hence, Ground No. 1 to 3 are dismissed. Interest u/s. 234A - HELD THAT - CIT(A) should have considered that the interest can be charged up to the due date prescribed u/s. 139(4) of the Act and not the date of the assessment order. Therefore, we direct the AO to charge the interest as per Section 234A read with Section 139(4). Action of the Ld. A.O. to adopt the circle rate of land @ ₹ 27,000/- per acre as on 01-04-1981 - HELD THAT - CIT(A) has rightly adopted the circle rate of land at ₹ 27,000/- per acre as the property is situated approximately two kilo meters away from the Municipal Limits of Gurgaon and not as contended by the assessee that it is at a distance of 15 kilo meter from the Tehsil Sohna. Hence, Ground No. 5 is dismissed.

Summary

Issues:
1. Admission of additional ground during appellate proceedings
2. Validity of reassessment proceedings
3. Escapement of income based on original reasons for reopening the case
4. Charging of interest u/s. 234A
5. Adoption of circle rate of land for taxation purposes

Issue 1: Admission of additional ground during appellate proceedings
The assessee challenged the CIT(A)'s decision not to admit an additional ground taken during appellate proceedings, arguing that it was a question of law based on available records. The tribunal noted that the CIT(A) had correctly dismissed the additional ground, emphasizing that the grounds for admission were not met. The tribunal upheld the decision, dismissing Ground No. 1.

Issue 2: Validity of reassessment proceedings
The assessee contended that the reassessment proceedings were initiated solely on suspicion, seeking to quash the entire process. The tribunal reviewed the facts and determined that the reassessment was valid and not solely based on suspicion. Therefore, the tribunal dismissed Ground No. 2 challenging the validity of the reassessment proceedings.

Issue 3: Escapement of income based on original reasons for reopening the case
The assessee argued that there was no escapement of income based on the original reasons recorded for reopening the case under Section 148 of the Act. The tribunal examined the facts and upheld the Assessing Officer's decision that the income assessed on the transfer of land was taxable under capital gains. Ground No. 3 was dismissed accordingly.

Issue 4: Charging of interest u/s. 234A
Regarding the charging of interest under Section 234A, the tribunal directed the Assessing Officer to apply the interest as per Section 234A read with Section 139(4) of the Act. Ground No. 4 was partly allowed on this issue.

Issue 5: Adoption of circle rate of land for taxation purposes
The assessee contested the adoption of the circle rate of land at ?27,000 per acre, arguing against the arbitrary manner of assessment. The tribunal supported the CIT(A)'s decision to adopt the circle rate based on the property's proximity to the Municipal Limits of Gurgaon. Ground No. 5 challenging the adoption of the circle rate was dismissed.

In conclusion, the tribunal partly allowed the appeal of the assessee, dismissing some grounds while partially allowing others based on detailed analysis and legal considerations.