2023 (10) TMI 558 - AT - Income Tax

Reopening of assessment u/s 147 - assessee has claimed exemption u/s 54B(2) on the ground that the said amount has been deposited in a capital gain scheme account, but no proof of same was furnished - HELD THAT - As in the computation of income filed at the time of original assessment available assessee had given the detail of the capital gains calculation. As the reasons of reopening available on record and also examined from the assessment record made available by DR, are considered, it is apparent that the failure has been attributed to the assessee for not disclosing fully and truly all material facts. CIT(A) during the first appellate proceedings observed that the issue has arisen only out of audit objections and in regard to which even there was an office note from the ACIT wherein nothing adverse was noticed so requiring no action. It appears that merely on the basis of borrowed satisfaction the reopening was initiated. CIT(A) has also taken into consideration the fact that even there were rectification proceedings u/s 154 initiated by AO in which too the information provided by the assessee was duly taken into consideration and no mistake was found in the order dated 23.12.2010. The factual findings given by CIT(A) could not be disputed by Ld. DR. The fact of payment of Rs. 55 lakhs to Sh. Balwant Singh stand establish as the same was through a banking channels and the bank certificate of deposit of Rs. 2.22 crores in the capital bank account is duly established. Ld. AR has also canvassed before us as to how the amount deposited in the capital gains account was used for purchase of the land. The Bench is of considered opinion that the Annotated Report of DCIT, Hisar, was not a mere internal document but formed the basis for the reopening and which Ld. CIT(A) has rightly held to be a case of change of opinion. Decided in favour of assessee.

Summary

Issues:
The judgment involves the appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals)-Hisar regarding the assessment completed under section 143(3) of the Income Tax Act, 1961.

Summary:

Issue 1: Jurisdiction under Section 147
The Revenue challenged the order quashing the assessment under section 143(3)/147, arguing that the facts were detailed in the assessment order itself. The CIT(A) found that the reopening was not justified as all information was already on file, including the advance payment to Sh. Balwant Singh and the deposit in the capital gain account. The AO's rejection of objections to the notice under section 148 was also upheld.

Issue 2: Allowability of Exemption under Section 54B
The Revenue contended that the CIT(A) erred in accepting the assessee's version without appreciating the facts discussed in the assessment order. However, the CIT(A) found that the assessee had provided evidence of the advance payment and deposit in the capital gain account, supporting the claim for exemption under section 54B.

Issue 3: Validity of Reopening
The CIT(A) observed that the reopening was based on borrowed satisfaction and the issue arose from audit objections. The AO's rectification proceedings under section 154 also confirmed no mistake in the original order. The CIT(A) concluded that the reopening was a case of change of opinion, dismissing the Revenue's appeal and allowing the cross objections filed by the assessee.

Conclusion:
The Tribunal upheld the CIT(A)'s findings, emphasizing the establishment of the advance payment and capital gain account deposit by the assessee. The Revenue's grounds were deemed unsubstantiated, leading to the dismissal of the appeal and allowance of the cross objections.