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TMI Blog2018 (11) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transferor. Since the transferors of the property were assessees, capital gain is to be taxed in their hands. Thus the plea of the assessees that property belongs to the firm cannot be accepted in the income-tax proceedings. As far as dispute with regard to FMV as on 1.4.1981 is concerned, it is of the view that the claim of the assessee that FMV of the land is ₹ 1,10,000 is not supported by any evidence; whereas the AO has based his conclusion based on a Gazette Notification of 1999 giving the value of the properties in the vicinity of the area, where the property of the assessee is situated. No merit in the submissions of the assessee on this issue. Claim for deduction on account of brokerage - There is no evidence filed by the assessee to substantiate its claim that it paid brokerage and therefore the claim made by the assessee is rejected. Cost of construction of the property - AO has adopted cost of construction of the building by estimating the same at ₹ 11,20,000 - Held that:- The only credible evidence available is the evidence of the Chartered Engineer towards value of the property for the purpose of availing loan by the assessee from KSFC. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of both the assessees:- 24/06/2014 During the course of assessment proceedings for the AY 2010-11 it is verified from the bank pass book copy produced by the assessee in the SB A/c no.08422101015233 (Joint account) of Canara Bank, the assessee made cash deposit of ₹ 4,15,500 during the year 2008-09. The assessee also made cash deposit of ₹ 15,47,406 in the SB account no.27887 in Corporation bank (Joint account). The total cash deposit is ₹ 19,53,206/-. The assessee has not been offered to tax. The assessee s share is 50% ie ₹ 9,76,603/- of both banks. The assessee has not filed the return of income. Based on the above evidences, I have reason to believe that the income has escaped assessment within the meaning of section 147 of the Income tax Act, 1961. 3. Accordingly, a notice u/s. 148 of the Income-Tax Act, 1961 [ the Act ] was issued to both the assessees on 26.06.2014. 4. The assessee in ITA No.1180/B/18 filed a return of income declaring income from brokerage commission of ₹ 90,000. The assessee in ITA No.1179/B/18 filed a return of income of ₹ 60,000 from brokerage commission. Both the assessees did not decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim for having incurred the aforesaid expenses, which comprised of civil construction cost of ₹ 19,02,104 and electrical works at ₹ 3,80,421 + revenue expenses incurred during the construction of ₹ 95,000. The assessee claimed that period of construction was between 05.10.01 to Nov. 2003 and applied cost inflation index applicable for FY 2003-04 and arrived at indexed cost of construction. In support of incurring cost of civil construction, assessee filed copy of bill statement from J.J. Construction, Mysore. The AO noticed that bill was dated 05.10.01. The assessee had made payment of ₹ 13,45,000 and balance of ₹ 5,55,000 was shown as payable. The bill statement refers to 1st running bill, 2nd running bill, etc. The AO was of the view that since the construction was completed only in Nov. 2003, there was no possibility of the running bills being referred to in the bill dated 5.10.01. In other words, the AO was of the view that running bills for expenses towards construction to be incurred in future cannot be referred to in the bill dated 5.10.01. The building constructed by the assessee was not a residential building. In these circumstances, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and roving enquiries. In that case, the reasons for reopening which are extracted in para 9 of the aforesaid judgment shows that the AO has specifically mentioned assessment is being reopened for making further investigation. The ld. Counsel submitted that the present proceedings initiated against the assessee was nothing but a fishing and roving enquiry. 12. I have considered his submissions and am of the view that the same is without any merit. As rightly pointed out by the ld. DR before me, the assessee in this case has not filed a return of income at all for the AY 2009-10. In the case decided by the Hon ble Karnataka High Court cited supra , the assessee had filed return of income for the relevant assessment year and the assessment u/s. 143(3) of the Act was already concluded. It was in those circumstances that the Court came to the conclusion that reopening of assessment was only for the purpose of making fishing and roving enquiry. 13. In the present case, I am of the view that in the light of the fact that assessee has not filed any return of income, there was every reason to believe that there was escapement of income chargeable to tax in terms of Explanation 2(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e support the claim of assessee that property belonged to the firm. He has also expressed the opinion that since the sale deed executed by both the assessees clearly mention that they were the co-owners of the property, the claim made by the assessee that the long term capital gain can be assessed only in the hands of the firm cannot be accepted. 17. We have examined the claim of assessee. We are of the view that the sale deed under which the property was sold (copy of which is placed at pages 90 to 100 of the assessee s PB) clearly shows that both the assessees were owners of the property. The assessees having sold the property as belonging to them and having received the sale consideration on their own account cannot be permitted to plead that they were not the owners of the property. U/s. 45 of the Act, long term capital gain arising on transfer of a capital asset is liable to tax in the hands of the transferor. Since the transferors of the property were assessees, capital gain is to be taxed in their hands. In these circumstances, I am of the view that the plea of the assessees that property belongs to the firm cannot be accepted in the income-tax proceedings. 18. As f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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