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Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
This appeal filed by the assessee is directed against an order dated 16.09.2016 of ld. Commissioner of Income Tax (Appeals)-5, Chennai. The assessee has taken altogether raised 11 grounds of ITA No.2844/Mds/2016 :- 2 -: which grounds No.1, 10 & 11 are general in nature needing no specific adjudication.
Vide its grounds 2 & 3, assessee assails the validity of reassessment.
Facts apropos are that assessee earning income from 3. commission, house property and also having income from other sources had filed return of income for the impugned assessment year disclosing income of �4,66,965/-. During the course of the original assessment procedure, ld. Assessing Officer based on information from AIR that assessee had sold property of value of �40,00,000/- during the relevant previous year, required the assessee to furnish the sale deeds. It seems assessee could not produce the sale deed of the property at Thiruvarur sold by the assessee. Ld. Assessing Officer sent letters to the buyer and the Sub-Registrar, Thiruvarur. It was replied by Sub-Registrar, Thiruvarur and a copy of the sale deed was submitted to the ld. Assessing Officer. It was explained by the assessee that the property was sold for a consideration of �40,00,000/- alongwith four other persons. As per assessee his share was 1/5th came to �8,00,000/-. Assessee also stated that money was deposited in his account with M/s. Karur Vysya Bank. Evidence was also submitted for purchase of the said property. Assessment was ITA No.2844/Mds/2016 :- 3 -: thereafter completed u/s.143(3) of the Income Tax Act, 1961 (in short ‘’the Act’’).
On 31.03.2015 a notice u/s.148 of the Act was issued to the assessee. The reason for issuing notice was that assessee had sold immovable property at Thiruvarur on 25.02.2008 for a sale consideration of �10,00,000/-, but the value for the purpose of stamp duty was �28,89,800/-. As per ld. Assessing Officer the sale consideration mentioned in sale deed was �10,00,000/- and Sec. 50C of the Act required adoption of the value fixed for the purpose of levy of stamp duty for computing long term capital gains. Assessee objected to the reopening stating that ld. Assessing Officer had considered all material facts relating to the computation of capital gains in the original assessment and there were no fresh materials justifying a reopening. However, ld. Assessing Officer was of the opinion that during the original scrutiny assessment, though ld. Assessing Officer had obtained a copy of the sale deed from the Sub- Registrar, applicability of Sec. 50C of the Act was not discussed. Thus according to him, there was escapement of income. He proceeded with the re-assessment and completed it by applying Sec. 50C of the Act and recomputed the long term capital gains.
ITA No.2844/Mds/2016 :- 4 -:
Aggrieved, assessee moved in appeal before ld. Commissioner of Income Tax (Appeals). Assessee challenged the reopening stating that such reopening was done after four years from the end of the impugned assessment year. According to him, ld. Assessing Officer having considered computation of long term capital gains arising from the sale of property in the original proceedings, the re-assessment was bad in law. Ld. Commissioner of Income Tax (Appeals) was not impressed. According to him, Sec. 50C of the Act which was required to be applied was not applied by the Assessing Officer in the original proceedings. Thus according to him, the reopening done was valid.
Now before me, ld. Authorised Representative submitted that by virtue of judgment of Hon’ble Apex Court in the case of CIT vs. Kelvinator India Ltd 320 ITR 561, unless and until, conditions set out in first proviso to sec. 147 were satisfied, a reopening done after four year would not be valid.
Per contra, ld. Departmental Representative strongly supported the orders of the authorities below.
I have considered the rival contentions and perused the 8. orders of the authorities below. For deciding on the validity of ITA No.2844/Mds/2016 :- 5 -: reopening, it would be apposite to refer to Sec. 147 alongwith its first proviso.
‘’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’’.
For a reopening after four years, necessary requirement is that there should be a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment. During the course of original assessment proceedings, ld. Assessing Officer was having with him a copy of the sale deed No.733/2008, for the Thiruvarur property sold by the assessee, based on which capital
ITA No.2844/Mds/2016 :- 6 -: gains was computed. This has been specifically mentioned by ld. Commissioner of Income Tax (Appeals) at para 2 of his order. Ld. Assessing Officer had obtained it from the Sub-Registrar. Ld. Assessing Officer had thereafter considered the explanations of the assessee and completed assessment. This is specifically mentioned by the ld. Assessing Officer in the original assessment order dated 29.10.2010. I cannot say that omission of the ld. Assessing Officer to apply Sec. 50C of the Act was on account of any failure on the part of the assessee. When copy of the registered sale deed was already with the ld. Assessing Officer, and ld. Assessing Officer had considered it in the original assessment, the very same deed cannot be construed as fresh material with ld. Assessing Officer. In my opinion, the reopening could not have resorted for applying Sec. 50C of the Act, since it was based on a change of opinion. Judgment of hon’ble Apex Court in the case of Kelvinator India Ltd (supra) clearly lay down that availability of fresh tangible material is a fundamental requirement when a reopening is done after four years from the end of assessment year. I am of the opinion that reopening done for the impugned assessment year was invalid. The re-assessment stands setaside.
Since appeal of the assessee is allowed on legal grounds, other
ITA No.2844/Mds/2016 :- 7 -: grounds relating to merits of the addition are not adjudicated.
In the result, appeal of the assessee stands allowed.
Order pronounced on Tuesday, the 7th day of March , 2017, at Chennai.