9911796707
TMI Blog2021 (1) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 143(3) of the Act is without jurisdiction and is merely based on a change of opinion as the appellant had disclosed fully and truly all the material facts at the time of original assessment made u/s 143(3) of the said Act. Hence the reassessment made u/s 147 is bad in law, illegal and non-est. 4. That the Ld. CIT(A) erred in not appreciating the fact that Assessing officer has reopened the case on the basis of audit objection, and therefore the reopening of assessment is illegal, bad-in-law and non-est. 5. Without prejudice to the above, appellant submits the following: (i) The Ld. CIT(A) erred in making observations about other conditions of section 54F which in the facts and circumstances of case and in law was not called for or relevant. (ii) The Ld. CIT(A) erred in confirming the action of the Assessing Officer in restricting exemption u/s 54F to Rs. 57,04,578/- for reinvestment of sale proceeds towards Alibaug Property as against Rs. 5,70,45,771/- claimed by the appellant. The appellant submits that the exemption u/s. 54F of Rs. 5,70,45,771/- has rightly been claimed and ought to have been allowed. (iii) That the Ld. CIT(A) erred in confirming the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scaped assessment within the meaning of sec. 147 of the I.T. Act, 1961. Accordingly, the assessment for A.Y. 2008-09 is reopened by issue of notice u/s 148 of the I.T Act, 1961." 3.1 During the course of re-assessment proceedings, the authorized representative of appellant submitted before the AO vide letter dated 25.03.2014 (i) that the re-opening is based on erroneous facts because the residential house property purchased comprises of 6700 sq. ft. and 400 sq. ft. and not only 400 sq. ft. as mentioned by the AO, (ii) that the assessee had sold long term shares in June 2006 and offered the long term capital gains to tax ; against the capital gains earned, he had claimed deduction u/s 54EC and 54F; the assessee had purchased a residential property at Alibaug amounting to Rs. 5,75,00,000/- on 12.06.2009, within 2 years of the capital gains earned, (iii) that the working of the capital gains was submitted vide letter dated 29.11.2010 during the original assessment proceedings; the copy of the purchase agreement along with details of payment made for acquiring the said property was also submitted, (iv) that as per the documents filed, the assessee had purchased a residential property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned by the AO. It is further stated by the Ld. counsel that during the course of original assessment proceedings, the AO had inquired about the capital gains and also asked for details of exemption claimed u/s 54EC and 54F; the transaction details, agreement for purchase of property, details of property owned, capital gains calculation and note on exemption claimed u/s 54F and 54EC were submitted by the appellant before the AO vide letter dated 29.11.2010. It is explained by the Ld. counsel that the details of exemption claimed u/s 54F were called for and examined by the AO during the original assessment proceedings u/s 143(3), therefore, it is a clear change of opinion on the same set of facts by the AO and it not permissible for him to resort to proceedings u/s 147 of the Act. Elaborating further, it is argued by him that the expression 'material facts' refers only to primary facts and the duty of the assessee is to disclose such primary facts ; no duty is cast on the assessee to indicate or draw attention of the AO to what factual or legal, or other inferences can be drawn from the primary facts disclosed. It is thus stated by him that fresh application of mind by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. long term capital gains other than sale of a residential house. The working of the same is enclosed herewith for your ready reference. Further, the assessee has deposited Rs. 47,30,812/- in the capital gains account scheme on 15-09-2008. The assessee has purchased a residential property at Alibaug worth Rs. 5,75,00,000/- on 12th June, 2009 i.e. within 2 years of the capital gains incurred. The copy of the agreement is enclosed herewith for your ready reference. Also the details of the payment made for acquiring the said property is enclosed herewith. Thus, as per the provisions of section 54F of the Income Tax Act, 1961, our client has rightly invested and purchased a residential property within the prescribed time i.e. 2 years from the transfer date. Thus, our client is eligible for exemption under section 54F of the Act." 7.1 We further notice that as per the purchase agreement of the residential property and Index No. II, which were filed before the AO during the course of original assessment proceedings, the agreement is for the purchase of residential property comprising of 6700 sq. ft. and 400 sq. ft. At page 3 of the said purchase agreement dated 12.06.2009 it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the AO vide letter dated 29.11.2010 received in the office of the AO on the same date. From the above narration of facts, it is evident that the appellant had purchased a residential property i.e. House No. 1057 of 6700 sq. ft. and House No. 1059 of 400 sq. ft. along with the land appurtenant thereto and claimed deduction u/s 54F against the sale of long term shares. 7.4 In Padmasundra Rao v. State of TN 255 ITR 147 (SC), the Constitution Bench of the Hon'ble Supreme Court has held that reliance should not be placed on a decision without discussing how the factual situation fits in with the factual situation of the decision on which reliance is placed. Also it was held therein that circumstantial flexibility, e.g. one additional or different fact, may make a world of difference between conclusions in two cases. Having examined the case laws relied on by the Ld. DR mentioned at para 6 hereinabove, we find that in view of the facts delineated at para 7, 7.1, 7.2 & 7.3 above, the instant case is distinguishable from the decisions relied upon. 7.5 Let us now turn to the enunciation of law on the above matter. In State Bank of India (supra), the regular assessment for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue's query, the Assessing Officer has certainly to form an opinion whether or not the stand taken by the assessee is acceptable. Therefore, it must follow that where queries have been raised during the assessment proceedings and the assessee has responded to the same, then the non-discussion of the same or non-rejection of the response of the assessee, would necessarily mean that the Assessing Officer has formed an opinion accepting the view of the assessee. Thus, an opinion is formed during the regular assessment proceedings, and it bars the Assessing Officer to reopen the same only on account of a different view. Thus, the reasons in support of the impugned notice is the very issue in respect of which the Assessing Officer has raised the query during the original assessment proceedings and the assessee had responded to the same by two letters justifying its stand. The non-rejection of the explanation in the Assessment Order would amount to the Assessing Officer accepting the view of the assessee, thus, taking a view/forming an opinion. Therefore, the reasons in support of the impugned notice to proceed on a mere change of opinion therefore would be completely without jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account books and the documents." His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment." Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them - including particular entries in account books, particular portions of documents and documents, and other evidence, which could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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