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TMI Blog2020 (5) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 54F of the Act was rejected. Once the AO has brought on record the facts and reasons to form the belief that income is assessable to tax on account of capital gain then the quantum of the income finally computed is not a material aspect at the stage of initiation of proceedings u/s 147/148 of the Act. Therefore, the objection raised by the assessee regarding the correct amount of capital gain as recorded in the reasons cannot be a ground for quashing the proceedings u/s 147/148 of the Act when the AO has shown the relevance between the reasons recorded and the formation of belief on the subject matter and the source of income which has escaped assessment. Therefore, the decisions relied by the ld.AR of the assessee are not applicable in the facts of the present case. When the reasons are itself self-explanatory and speaking the link between the material and the formation of belief then the approving authority i.e. Pr. CIT is not required further to supplement the reasons to believe as recorded by the AO. Hence, in view of the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the ld. CIT(A). - Decided against assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case the ld. CIT(A) erred in law and fact in confirming the addition of ₹ 25,69,606/- (₹ 26,27,403 minus relief granted ₹ 57,797) as made by the AO on account of Long Term Capital Gain ( LTCG' for short) as against ₹ 1,93,215/- declared by the assessee by rejecting the deduction u/s 54F of the Act of ₹ 23,76,391/- as claimed by the assessee. The rejection so made and confirmed by the ld. CIT(A) being totally contrary to the provisions of law and facts of the case, the appellant be held entitled to the deduction u/s 54F as claimed. 2.1 The Ground No. 1 and 2 of the assessee are regarding the validity of initiation of proceedings u/s 147/148 of the Act. 2.2 The assessee is an individual and filed his return of income on 24-03-2010. Thereafter the AO received information about the transfer of immovable properties by the assessee during the financial year relevant to Assessment Year under consideration. The AO conducted an enquiry by issuing notice u/s 133(6) of the Act calling for certain information from the assessee. Thereafter the AO issued notice u/s 148 of the Act on 30-03- 2016 after recording the reasons that income on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reasons recorded by the are based on incorrect and incomplete facts then reopening is not valid and liable to be quashed. Taking the support of the decision, the ld.AR of the assessee pleaded that factually the reasons recorded by the AO are incorrect and, therefore, the reopening is not valid. 2.4 On the other hand, the ld. DR has submitted that the assessee has transferred these two plots of lands vide registered agreement and also shown sale consideration in cash except ₹ 1.00 lac. Therefore, when the AO received the information from the DIT (I CI) that the assessee had sold the immovable properties situated at Plot No. N-70(83), Hanuman Vatika-II, Heerapura, Ajmer Road, Jaipur and Plot No.N-69(76), Hanuman Vatika-II, Heerapura, Ajmer Road, Jaipur on 30-05-2008 to one Shri Jai Prakash S/o Shri Norang Lal and Sub-Registrar has adopted the value of sale consideration of the properties at ₹ 26,57,797/-. The AO after taking prior approval conducted an enquiry by issuing notice u/s 133(6) of the Act. The AO has clearly stated in the reasons that the assessee filed reply but no evidence was filed for claiming deduction u/s 54F of the Act of ₹ 24,04,500/-. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice, it is seen that the assessee has filed his return of income on 24-03-2010. The assessee has taken indexed cost and claimed deduction u/s 54F of ₹ 24,04,500/- for which no evidence are furnished. Therefore, the taxability of above transactions could not be ascertained. In view of above, I have reason to believe that the income to the extent of ₹ 26,57,797/- has escaped assessment within the meaning of Section 147 of the I.T. Act, 1961. Therefore, it is a fit case for issuance of notice u/s 148 of I.T. Act, 1961. In view of the above reasons, it is requested that necessary approval as laid down under sub section 2(2) of the Section 151 of the Act, 1961 may kindly be accorded. It is manifest from the reasons recorded by the AO that the AO had received information from DIT (I CI) regarding transfer of the immovable properties in question by the assessee. Further as per the said information, the sale consideration was given as Nil whereas the Sub- Registrar has adopted the value for stamp duty purposes at ₹ 26,57,797/-. These facts show that no stamp duty was paid by the parties at the time of this transfer because the agreement to sale was not registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the reasons recorded by the AO for initiating proceedings u/s 147 of the Act, it has been stated that the appellant has claimed deduction u/s 54F of the Act at ₹ 23,76,391/- in its return of income filed on 24.03.2010, for which no evidence was furnished even in its reply to notice issued by the AO u/s 133(6) of the Act and therefore, the AO had reason to believe that income has escaped assessment.I do not find any merit in the submissions of the appellant as reproduced above. It is to be noted that at the time of initiation of proceedings u/s 147 of the Act, the AO is not required to prove that the income had escaped assessment and it is sufficient that the Assessing Officer had cause or justification to know or suppose that income had escaped assessment. (ii) It may be mentioned that in the case of Shumana Sen Vs CIT, reported in 2012-TIOL-895-HC-DEL-IT, it was held by the Hon'ble High Court of Delhi that: it is well-settled that the reasons recorded u/s 148(2) should be based on credible material which should have a live link or nexus with the belief that there was escapement of income. At the stage of recording the reasons and issuing notice u/s 148, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant company has received and utilised the share application money received from bogus sources lacking genuineness, creditworthiness, genuine identity, which fall within the purview of section 68. [Para 14] It is true that the reasons recorded or the material available on record must have nexus to the subjective opinion formed by the Assessing Officer regarding the escapement of the income but then, while recording the reasons for belief formed, the Assessing Officer is not required to finally ascertain the factum of escapement of the tax and it is sufficient that the Assessing Officer had cause or justification to know or suppose that income had escaped assessment. It is also well settled the sufficiency and adequacy of the reasons which have led to formation of a belief by the Assessing Officer that the income has escaped the assessment cannot be examined by the Court. [Para 16] (iv) It may be mentioned that the Courts cannot look into the sufficiency of the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. Reliance is placed on the decision of Hon'ble Apex Court in the case of Raymond Woollen Mills Ltd. Vs ITO [1999] 236 ITR 34 (SC), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is assessable to tax on account of capital gain then the quantum of the income finally computed is not a material aspect at the stage of initiation of proceedings u/s 147/148 of the Act. Therefore, the objection raised by the assessee regarding the correct amount of capital gain as recorded in the reasons cannot be a ground for quashing the proceedings u/s 147/148 of the Act when the AO has shown the relevance between the reasons recorded and the formation of belief on the subject matter and the source of income which has escaped assessment. Therefore, the decisions relied by the ld.AR of the assessee are not applicable in the facts of the present case. When the reasons are itself self-explanatory and speaking the link between the material and the formation of belief then the approving authority i.e. Pr. CIT is not required further to supplement the reasons to believe as recorded by the AO. Hence, in view of the facts and circumstances of the case, we do not find any error or illegality in the impugned order of the ld. CIT(A). Thus Ground No. 1 and 2 of the assessee are dismissed. 3.1 During the course of hearing, the ld.AR of the assessee has not pressed the Ground No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee submitted that when the assessee has invested the money in the construction of house then the deduction u/s 54F is allowable to the assessee. In support of his contentions, the ld.AR of the assessee relied on the following decisisons:- (i) Shri Ganesh Chawla vs ACIT (ITA No 452/JP/2017 dated 25-01-2018), ITAT Jaipur Bench (ii) Smt. Kalavathy Sundaram vs ITO (ITA No.3187/CHNY/2016 dated 07-09-2018), ITAT Chennai Bench The ld.AR of the assessee also referred to the additional evidences which has been filed before this Tribunal during the appellate proceedings and submitted that the said evidences may be admitted under Rule 29 of ITAT Rules, 1963. These additional evidences are regarding the ownership of the assessee as well as expenditure incurred by the assessee for construction of the house. 4.3 On the other hand, the ld. DR has submitted that the AO has duly examined the Architect as well as father of the assessee and noted that residential house in question is not owned by the assessee but it is the property of assessee's father who has entered into a MOU with the Contractor / Architect for construction of the house. Therefore, the assessee has not produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that his father Shri Murari Lal Khairari had inherited a residential house situated at 116/1, Hari Marg, Civil Lines, Jaipur from his father. The appellant and his father entered into a MOU on 20.10.2007 for construction of a residential house at 116/1, Hari Marg, Civil Lines, Jaipur after demolishing the existing house and as per the MOU, the ground and first floor were to be constructed by the father of the appellant and second and third floor were to be constructed by the appellant. It was submitted by the appellant that it has constructed second and third floor with his own funds and through the above referred MOU, these floors belong solely and exclusively to the appellant and in the absence of a registered deed, the assessee at the most could not become a registered legal owner but in any case, it was a beneficial owner of the second and third floor. Shri M.L. Khairari, father of the appellant, has obtained an estimate dated 12.10.2007 from the Architect, Shri Raghav Choudhary, who estimated the cost of construction of the house (consisting of ground, first, second and third floor) at ₹ 53,50,000/-. Shri Raghav has constructed the house including the second and third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not show the dates on which these photographs were taken. Therefore, these additional evidences filed by the appellant are of no use to it. Shri Raghav Choudhary has filed the details of amount received for the period 02.10.2007 to 04.08.2010 wherein, the total amount was shown at ₹ 22,40,000/- only which could be taken as the payments made by Shri M.L. Khairari for whom the house was constructed by Shri Raghav Choudhary. The appellant has failed to bring on record any evidence which may establish that it has constructed the second and third floor at 1/116, Hari Marg, Jaipur. It may be mentioned that the onus was on the appellant to prove the deduction claimed u/s 54F of the Act which, it failed miserably. In fact, besides the above receipt of ₹ 1 lakh claimed to be issued by Shri Raghav Choudhary, no other receipt for making the payment on earlier occasions was furnished by the appellant. Therefore, in view of the totality of facts and circumstances of the case, it is held that the AO was justified in not allowing deduction u/s 54F of the Act and hence, the action of the AO is hereby upheld. Even in the additional evidences which were sought to be filed by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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