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TMI Blog2024 (9) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities at the time of framing assessment order under Section 143 (3) of the Act has already considered the aspect of allowability of claim of deduction under Sections 54B and 54F of the Act. Thus, the respondent authorities cannot reopen the reassessment on the ground that the then Assessing Officer has not inquired properly and/or adopted casual approach. In our view, issuance of notice under Section 148 of the Act should be based on the reasons to believe which should have direct nexus with any new information and/ or tangible material which has come to the knowledge of the respondent authorities based on assessment proceedings. The revenue authorities, cannot under the guise of reasons to believe permit to reopen the case on the ground that the then AO has not properly inquired in the proceedings. Decided in favour of assessee. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance: For the Petitioner : Mr Tushar Hemani, Senior Advocate With Ms Vaibhavi K Parikh (3238). For the Respondent(s) No. 1: Mr Karan Sanghnai For Mrs Kalpana K Raval (1046). For the Respondent(s) No. 2: Notice Served. ORAL ORDER (PER : HONOURABLE MR. JUSTICE NIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed correctly . 2.6 The then Assessing Officer vide notice dated 16.10.2017 issued under Section 142 (1) of the Act, called upon the petitioner to furnish various details and evidence as under : (1) Complete ITR (income tax return) along with computation of income (point No. ii ) (2) Necessary documentary evidences such as (I) copy of sale deed, (ii) cost of acquisition, mode and date of payment, source thereof along with supporting documents and (iii) copy of relevant account from books of accounts (Point No. v ). 2.7 The petitioner vide letter dated 9.11.2017 furnished various details and evidence, as under : (1) Acknowledgment of return of income along with computation of income w.r.t. original return as well as revised return (Point No.4a); (2) Bank statements for the period from 01.04.12 to 31.03.15 i.e. whole period of receipt of sale proceedings (Point No.4b); (3) Conveyance deeds with respect to the following transactions (Point No.4c): (a) Agricultural land sold during the year under consideration; (b) Residential bungalow acquired out of sale proceeds thereof (in respect of which deduction under section 54F of the Act has been claimed); (c) Agricultural lands acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1) of Section 142 or Section 148 and (ii) failure to disclose fully and truly all material facts necessary for the assessment for the particular assessment year. Learned Senior Advocate, therefore, submitted that neither of the conditions are fulfilled which enable the authority to reopen the assessment beyond the period of 4 years. He, therefore, urged this Court to allow the petition only on the ground that the impugned notice is barred by limitation. (2) Learned Senior Advocate further submitted that the assessment sought to be reopened on mere change of opinion. He submitted that to assume the jurisdiction under Section 148 of the Act, the Assessing Officer has to have reason to believe that any income chargeable to tax has escaped assessment. It was further submitted that the Assessing Officer must have reasons to believe and secondly, such reason must be that of an honest and reasonable person based on reasonable ground and not on mere change of opinion. Learned Senior Advocate further submitted that such reason to believe must have direct nexus with new and/or tangible material or information that has come in possession of the respondent after framing of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is only required to form an opinion before he proceeds to issue a notice. Accordingly, learned advocate Mr. Karan Sanghani submitted that having recorded the reasons, the Assessing Officer has already formed an opinion and belief that the provision of clause (c) of Explanation-2 to Section 147 of the Act is already attracted and, therefore, reopening sought is justified. He further submitted that plain reading of reasons recorded would suggest that the petitioner had sold the agricultural land on 21.4.2014 and the petitioner has claimed deduction of Rs. 68,39,149/- for purchase of new house under Section 54F of the Act and deduction of Rs. 65,95,762/- for purchase of new agricultural land under Section 54B of the Act. On perusal of the purchase deed, it seems that the house was purchased on 2.3.2013 and similarly, the agricultural land was purchased on 9.10.2013. Therefore, the claim under Sections 54B and 54F of the Act is not justified and excess deduction was claimed and allowed. (3) Learned advocate Mr. Karan Sanghani further submitted that the concerned Assessing Officer, during the original assessment proceedings, adopted the casual approach in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- on 21.04.2014 and his share therein was Rs. 1,39,00,000/- The assessee has claimed deduction of Rs. 68,39,149/- for purchase of new house u/s. 54F and deduction of Rs. 65,95,762/- for purchase of new agriculture land u/s. 548 of the Act. One of the primary conditions for availing benefits under section 54F of the Act is that new property (residential house) should be purchased within a period of 1 year before or 2 years after the date of transfer or new property to be constructed within a period of three years after the date of transfer. Similarly, one of the primary conditions for availing benefits under section 54B of the Act is that within a period of two years from the date of transfer of old land the taxpayer should acquire another agricultural land. However, for the reasons/findings depicted in the forthcoming paragraphs, these conditions were not found fulfilled; therefore, deduction claimed under section 54F 54B of the Act was irregular and requires to be disallowed. 4.2 To avail the benefit of section 54F of the Act, investment to purchase a new residential house must be made within a period of 1 year before the date of transfer of old asset. However, in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied to claim the benefit of section 54B of the I.T. Act, 1961: * The benefit of section 54B is available only to an individual or a HUF * The asset transferred should be agricultural land. The land may be a long-term capital asset or short-term capital asset * The agricultural land should be used by the individual or his parents for agricultural purpose at least for a period of two years immediately preceding the date of transfer. In case of HUF the land should be used by any member of HUF. * Within a period of two years from the date of transfer of old land the taxpayer should acquire another agricultural land. However, in the instant case, as depicted in the foregoing paragraph, the assessee had not fulfilled one of the required conditions. Therefore, deduction claimed under section 54F 54B of the Act is found irregular and same is required to be disallowed. 6. Basis of forming reason to believe and details of escapement of income: As discussed in the foregoing paragraphs, (i) For claiming deduction u/s. 54F of the Act, investment to purchase a new residential house must be made within a period of 1 year before the date of transfer of old asset. However, in the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural lands for claiming deduction under Section 54B of the Act out of which 2 agricultural lands have been purchased prior to the date of transfer of original asset and thus, deduction of Rs. 52,38,149/- claimed under Section 54B of the Act is not allowable. 9. Keeping in mind the aforesaid, if the facts of the present case are considered, it is an admitted position of fact that the case of the petitioner was selected for scrutiny and notice under Section 142 (1) of the Act also issued upon the petitioner and the petitioner also furnished various details and evidence as under : (1) Complete ITR (income tax return) along with computation of income (point No. ii ) (2) Necessary documentary evidences such as (I) copy of sale deed, (ii) cost of acquisition, mode and date of payment, source thereof along with supporting documents and (iii) copy of relevant account from books of accounts (Point No. v ). 10. It further appears that in response to the aforesaid notice, the petitioner also submitted series of evidence as under : (1) Acknowledgment of return of income along with computation of income w.r.t. original return as well as revised return (Point No.4a); (2) Bank statements for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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