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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of ld.Commssioner of Income Tax(Appeals)[NFAC] under section 250 of the Income Tax Act, 1961 for the A.Y.2010-11, dated 27.03.2023 emanating from assessment order under section 144 r.w.s 147 of the Income Tax Act, 1961, dated 30.12.2016. The Assessee has raised the following grounds of appeal :
“1. The Learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in not appreciating the fact that the reassessment proceeding initiated U/Sec. 147 r.w.s. 144 of the Act by the Ld.AO is without jurisdiction and void ab initio as the impugned notice issued under section 148 is time-barred as per the proviso to section 147 of the Act.
2 The Ld. CIT(A) has erred in confirming that the assessment order passed by the Ld.AO U/Sec 147 rw.s. 144 of the Act, is not bad in law without appreciating the following important facts: a. The Ld. AO has erred in re-opening the assessment on the same issue without any tangible or fresh material on record b. The re-assessment has been made, even though the original assessment was completed U/Sec. 143(3) of the Act dated 12.03.2013 and therefore, it is clearly on account of change of opinion. c. The assessment order passed is a gross violation of the principles of natural justice.
3 The Learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in dismissing the appellant's appeal and confirming the addition of Rs.19,71,626/- made by the Assessing Officer (AO) by disallowing deduction U/Sec. 54F of the Act without considering the true and correct facts of the case and without appreciating the contention of the appellant that the appellant has purchased the property which is eligible for deduction U/Sec. 54F of the Act.
The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
Submission of ld.AR : 2. Ld.AR filed a factual paper book and case law paper book. Ld.AR submitted that reopening is bad in law as in the case of the assessee during the original assessment proceedings, entire claim of 54F was verified and Assessing Officer has not made any addition in the original assessment order dated 12.03.2013. Ld.AR took us through the original assessment order which is at page 30 to 33 of the paper book. Ld.AR submitted that the Investment was made within the period of one year of sale of the asset; hence Assessee is eligible for exemption.
2.1 Ld.AR submitted that no notice u/s.143(2) was issued in the case of Assessee, though assessee had filed Return of Income within 30 days of the notice u/s.148 of the Act. Ld.AR took us through the page 34 of the paper book.
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the material placed before us.
4.1 In this case, Notice u/s.148 of the Act was issued on 21.03.2016 for A.Y.2010-11. The reasons recorded are as under which are appearing at page no.2 of the assessment order : "The assessment u/s 143(3) was 12.03.2013 wherein the assessed income was Rs.11,97,170/-However during the verification of records it was seen that assessee has claimed a deduction of Rs 19,71,626/-u/s 54F of the Income Tax Act, 1961. Further, the assessee should have purchased the residential property within 2 years from the date of transferring the capital asset. As the assessee had transferred the developments rights of his plot to the builder on 11.03.2010, hence he was supposed to make the reinvestment in residential property before 10.03.2012. However, the assessee has purchased the property on 19.03.2012 which is beyond 2 years from the date of selling the land. But the assessee has not kept the amount in Capital Gain Deposit Account Scheme with any nationalized bank before the due date of filing of return of income which clearly amounts to violation of section 54F of the Income Tax Act, 1961 Thus, I am satisfied that the income to the tune of Rs.19,71,726/-escaped assessment within the meaning of explanation 2(c) to section 147"
4.1 Thus, it can observed that there was an assessment order u/s.143(3) of the Act, for A.Y.2010-11. The Proviso to Section 147 is reproduced as under : “[Income escaping assessment.
If the [Assessing] Officer [has reason to believe ] that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153 , assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned
(hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:”
4.2 Thus, as per Section 147 Proviso, after the expiry of Four(04) Years from the end of the assessment year, re-assessment can be done only if Income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts.
4.3 In this case, there is a finding in the Assessment Order u/s.143(3) of the Act, dated 12.03.2013 that Assessee had filed all necessary documents with reference to capital gain and claim of deduction u/s.54F of the Act. The relevant paragraph 4 of the Assessment order dated 12.03.2013 is reproduced here as under : “4 During the course of scrutiny assessment, the counsel of the assessee was asked to produce the supporting documents pertaining to as the claim of deduction u/s.54F. In this regard, the counsel of the assessee furnished balance-sheet, capital account, sale deeds, agreement copies, receipts for payments and bank account. On verification, the deduction claimed u/s.54F is found to be in order and placed on record. After examination of information furnished, assessment is completed by accepting Income returned.”
We have also perused submission of the assessee filed during the assessment proceedings u/s.143(3) of the Act and observed that assessee had filed copy of development agreement, copy of purchase deed, copies of receipts issued by the New Sahara Developers from whom assessee has purchased new asset. Thus, all the documents were duly filed by the Assessee during the assessment proceedings u/s.143(3) of the Act. In the reasons recorded for reopening, the Assessing Officers has nowhere mentioned about any failure of the assessee.
5.1 In these facts and circumstances of the case, the assumption of jurisdiction u/s.148 r.w.s 147 by the Assessing Officer is bad in law. Consequentially, the notice u/s.148 is bad in law.
In this case, in the order u/s.144 r.w.s 147 of the Act, dated 30.12.2016 the Assessing Officer in Para 5 has stated that since no Return of Income has been filed by the Assessee in response to notice u/s.148 of the Act, no notice u/s.143(2) has been issued. Thus, it is a fact that No Notice u/s.143(2) has been issued. On perusal of the Page No.34 of the paper book, it is observed on 07.04.2016, the Assessee filed a letter stating that the Return of Income filed on 15.02.2012 may be treated as Return in response to notice u/s.148 of the Act. The said letter is reproduced here as under :
6.1 The Assessee also filed copy of the said Income Tax Return. The impugned letter of the assessee has an acknowledgment stamp and signature of the Clerk, of the Office of the DCIT, Circle Latur, dated 07.04.2016. This fact has not been rebutted by the ld.DR for the Revenue.
6.2 Thus, Assessing Officer has erred in stating that No Return of Income has been filed in response to notice u/s.148 of the Act. It is observed that Assessee had filed Return of Income in response to notice u/s.148 of the Act, within 30 days. Therefore, it was mandatory to issue a notice u/s.143(2) of the Act. Admittedly, Notice u/s.143(2) has not been issued.
6.3 The Hon’ble Delhi High Court in the case of Pr.CIT Vs. Shri Jai Shiv Shankar Traders (P.) Ltd., 282 CTR 435 (Del) dated 14.10.2015 has held as under : “19. The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment.
Consequently, there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal is dismissed.”
6.4 The ITAT Delhi Bench in the case of ACIT Vs. P & R Infraprojects Ltd., in has also quashed the Assessment Order wherein, Notice u/s.143(2) was not issued.
Respectfully following the decision of Hon’ble Delhi High Court and ITAT Delhi Bench, we hold that the Assessment Order u/s.144 r.w.s 147 of the Act, dated 30.12.2016 is bad in law as No Notice u/s.143(2) of the Act, was issued. Accordingly, Ground Nos.1 and 2 raised by the Assessee are allowed.
Ground No.3 : 8. In this case, Assessee had sold immoveable asset on 11.03.2010 after claiming cost of acquisition, the Long-Term Capital Gain was of Rs.31,68,798/-. Assessee had purchased a Bungalow from New Sahara Developers and Builders. As per the agreement for purchase dated 11.03.2011 which is at Page No.24 to 26 of the paper book, the assessee has booked a Bungalow with New Sahara Developers and Builders. Assessee had paid Rs.1 lakh on 04.03.2011 and remaining amount was to be paid as per the installment. The remaining amounts were paid on various installments which is mentioned in the assessment order. The Assessing Officer has denied exemption u/s.54F of the Act, only because the Assessee has not deposited the amount in the specified capital gain account before 31.07.2010 i.e.Due Date for filing Return of Income. Thus, in the assessment order, Assessing Officer has accepted that Assessee has purchased a new asset within the time specified under section 54F of the Act.
8.1 The Hon’ble Karnataka High Court in the case of Narayan Ravi Prakash vs ITO [2024] 167 taxmann.com 192 (Karnataka) held as under : Quote, “ In view of the law laid down by the Division Bench to the effect that mere non-deposit of the sale consideration or portion thereof in a designated capital gains account would not deprive or come in the way of the petitioner from claiming exemption from payment of capital gains tax, I am of the view that the impugned reassessment order and notices are contrary to law and the aforesaid judgments of the Court and the same deserves to be quashed. ” Unquote.
8.2 In these facts and circumstances of the case, respectfully following the Hon’ble Karnataka High Court, since the new asset was purchased within one year from date of sale of the original asset, Assessee was eligible for deduction u/s.54F of the Act. Thus, Ground No.3 raised by the Assessee is allowed.
In the result, appeal of the assessee is Allowed. Order pronounced in the open Court on 27 May, 2025.