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TMI Blog2021 (9) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... n if at all raised for reopening of assessment is to be construed as change of opinion and cannot be considered as new materials for the purpose of reopening of assessment. In the present case, admittedly the assessee had submitted all the documents pertaining to the purchase of the three properties and all those documents were placed before the Assessing Officer and the Assessing Officer considered all those three documents and formed an opinion that, the petitioner / assessee is eligible to grant exemption under Section 54F of the Income Tax Act only in respect of one property. Exemption under Section 54F is required to be withdrawn for violation of condition under sub-section (2) of Section 54F - AO during the relevant point of time, when this issue was considered was very much aware of the fact regarding the implication of sub-section (2) of Section 54F and by considering all those aspects, he granted exemption for only one property alone. This being the factum, the Assessing Officer clearly formed an opinion for the purpose of grant of exemption under Section 54F while passing the original assessment order and now the reasons furnished for reopening of assessment would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e placed by the assessee and confirmed the order of assessment passed by the original Assessing Authority and reversed the order passed by the Commissioner of Income Tax (Appeals). Against the said order of Income Tax Appellate Tribunal, the petitioner filed T.C.A. No. 71 of 2016 before this Court and an interim order was granted by this Court on 09.03.2016. The Tax Case Appeal is pending. However, it is brought to the notice of this Court that during the pendency of the Tax Case Appeal, the petitioner has opted Samadhanam scheme and settled the issues and therefore, the assessment order dated 22.12.2011 became final. 3. The learned counsel for the petitioner reiterated that all the documents pertaining to the purchase of the properties made by the petitioner / assessee were produced before the Assessing Officer at the first instance more so along with the return of income. Further clarifications sought for by the Assessing Officer were also furnished. The Assessing Officer elaborately discussed the transactions and the purchase of the properties made by the petitioner and made a finding in the assessment order itself. Based on the finding, the Assessing Officer granted exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act and the said informations and materials were not considered by the original Assessing Authority at the time of passing the final assessment order under Section 143(3) of the Act. If at all, the exemption under Section 54F of the Act is required to be withdrawn for violation of the condition under sub-section (2) of Section 54F of the Act, the assessee has to pay an additional tax and the additional tax is also calculated as ₹ 46,20,782/-. 6. In view of the fact that these aspects were not considered by the Assessing Officer, the respondent has reopened the assessment. 7. In support of the said contentions, the learned Senior Standing counsel relied on the Judgment of the Hon'ble Supreme Court of India in the case of Indi-Aden Salt Manufacturing and Trading Company Private Limited v. Commissioner of Income Tax reported in (1986) 25 Taxman 356 (SC) wherein, the Apex Court made the following observations: 7. ..... In respect of the material failure, the omission to disclose may be deliberate or inadvertent. That was immaterial. But if there is omission to disclose material facts, then, subject to the other conditions, jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 of the Act. Explanation 2 to Section 147 enumerates various circumstances wherein the cases are to be treated as deemed cases for reopening of assessment. However, in the case where reopening of assessment is made beyond the period of four years but within six years it is mandatory that the conditions stipulated under proviso clause to Section 147 of the Act is to be complied with. 11. In the present case, the respondent raised a ground that the petitioner / assessee had not produced all relevant materials fully and truly which provided cause for reopening of assessment. In this regard, this Court has to examine the materials produced as well as the reasons furnished for reopening of assessment. 12. The return of income for the assessment year 2009-10 filed by the assessee reveals that deduction under Section 54F was sought for. Long term capital gain was informed and deductions were also sought for under the provisions of the Income Tax Act. It was not in dispute with reference to the capital gain claimed as well as the informations provided seeking exemption under Section 54F of the Act. 13. A reading of the assessment order would clearly reveal that the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 54F as reported in 184 ITR (Statue) submits that provision is intended to benefit an assessee that invests in acquisition of residential house. According to the assessee, this parameter is satisfied in this case. Therefore, interpretation given by the Revenue that assessee purchased several pieces of land by way of separate sale deeds and therefore not eligible for deduction under section 54F of the Act on the entire land is hyper technical and contrary to the intention of the provision. No doubt provision is intended to benefit the assessee that invests in acquisition of residential house. However, in this case the intention of the assessee appears to be not to purchase residential house but to develop a resort. This is clearly evident from the enquiry report submitted by the Inspector of Income Tax on 27.05.2013 which read as under:- As directed, I have conducted a site inspection on 21.05.2013 at the landed property purchased by Smt. Janaki Mohan, Plot No.490, 4th South Cross Street, Kapaleeswara Nagar, Neelankarai, Chennai (PAN : AAGPJ7764C) from Yogyaveettil family at Muhamma on 04.04.2009 and the report thereupon is submitted as under:- The property in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rief in the light of questionnaire envisaged in the letter of Hon.ITAT Chennai are as under:- 1. The very intention behind deduction u/s.54F is fully defeated as the assessee neither constructed any building in the land nor existing buildings were useful for residential purpose. Moreover, the intension of the assessee in purchasing the property is to start a resort thereon which is a commercial / business activity. The assessee has been keeping the land idle from the date of purchase till last month. 2. With regard to the investment in property after purchase. a) three side of the property is fenced with temporary compound wall ( metal sheet) b) two medium type gate fixed. c) Three metre wide approach road from the opening of the property about 150 mtrs is paved with graved red earth. d) Ground leveling work in about 3.5 acre land which is being carried out. 3. The purchaser never used this property for residential or for business / commercial purpose. 4. After the approval by the Alappuzha Chief town planner, the Grama Panchayat, Muhamma has given permission for construction of villas in the resort on 07.01.2011. This has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact in contention here is the eligibility of claim u/s 54F of the IT Act. Even in the face of the claim of the assessee that there was no failure on her part to disclose fully and truly all material facts regarding the claim u/s. 54F, the specific facts related to the acquiring of total three houses on the same date out of the sale consideration is found being missed scrutiny and hence escaped assessment. As purchasing/acquiring more than one residential house on the same date out of the sale consideration is against the principle and violation of the conditions prescribed under sub section (2) of Sec.54F of the IT ACt, the reassessment to scrutinize this crucial criteria whether to allow exemption or withdraw the claim of 54F is justified and permissible by the law. Further for the benefit of the assessee, it is worth to discuss the relevant section 147 of the IT Act which speaks about the Income Escape Assessment is having it's sub section (c) under explanation 2 where it empowers the assessing officer to consider a few cases to be deemed cases where income chargeable to tax has escaped assessment. 19. The objections in detail filed by the petitioner regarding filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, in the present case, admittedly the assessee had submitted all the documents pertaining to the purchase of the three properties and all those documents were placed before the Assessing Officer and the Assessing Officer considered all those three documents and formed an opinion that, the petitioner / assessee is eligible to grant exemption under Section 54F of the Income Tax Act only in respect of one property. 23. While so, now the reopening is made based on the reasoning that the exemption under Section 54F is required to be withdrawn for violation of condition under sub-section (2) of Section 54F. The Assessing Officer during the relevant point of time, when this issue was considered was very much aware of the fact regarding the implication of sub-section (2) of Section 54F and by considering all those aspects, he granted exemption for only one property alone. This being the factum, the Assessing Officer clearly formed an opinion for the purpose of grant of exemption under Section 54F while passing the original assessment order and now the reasons furnished for reopening of assessment would reveal that they are taking a different opinion on the same set of facts. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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