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1. Reopening of completed assessment under section 147(a) 2. Reduction of exemption granted under section 54 Analysis: Issue 1: Reopening of completed assessment under section 147(a) The case involved the reopening of an already completed assessment under section 147(a) and the subsequent withdrawal of a deduction under section 54. The original assessment allowed an exemption under section 54 for the sale of a house property and investment in a new residential property. The tax authorities sought to reopen the assessment upon discovering that a part of the newly constructed property had been gifted away. The Income Tax Officer (ITO) proposed to withdraw a portion of the exemption granted under section 54 based on the gifted property's value. The ITO argued that the assessee failed to disclose this fact fully and sought permission to reopen the assessment. The CIT (Appeals) upheld the ITO's decision on both counts, leading to an appeal. Issue 2: Reduction of exemption granted under section 54 The appellant contended that all relevant facts were properly disclosed in the original and revised returns filed. The appellant argued that the disclosure of the gifted property in the gift-tax return should suffice as a proper disclosure for income tax purposes. The appellant cited various legal authorities to support their position. On the other hand, the Departmental Representative (D.R.) supported the tax authorities' decision, claiming that the disclosure was belated and insufficient. The appellant further argued that only a portion of the property was gifted, and a substantial portion was still used for residential purposes, citing relevant case law. Ultimately, the tribunal found that the voluntary disclosure of the gifted property at the draft assessment stage constituted a true disclosure of primary facts, rendering the reopening under section 147(a) unjustified. Additionally, the tribunal held that the provisions of section 54 required any action to be taken in the year of transfer of the newly acquired asset, which was not the year under consideration. Therefore, the tribunal allowed the appeal, ruling in favor of the appellant and deleting the addition made by the ITO during reassessment proceedings. In conclusion, the tribunal allowed the appeal, emphasizing that the reopening of the assessment was not justified, and no withdrawal from the exemption under section 54 was required based on the specific provisions of the law. The tribunal highlighted the importance of proper disclosure of facts and adherence to statutory provisions in income tax assessments.
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