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TMI Blog2020 (5) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commissioner of Income Tax (Appeals) grossly erred in sustaining an addition of Rs. 4,30,000/- as unexplained deposit in bank account thereby ignoring all the material evidences on record." 2. In ground no. 1, the assessee has challenged the reopening assessment U/s 147 of the IT Act. 3. In this regard, the ld. AR submitted that the assessment was reopened by issuance of notice U/s 148 of the Act on the ground that the assessee has made time deposit of Rs. 10,00,000/-. The assessee vide letter dated 11.10.2017 had requested for a copy of reasons recorded by the Assessing Officer before the issuance of notice U/s 148 of the Act however, instead of providing copy of the signed reasons originally recorded by the then AO at the time of issue of notice U/s 148, a printout was provided by the incumbent Assessing officer which also contained queries raised by him. It was submitted that neither the reasons so recorded were provided to the assessee nor the same were reproduced in the reassessment order hence, the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited vs. ITO (2003) 259 ITR 19 was not followed by the Assessing Officer and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, instead of providing copy of the signed reasons originally recorded by the then AO at the time of issue of notice U/s 148, a printout was provided by the incumbent Assessing officer which also contained queries raised by him and the same is in violation of the procedure laid down by the Hon'ble Supreme Court in case of GKN Drivehafts(supra). In this regard, we refer to the assessment order wherein the Assessing officer has acknowledged receiving the reply dated 11.10.2017 submitted by the assessee and has also stated that a copy of the reasons was also supplied to the assessee. We therefore find that where the reasons so recorded were duly supplied to the assessee even though not in the original format as recorded by the AO, there is no infirmity in the action of the Assessing officer. The essence and substance of the requirement as laid down by the Hon'ble Supreme Court is to allow the assessee to have access to the contents of the reasons so recorded for reopening the matter and where the assessee so desire, he has the liberty to submit his objections against such reopening. Therefore, in the instant case, we feel that the requirement of supplying the reasons has been duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge the opening of the assessment proceedings by issuance of notice u/s 148 of the Act. In the result, the ground of appeal is dismissed. 7. In ground no. 2, the assessee has challenged sustenance of addition of Rs. 3,29,302/- under the head " short term capital gains." 8. In this regard, the assessee has raised a preliminary objection stating that the assessment was reopened on the ground that the assessee has made an investment in time deposit however, no such addition was finally made and the addition was made towards capital gains and income from other sources. It was submitted that the AO cannot assess other escaped income where the AO did not assess the income for which he has reopened the assessment and in respect of which the notice u/s 148 was issued. In support, reliance was placed on the decision of Hon'ble Delhi High Court in case of Ranbaxy Laboratories Limited vs. CIT 336 ITR 136 and decisions of Hon'ble Bombay High Court in case CIT vs. Jet Airways (I) Ltd. 331 ITR 236 and CIT vs Mohammed Juned Dadani 355 ITR 172. 9. Further, on merits, it was submitted by the ld AR that the assessee had sold an immovable property at 300, Gurunanakpura, Jaipur during the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of asset, cost & period of holding of previous owner has to be considered while computing capital gains and the ld. A.O. grossly erred in interpreting the provisions of taxation of capital gains in case of inherited assets. It was submitted that where the provisions of sections 2(42A), 47(ii), 48, 49(1) and 55(2)(b)(ii) are cumulatively and harmoniously read, then in case of succession, the date of acquisition, cost of acquisition and period of holding is to be computed with reference to the acquisition of capital asset by the previous owner. If only for the purpose of computing indexed cost of acquisition, the date of acquisition by the previous owner is excluded, then it will lead to absurd results. Such interpretation will be against the intent and object of the enactment and will be against the overall scheme of taxation of capital gains in case of inherited assets. The cardinal principles of interpretation of statutes is that if literal meaning of the statute leads to an absurdity, the statute should be interpreted in a manner which will result in harmonious interpretation which avoids absurdity and promote the objective of an enactment. In the case of Tehmi Jimmy Cooper Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Ltd and out of some old savings lying with him along with financial help from the family members, he has deposited cash in his bank account and out of the payments so received and deposited, he has invested a sum of Rs. 10 lacs in time deposit. Further, the assessee has filed his return of income in response to notice u/s 148 wherein he has disclosed capital gains on the sale of the property and interest on time deposits. We therefore find that where the source of time deposit has been declared by the assessee as sale of the property and where transaction relating to capital gains has been offered in the return of income and ultimately, brought to tax by the Assessing officer, the latter is well within his jurisdiction to assess such capital gains as the same has been suo-moto offered to tax by the assessee in the return of income filed in pursuance to notice u/s 148 and secondly, what was intended to be brought to tax is the source of deposit of such time deposits which remain unexplained prior to issuance of notice u/s 148 of the Act and once, the assessee has offered the source of such deposits as consideration on sale of property to capital gains tax in the return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gains liability has to be computed by considering that the assessee held the said share in the property from the date it was held by the previous owner and the same analogy has to be applied in determining the indexed cost of acquisition and indexed cost of improvement which is linked to the period of holding such asset. In the instant case, the previous owner is the deceased father of the assessee who had initially purchased the property in the year 1967, therefore, the assessee shall be liable to tax on the share of the property, acquired through relinquishment of rights by his mother and sister, as long term capital gains after providing requisite indexation of cost of acquisition and cost of improvement on similar lines as done in case of share of property acquired through inheritance and will be chargeable to tax as long term capital gains. We find that similar view has been taken by the Coordinate Bench in case of Tehmi Jimmy Cooper (supra) wherein the relevant findings read as under: "14. In view of the above decision of the Hon'ble Supreme Court cited (Supra) it has to be held that the transfer of the property by the respective co-owners in favour of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of improvement incurred by the assessee but also the cost of improvement incurred by the previous owner shall be deducted from the total consideration received by the assessee while computing the capital gains under Section 48 of the Act. The question of deducting the cost of improvement incurred by the previous owner is included in determining the period for which the asset was held by the assessee. Therefore, it is reasonable to hold that in the case of an assessee covered under Section 49(1) of the Act, the capital gains liability has to be computed by considering that the assessee held the said asset from the date it was held by the previous owner and the same analogy has also to be applied in determining the indexed cost of acquisition. 22. The object of giving relief to an assessee by allowing indexation is within a view to offset the effect of inflation. As per the CBDT Circular No. 636 dated 31/8/1992 [see 198 ITR 1 (St) a fair method of allowing relief by way of indexation is to link it to the period of holding the asset. The said circular further provides that the cost of acquisition and the cost of improvement have to be inflated to arrive at the indexed cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster Anita Kumari (Rs. 250000/-) and brother Ajay Kumar (Rs. 600,000/-), which was deposited by him in his bank account to the extent of Rs. 708,000/- out of which the ld. AO partly accepted Rs. 278,000/- from brother as withdrawal from bank account and the remaining balance of Rs. 430,000/- was treated as unexplained and added to the total income. It was submitted before the ld. A.O. during the assessment proceedings that the appellant's brother Mr. Ajay Kumar has made withdrawals of Rs. 5,78,000/- from his bank account (para 6.1 of the assessment order) but the ld. A.O. allowed credit only of the withdrawal of Rs. 2,78,000/- (para 6.3 of the assessment order) but didn't allow credit of the withdrawal of Rs. 3,00,000/- made earlier on 08.05.2009. 22. It was further submitted that the assessee had filed affidavits confirming gifts from these relatives but the ld. AO didn't made any inquiry and simply rejected the affidavits by holding that the assessee has not filed any other evidence in support of creditworthiness/genuineness/identity of other persons. Even the ld. AO failed to consider the registered family settlement and relinquishment deed wherein these relatives alongwith the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other which is an existing income tax assessee and in the affidavit so submitted, he has explained that he has gifted the said amount to the assessee for purchase of residential property and the source of such money is income from his business, past savings, etc. Further, he has explained that he has withdrawn an amount of Rs. 5.78 lacs from his bank account on 8.5.2009 and 4.02.2010 and the same has been gifted to the assessee. We therefore find that the assessee has substantially discharged the initial onus cast on him and in absence of any contrary material on record, the source of deposit to the extent of Rs. 5.78 lacs is duly explained. Further, in respect of remaining deposit of Rs. 1.22 lacs, the source of the same has been explained as gift received from assessee's mother and sister supported by their respective affidavits. Given the quantum of amount involved and the fact that household savings by the women in our society is a norm rather than an exception, we believe that the assessee has reasonably discharged the onus cast on him in terms of explaining the nature and source of such deposit as received from his mother and sister. Therefore, the addition so sustained by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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