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TMI Blog2013 (12) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer under section 147 read with section 143(3) of the Income-tax Act (in short "the Act") dated March 30, 2006 pertaining to the assessment year 1998-99. The appellant is a Hindu undivided family, who had declared long-term capital gain on sale of its share in the land amounting to Rs. 28,49,780. The net long-term capital gain so declared, inter alia, included a claim of deduction under section 54F of the Act amounting to Rs. 2,04,50,220 which has since been denied and the long-term capital gain has been assessed at Rs. 2,33,00,000. The sum and substance of the dispute revolves around such addition made in the impugned assessment finalised by the Assessing Officer under section 143(3) read with section 147 of the Act. In the memo of appeal, the appellant Hindu undivided family has raised multiple grounds of appeal, primarily articulating its grievance on twofolds. Firstly, on the point of law, it is canvassed that the initiation of proceedings by the Assessing Officer by invoking section 147/148 of the Act was unjustified and as a result, the impugned assessment is invalid on account of lacking in jurisdiction. Secondly, it is canvassed that even on merits o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r : Income from capital gains (Rs.) Sale of rights of land bearing S. No. 15/1,15/2/1, 15/2/2 15/3, 15/4, 15/5 and 15/6 at Vadgaon Sheri, Tal. Haveli, Dist. Pune 2,50,00,000 Less : Indexed cost of acquisition 16,55,000 Long-term capital gains 2,33,45,000 Less : Investment made in house property under section 54F (taken at Rs. 2,04,50,220 proportionately) 2,04,50,220 28,94,780 Less : Expenses incurred in connection with transfer 45,000 Net long-term capital gains 28,49,780 Evidently, the determination of long-term capital gain at Rs. 28,49,780, inter alia, included a claim of deduction under section 54F of the Act amounting to Rs. 2,04,50,220. The said return of income was subject to scrutiny assessment under section 143(3) of the Act vide order dated January 30, 2001. The Assessing Officer examined the copy of agreement dated March 31, 1998 between the assessee and MPPL. The Assessing Officer examined the assessee's claim of deduction under section 54F of the Act and noticed that the residential house sought to be acquired by the assessee from MPPL in lieu of the sale consideration was not one house but four separable units/bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT v. Mrs. Hilla J. B. Wadia [1995] 216 ITR 376 (Bom). The aforesaid order of the Commissioner of Income-tax (Appeals) is stated to have become final as mentioned by learned counsel before us during the course of hearing and this aspect has not been controverted by the Revenue before us. Further, it appears that a search action under section 132(1) of the Act was conducted on November 9, 2000 at the residential and business premises of the members of Vascon group. Consequently, a notice under section 158BD was issued to the assessee on November 14, 2002 in order to assess an undisclosed income for the block period from April 1, 1990 to November 9, 2000 and again the issue relating to the acquisition of domain by the appellant over the new residential unit within the stipulated period was raised. In the subsequent assessment finalised under section 158BD of the Act on November 30, 2004, the Assessing Officer, inter alia, concluded that the possession of the new residential house was not taken within the period of two years from the date of transfer of development rights in land. Though the Assessing Officer held during the block assessment proceedings that the capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kamlabai Gundecha have shown/returned the capital gains on the transfer of the rights of the aforesaid property in the assessment year 1998-99 (total sale consideration is Rs. 10 crores) and therefore, they have shown capital gains in the assessment year 1998-99. The assessee has not acquired the dominion over the new residential property within the stipulated two years as the map for the said premises were neither sanctioned nor the construction has started in two years from the date of transfer of the original asset. What is being tried to bring to tax here is not undisclosed income, within the meaning of section 158B(b) of the Income-tax Act, for it is not an income which has not been or would not have been disclosed for the purposes of the Act, (as also by the Commissioner of Income-tax (Appeals)-II, Pune, in his order dated March 24, 2005) but what is being brought to tax here is the excess deduction which has been allowed to the assessee in the assessment year 1998-99, which has escaped assessment in that particular year, i.e., assessment year 1988-99 within the meaning of section 147 of the Income-tax Act, and therefore, I am satisfied and have reason to believe that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid. In the aforesaid background, factually, it is evident that the entire controversy is as a consequence of an agreement executed with MPPL whereby the assessee transferred its share of the development rights in the land at Vadgaon Sheri. The assessee had declared capital gains as a consequence of such agreement in the return of income filed originally under section 139(1) of the Act which was subsequently revised making a claim for exemption under section 54F of the Act. The claim of exemption was with respect to acquisition of a residential house from MPPL in lieu of the sale consideration. Factually, these aspects were subject matter of consideration by the Assessing Officer while finalising the assessment under section 143(3) of the Act on January 30, 2001 wherein partial deduction under section 54F was allowed. This partial allowance had since been affirmed by the Commissioner of Income-tax (Appeals) in an appeal preferred by the assessee vide his order dated January 28, 2002. Similarly, even consequent to search under section 132(1) of the Act on Vascon group, assessment proceedings were initiated in the case of the assessee under section 158BD of the Act wherein also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch block assessment has not been held to be tenable. So however, it would not follow that such income can be construed as escaped income chargeable to tax under section 147 of the Act. In similar circumstances, the hon'ble High Court of Allahabad in the case of Vishwanath Prasad Ashok Kumar Sarraf v. CIT [2010] 327 ITR 190 (All) has held that once a particular amount has been considered in the block assessment it cannot be thereafter treated as an escaped income within the meaning of section 147/ 148 of the Act. Further, in the case of CIT v. C. Sivanandan [2011] 52 DTR (Ker) 428, the hon'ble Kerala High Court was considering a situation where the Assessing Officer had initiated proceedings under section 147/148 of the Act, to tax certain income which according to the Revenue had escaped assessment. The hon'ble Kerala High Court noticed that the block assessment was made by the Assessing Officer based on material gathered during the search under section 132 of the Act and on the basis of the same material after block assessment was cancelled by the appellate authorities, the Assessing Officer proceeded to make the reassessment under section 147 of the Act. According to the hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even though learned counsel submitted that deposit amounts were not considered in block assessment, we cannot accept it because when interest from the same deposits were assessed as undisclosed income of the block period, it can be legitimately assumed that the officer considered the deposit amounts for assessment but gave up the same. In this context, the findings of the Tribunal that reassessment under section 147 is a result of change of opinion of the Assessing Officer cannot be said to be illegal or incorrect because what was treated as undisclosed income in block assessment is later treated escaped income in another round of assessment under a different provisions of the Act (section 147) which in our opinion is impermissible." The aforesaid legal position is also in line with the judgment of the hon'ble Bombay High Court in the case of Smt. Mira Ananta Naik v. Dy. CIT (Investigation) [2009] 183 Taxman 40 (Bom) ; 15 DTR 8 (Bom). The following observations of the hon'ble High Court are worthy of notice : "There is much substance in the contentions of Shri Nadkarni that the search having resulted in block assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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