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TMI Blog2013 (1) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 3. The facts leading to the present petition are as under : (a) During the assessment year 2006-07, the petitioner sold property at Pune to a builder for the consideration of Rs. 9.23 crores. The petitioner, inter alia, received an amount of Rs. 90.84 lakhs as earnest money before the sale/execution of the conveyance which took place during the assess-ment year 2006-07. So as to be eligible to claim a deduction under section 54EC of the said Act the aforesaid amount of Rs. 90.84 lakhs had been invested by the petitioner in the NABARD bonds and the National Housing bonds on December 18, 2004, and November 30, 2004, respectively, i.e., prior to the sale/execution of the conveyance. (b) On October 31, 2006, the petitioner filed her return of income, declaring her total income to be Rs. 21.58 lakhs. On June 28, 2007, a notice under section 143(2) of the said Act was issued to the petitioner. There-after, during the course of the assessment proceedings respondent No. 1 by a communication dated August 5, 2008, called upon the petitioner to, inter alia, submit details for purposes of assessment. The information sought by the above letter at serial No. 10 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested in purchase of house property and Rs.740 lakhs invested in specified bonds, i.e., NABARD C. G.bonds, Rs. 200 lakhs, NHB C. G. Bonds Rs. 240 lakhs, REGCG bonds 150 lakhs and SIDBI bonds 150 lakhs and claimed deduction under section 54EC. It was seen that out of the above invest-ment 50 lakhs invested on December 18, 2004, in NABARD bonds and 50 lakhs invested on November 30, 2004, in National Housing Bonds, i.e., prior to the date transfer of long-term capital assets. As per section 54EC 'Where the capital gain arises from the transfer of long-term capital asset and the assessee has at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gain in the long-term specified asset is not to be charged on investment in certain bonds'. In this case, the assessee made an investment prior to transaction which is not permutable (sic) for deduction under section 54EC. In view of this, it is submitted that, there has been escapement of income to the tune of Rs. 90,84,952 for the assessment year 2006-07." (f) On April 25, 2011, the petitioner filed her objection to the reasons recorded for reopening her assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate-rial and application of law to the same the benefit was extended to the petitioner. Consequently, the present proceeding is nothing more than a different view on law applicable on the facts already disclosed ; (ii) there is no reason to believe that income has escaped assessment as the proceed-ings to reopen the assessment appear to have commenced in view of a different view of the auditors ; (iii) there is no tangible material which has come to the knowledge of respondent No. 1 to have a reasonable belief that there has been an escapement of income from assessment ; and (iv) on the merits, the issue stands covered by Circular No. 359, dated May 10, 1983, issued by the Central Board of Direct Taxes in the context of section 54E of the said Act on the provisions identical to section 54EC where the Central Board of Direct Taxes has clarified that if earnest money or advance received as a part of the sale consideration is invested in specified assets before the date of the transfer of the assets, then the net amount so invested would qualify for exemption notwithstanding the fact that section 54E specifically provides that the investment must be made within a period of six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment on the basis of 'mere change of opinion', which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopen-ing the assessment, review would take place." The Supreme Court further held that there must be tangible material to come to the conclusion that there has been an escapement of income. The apex court in fact upheld the Full Bench decision of the Delhi High Court in the matter of CIT v. Kelvinator of India Ltd. reported in [2002] 256 ITR 1 (Delhi) [FB] wherein it has been held that the power to reopen an assess-ment cannot empower an officer of the Department to reopen the procee-ding on the ground that an earlier order was passed without application of mind. An exercise of power in such a manner would amount to a review of an order which is not permissible under the law. Consequently, when jurisdiction is exercised to reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains would not be available if part of the consideration is invested prior to the date of execution of the sale deed as the invest cannot be regarded as having been made within a period of six months after the date of transfer. 2. On consideration of the matter in consultation with the Ministry of Law, it is felt that the foregoing interpretation would go against the purpose and spirit of the section. As the section contemplates invest-ment of the net consideration in specified for a minimum period and as earnest money or advance is a part of the sale consideration, the board has decided that if the assessee invest the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption under section 54E of the Income-tax Act." 9. The Tribunal in the case of Ramesh Narhari Jakhadi (supra) while cons-truing section 54E of the said Act applied Circular No. 359, dated May 10,1983, to hold that an investment made in bonds out of advance received for transfer of land before the actual date of transfer would be entitled to the benefit of exemption under section 54E of the said Act. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for making/granting a claim of deduction. If it does so, an assessment order would cease to be an order and become an epic tome. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made ; and, secondly, the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with." 11. Further, the reasons recorded by respondent No.1 for reopening the assessment do not state that the deduction under section 54EC was not con-sidered in the assessment proceedings. In fact from the reasons, it appears that all facts were available on record and, according to the respondents, deduction was only erroneously granted. This is a clear case of review of an order. The application of law or interpretation of a statute leading to a parti-cular conclusion cannot lead to a conclusion that tax has escaped assessment for this would then certainly amount to review of an order which is not permitted unless so specified in a statute. The order dated November 14, 2011, di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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