9911796707
TMI Blog1990 (4) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... t facts are that the original assessment in this case was completed on 14-9-1978 determining the total income at Rs. 1,56,718. In computing the aforesaid income exemption u/s. 54 was allowed to the tune of Rs. 6,26,868 in respect of the sale of a house property located at Borsali Apartments and the investment of the sale proceeds in a new residential property. Subsequently it came to the knowledge of the department that a part of the newly constructed residential property had been gifted away on 3-1-1976 and the same had been reflected in a gift-tax return filed on 30-6-76. According to the ITO the assessee should have filed a revised return of income recomputing the claim u/s. 54 vis-a-vis the value of the property that stood gifted. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-6-76. This plea was not accepted by the ITO as according to him the gift-tax proceedings were separate from the income-tax proceedings and a true and proper disclosure was required to be made in the income-tax return. The ITO also observed that the assessee did not withdraw the deduction u/s. 54 proportionate to the value of the gifted property by way of a revised return. In this view of the matter the ITO held that the provisions of section 147(a) were fully applicable and an excess deduction of Rs. 1,20,624 u/s. 54 was required to be withdrawn. He thereafter proceeded to recompute the assessee's taxable income. 3. The CIT (Appeals) confirmed the action of the ITO on both counts, namely, the reopening aspect as also the withdrawal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (4) CWT v. Ramniklal D. Mehta [1982] 136 ITR 729 (Ori.) (5) Chhotalal Vashram v. ITO [1984] 19 TTJ (Ahd.) 287 5. The learned D.R. on the other hand strongly supported the orders of the tax authorities. According to him the assessee had not cared to state the relevant facts at the time of filing the original as well as the two revised returns but proceeded to do so only at the belated stage of the proceedings under section 144B of the Act. In this connection he invited our attention to the copies of the various returns appended on the paper book filed by the assessee's counsel. The learned D.R. also supported the viewpoint expressed by the Income-tax officer to the effect that the filing of the gift-tax return did not tantamount to a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case. It is an accepted fact between the parties that the assessee at the draft assessment stage did indicate in categorical terms that she had gifted away a part of the property the value thereof being Rs. 1,20,624. It would be worthwhile reproducing the following extract from the letter dated 5-4-78 addressed to the ITO after the receipt of the draft assessment order : "It may be pointed out that the portion of land with small construction thereon has been gifted on 3-1-1976 (as per Gift-tax return filed on 30-6-76) out of the total land admeasuring 3569 sq. yds. The figures of gifted property in respect of cost of land and cost of construction are as under : Gifted Property Land Value Construction cost of land gifted ----- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We accordingly strike down the proceedings initiated by the ITO under the aforesaid section. 9. On the merits of the case we are of the view that even if for the time being we presume that the proceedings u/s. 147(a) were validly initiated still nothing would be required to be withdrawn from the exemption under section 54 granted at the time of the original assessment. This would be so in view of the specific provisions of section 54(1)(i)/(ii) which envisage a situation where the newly acquired asset is transferred within a period of three years of its purchase or construction. This section speaks of a capital gain to be computed in the year in which the newly acquired asset is transferred. It is an accepted fact that a part of the newly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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