2022 (4) TMI 796 - AT - Income Tax

Validity of reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT - AO has not alleged that there is a failure on the part of the assessee to disclose fully and truly all material facts to complete the assessment. That apart, we find that there is no failure on the part of the assessee in respect of disclosure of all relevant materials required for assessment fully and truly. Therefore, in our opinion, the reopening of assessment under section 147 of the Act is invalid and the same is quashed.

Summary

Issues:
1. Validity of reopening of assessment under section 147 of the Income Tax Act.
2. Allowance of exemption under section 54F of the Act.

Analysis:
1. The appeal challenged the reopening of assessment under section 147 of the Income Tax Act for the assessment year 2011-12. The appellant contended that the reopening was beyond the four-year limit and lacked any failure on their part to disclose relevant material. The Tribunal examined the reasons recorded for reopening, which indicated that the Assessing Officer questioned the exemption claimed under section 54 as the property was purchased in the wife's name. The Tribunal noted that there was no failure on the appellant's part to disclose all relevant facts for assessment. Consequently, the Tribunal held the reopening of assessment invalid and quashed it, ruling in favor of the appellant.

2. The second issue pertained to the denial of exemption under section 54F of the Act. The appellant argued that they were entitled to the exemption as reinvestment in a residential house was made within the statutory period after selling the property. The Tribunal observed that the reinvestment was made within the stipulated time frame and in excess of the sale consideration. Additionally, the reinvestment in the wife's name was deemed valid. The Tribunal found merit in the appellant's contentions and allowed the claim for exemption under section 54F of the Act.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant on both issues. The reopening of assessment under section 147 was deemed invalid due to the absence of failure to disclose material facts, and the appellant's claim for exemption under section 54F was upheld based on the reinvestment made within the prescribed period and the investment in the wife's name being considered valid.