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TMI Blog2023 (6) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... he property purchased has been held for a period beyond three years in terms of second proviso to Section 48, the words, 'cost of acquisition' is to be substituted by the words, 'indexed cost of acquisition'. This material is pointed out in the reply at Annexure-'F1' furnished to the show cause notice, which ought to be taken note of prior to the issuance of notice under Section 148A of I.T. Act. Clearly when the procedure is followed culminating in an order passed under Section 148(A)(d), the Authority is required to apply its mind and consider the reply of the assessee and pass a considered order. In the present case, the respondent Authority has not applied its mind to the reply filed, nor noticed the legal position while deciding as to the application of the extended period under Section 149(1)(b) of the I.T. Act. In the present case, the words found in Section 149 which is 'income chargeable to tax' must be read in terms of 'income' as arising out of the 'Capital Gains' as provided under Section 48 and this is the only manner of understanding the words, 'income chargeable to tax under Section 149(1)(b) of I.T. Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .55,77,700/- and also furnishing details of the sale deed by virtue of which the petitioner has purchased the property on 24.09.2011 for consideration of Rs.15,91,735/- (cost of acquisition). It was submitted that since the date of acquisition was in the year 2011 and the sale was in the year 2015 and therefore the long term capital gain would be as follows: Long term capital gain of Sale of Site Date of acquisition 24/09/2011 Date of transfer 22/12/2015 Acquisition details A - Sale consideration 55,77,700 B - Cost Of Acquisition 15,91735 Indexed Cost of Acquisition 1591735*1081/785 21,91,931 Taxable Capital gain (A-B) 33,85,769 4. The 'Capital Gain', according to the petitioner in terms of the reply made out is Rs.33,85,769/-. It was submitted that, as the income escaping assessment did not exceed rupees fifty lakh in terms of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of I.T. Act. 9. Learned counsel appearing for the Revenue has also relied upon the memorandum explaining the provisions in the Finance Bill, 2021 to justify such interpretation. 10. Heard both sides. 11. What needs to be noted in the present case is that the income stated to have escaped assessment which has been taken note of seeking to re-open the assessment for the Assessment Year 2016-2017 is the sale transaction with Sri D.V. Venkatachalapathi. The time prescribed for such reopening of assessment by virtue of proceedings under Section 148 is provided under Section 149. Relevant extract of Section 149 reads as follows:- 149.(1) No notice under section 148 shall be issued for the relevant assessment year.- (a) if three years have elapsed from the end of the relevant assessment year; unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income chargeable to tax, represented in the form of - (i) an asset; (ii) expenditure in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issuance of notice u/s 148. 14. It is clear that the notice is issued in the context of sale consideration from sale of immoveable property for an amount of Rs.55,77,700/-. As noted above, the reply to the show cause notice, copy of which is enclosed at Annexure-'F1' would reveal the details of sale consideration and the cost of acquisition would be the indexed cost of acquisition in light of the sale leads to accrual of long term capital gain. 15. In the present case on hand, clearly, the income that has escaped assessment is the proceeds from the sale as made out from perusal of the Annexure to the show cause notice at Annexure-'C'. In case of income arising from the sale of property which may fall within the purview of Section 48 so as to amount to capital gains, it is relevant to notice that Section 48 provides for mode of calculation of income chargeable under the head 'Capital Gains'. Section 48 reads as follows:- 48. The income chargeable under the head Capital gains shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in ..... 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