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TMI Blog2014 (9) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the first assessment u/s 143(3) read with section 147 of the Act, hence there is no reason why the issue relating to reducing the exemption claimed u/s 54 from the cost of acquisition was not considered in the original assessment order passed on 03/06/2008 - when the assessee has furnished all information relating to the sale of immovable property in pursuance to enquiry conducted by department, which forms part of the assessment record at the time of completion of original assessment u/s 143(3) read with section 147 of the Act, reopening of assessment again on the very same issue after expiry of four years from the end of the relevant AY is legally unsustainable as it is against statutory mandate of section 147 - proceeding initiated u/s 147 of the Act is invalid in law and assessment order passed u/s 147 also cannot be sustained – Decided in favour of assessee. - ITA No. 179/Hyd/2014 - - - Dated:- 5-9-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Shri Laxminiwas Sharma For the Respondent : Shri Solgy Jose T. Kottaram ORDER Per Saktijit Dey, J. M. This appeal of the assessee is directed against the order dated 29/11/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purchase of units of mutual fund, since assessee has not utilized sale proceeds of house sold during the year in acquiring the asset, he is eligible for claim of deduction u/s 54. It was submitted that the assessee has not admitted any capital gain arising on sale of residential property during the previous year relevant to AY 2005-06 and has also not claimed any exemption u/s 54. The AO, however, did not accept the contention of the assessee and proceeded to complete the assessment vide order dated 31/12/2012 by reducing the exemption claimed u/s 54 of ₹ 41,41,007/- from the cost of acquisition and computed short term capital gain of ₹ 27,02,254/-. 4. Being aggrieved with the assessment order, so passed, assessee preferred appeal before the CIT(A), challenging the assessment order both on the validity of action taken u/s 147 as well as merits of the issue. 5. So far as the validity of reopening of assessment is concerned, assessee submitted before the CIT(A) that during earlier assessment proceeding u/s 147 of the Act, AO vide letter dated 21/11/2007 had made full scrutiny and taken on record, the details of purchase of immovable property wherein the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO during the pendency of the original assessment proceeding. The CIT(A) held that though the final order u/s 143(3) read with section 147, which is under appeal, is passed by the ITO, who had examined the matter through the notice issued u/s 142(1) dated 21/11/2007, but, he was not the AO when he issued that notice. Hence, the assessee's claim that he had furnished information before the AO during the earlier proceeding is factually not correct. Negating assessee's contention that assessment proceeding is time barred as the second reopening of assessment is beyond four years from the expiry of AY, the CIT(A) held that as the matter of sale of property had not been disclosed in the return of income at all, there is a failure on the part of the assessee to disclose fully and truly the material facts relevant to assessment, hence, 4 years restriction would not apply in the present case. 6. The learned AR reiterating submissions made before the CIT(A), submitted that the order passed by the CIT(a) itself is evident of the fact that the information relating to sale of property for which consideration of ₹ 1,95,00,000/- was paid was available before the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try dated 19/07/2011, reasons recorded for reopening the assessment are as under: The assessment in the case of the assessee was completed u/s 143(3) r.w.s. 147 was on 03/06/2008. Subsequently, information was received that the assessee has sold a property for ₹ 1,95,00,000/- on 30/11/2004 and the property was jointly purchased with Smt. Manjula D. Shah and others. In the case of Manjula Shah, it was found that the assessee has received capital gains in FY 03-04 (AY 2004-05) and the investment in purchase of the said property was claimed as exemption u/s 54. As per the provisions of section 54(1)(ii) of the IT Act, 1961, if the property on which exemption u/s 54 was sold within 3 years, the amount of capital gain claimed should be reduced from the cost of asset. Accordingly, the case of Smt. Manjula D. Shah for AY 2005-06 was reopened and reassessment was done on 28/12/2010 bringing the capital gains to tax. Similar claim was made by the assessee Sri Nilesh Dharod in AY 2004-05. As per the details furnished by Smt. Manjula D. Shah, the assessee Shri Nilesh Dharod has received capital gains of ₹ 31,41,007/- during AY 2004-05 and the same was claimed as exemption u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has furnished all information relating to the sale of immovable property in pursuance to enquiry conducted by department, which forms part of the assessment record at the time of completion of original assessment u/s 143(3) read with section 147 of the Act, reopening of assessment again on the very same issue after expiry of four years from the end of the relevant AY is legally unsustainable as it is against statutory mandate of section 147. In the aforesaid view of the matter, proceeding initiated u/s 147 of the Act is invalid in law and consequently, assessment order passed u/s 147 also cannot be sustained. In view of the above, we set aside the order of CIT(A) and quash the impugned assessment order. 11. So far as merits of the issue is concerned, Ld. AR submitted that after sale of original asset on 28/05/2003 in which assessee's share of capital gain was ₹ 31,41,007, assessee along with others purchased a residential house at Road No. 12, Banjara Hills on 27/02/2004 for ₹ 1,95,00,000/-. However, for religious and sentimental reasons the said house was sold for ₹ 1,95,00,000 on 30/11/2004, in which assessee's share was ₹ 32,50,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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