2022 (9) TMI 975 - AT - Income Tax

Reopening of assessment u/s 147 - premature surrendered of policy amount deposited in assessee s bank account - HELD THAT - Section 45 lays down the tenets for the charge of capital gains tax. The computation of that tax is to be done in accordance with the modus prescribed under section 48. The benefit of indexation of cost of such units should thus be made available on repurchase or redemption of such units. In fact the entire amount was received u/s 80CCB(2) is not liable to be taxed in the hands of the assessee. Assessee argued the legal issue pointed out that the information was received from AIR Data base and the issue was agitated before the appellate authority. But the CIT(A) had not passed any speaking order against the assessee s submissions. The fact related application section 45(6) was also had not discussed by any of the revenue authorities. Considering the veracity of the legal position application of charging section related calculation of tax, the matter is setting aside to ld. CIT(A) for speaking order. Accordingly, the matter is setting aside to the ld. CIT(A) for further adjudication and is directed to pass a speaking order related to the legal point for reopening of u/s 148 on basis of the AIR Information calculation of income under perview of section 45(6) of the Act. Needless to say, the assessee should get a reasonable opportunity for substantiate his claim and the revenue should accept and adjudicate the documents which will be filed by the assessee during the proceeding. Appeal allowed for statistical purposes.

Summary

Issues:
1. Reopening of assessment u/s 148 based on surrendered policy amount.
2. Applicability of section 80CCB(2) for taxation of surrendered amount.
3. Legal validity of proceeding u/s 148 and application of section 45(6) for taxation.

Analysis:
1. The appeal was against the order of the ld. CIT(A) upholding the AO's addition of the surrendered policy amount to the assessee's total income. The assessee argued that section 80CCB(2) should not apply as no benefit was availed under section 80CCB(1) due to non-filing of returns for AY 2007-08. The Tribunal found that the revenue wrongly taxed under 80CCB(2) without considering section 45(6) for capital gains taxation on redemption. The matter was remanded to the CIT(A) for a detailed order on the legal issues raised by the assessee.

2. The legal validity of the reassessment u/s 148 was questioned by the assessee, contending that the recorded reasons were based on borrowed satisfaction and the entire process was flawed. The Tribunal agreed that the reopening was unwarranted solely based on bank transactions and directed the CIT(A) to provide a speaking order addressing the legal points raised, especially regarding the application of section 45(6) for taxation on redemption of units.

3. The Tribunal highlighted the necessity for a comprehensive analysis of the legal aspects related to the reassessment and taxation under section 80CCB(2) and section 45(6) by the CIT(A). Emphasizing the importance of a reasoned order, the Tribunal set aside the decision for further adjudication, ensuring the assessee's right to substantiate claims and the revenue's duty to consider all relevant documents during the proceedings. The appeal was allowed for statistical purposes, with directions for a detailed order by the CIT(A.