ITO, HISAR vs. SH. SANT SINGH PROP., HISAR

The appeal is preferred by the Revenue against the order dated 03.02.2017 of Commissioner of Income Tax (Appeals)-Hisar (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal no.

2547/Del/2017 269/HSR/2014-15 arising out of an appeal before it against the order dated 24.02.2015 passed u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ITO, Ward-4, Hisar (hereinafter referred as the Ld. AO).

2547/Del/2017 validity of exercising jurisdiction u/s 147 and ld. CIT(A) after examining the records concluded as below :

“This is not substantiated by facts as the appellant has proved as under :- a) Rs 5500000/- has been given as advance to Sh. Balwant Singh for purchase of land is duly shown in the Income Tax return computation. In the Annotated report sent by learned Dy. Commissioner of Income Tax on 13.08.2012 it is clearly mentioned in the reply submitted by learned Dy. Commissioner of Income Tax that assessee Has given advance of Rs 5500000/- to Sh. Balwant Singh s/o Pehlad on 06.08.2008 after withdrawing Rs 50,00,000.00 from cash Book. b) Copy of date wise capital A/c of the assessee clearly depicts Rs 5500000/- given as advance to Sh. Balwant Singh had been submitted and placed on file. c) Copy of bank certificates for deposit Rs 22000000/- in capital gain a/c in PNB clearly shown in computation of income and Bank Certificate was submitted at the time assessment. d) This fact is also supported by the office note of Learned ACIT and from the notice issued under 154 of the Income Tax Act in which Capital Gain account No. are clearly mentioned. e) Before disposing of objections to the initiation of proceedings u/s 147, assessee again submitted copy of capital gain a/c in response to notice clearly mentioning the fact that this has been submitted at the time of assessment and duly considered by AO at the time of assessment. That in para no. 5 Learned AO has stated that no order u/s 154 was passed by the department. In this regard it is submitted that assessee was issued notice u/s 154 and after considering clarification given by the assessee, it was clear to AO that all the information is already on file and there is no mistake in the order passed by the AO on 23.12.2010, so there is no need to pass any rectification u/s 154. This stand taken by the AO clearly shown that there was no mistake in the order passed by AO on 23.12.2010 and so there was no need to pass the proposed rectification order u/s 154. In Para 3.2 the Learned AO has mentioned that in the sale deed there is no specific mention of advance received by Sh. Balwant Singh and there is no mention of adjustment of Rs_50,00,000.00. In this regard it is submitted that in the sale deed it is clearly mentioned that assessee had already received the full payment at home and now nothing is due.

In may view therefore, the proceedings u/s 147 were not justified and this is not a case where new material was found or came to the notice of the AO. I, therefore, quash the order passed u/s 143(3)/147 in this case.”

2. On the facts and in the circumstances of the case, the Ld. CIT (Appeal) has erred in accepting the version of assessee filed ’ before the Ld. CIT(A) without appreciating the facts that the facts has been discussed in length in assessment order itself.

3. The A. 0 has rightly disallowed the deduction claimed u/s 54 B of the Income Tax Act, 1961 and the facts has not been appreciated by the Ld. CIT (Appeal) while deciding the appeal.

4. On the facts and in the circumstances of the case, the Ld. CIT (Appeal) has erred in quashing the order u/s 143(3)/ 147 of the Income Tax Act. 1961 without appreciating the provisions of section 54B of the Income Tax Act, 1961 which are discussed in the assessment order itself and rightly been disallowed.

5. On the facts and in the circumstances of the case, the Ld. CIT (Appeal ) has erred in quashing the order u/s 143(3)/ 147 of the Income Tax Act. 1961 without appreciating that the case of assessee is not fit to avail exemption in view of the provisions of section 54B of the Income Tax Act, 1961 which are discussed in the assessment order itself and disallowance has rightly been made.

6. On the facts and in the circumstances of the case, the Ld. CIT (Appeal) has erred in quashing the order u/s 143(3)/ 147 of the Income Tax Act. 1961 without appreciating that the assessee has not deposited unutilized funds into capital gain scheme which is not invested in purchasing the new assest within stipulated time and has also not provided the proof during the assessment proceedings. The Bank has also not provided any proof in this regard.

8. The CIT(A) has failed to appreciate that the AO in this case has reopened the case after following the due procedure/ provisions of the Income Tax Act, 1961.

9. The Appellant craves leave to add, amend or modify the grounds of appeal subsequently, before the appeal is disposed off.”

4.1 The assessee has also filed cross objections supporting the findings of ld. CIT(A).

2547/Del/2017

7. Giving thoughtful consideration to the matter on record and submissions it comes up that in the computation of income filed at the time of original assessment available at page no. 100-102 of the paper book, the assessee had given the detail of the capital gains calculation. As the reasons of reopening available on record and also examined from the assessment record made available by the ld. DR, are considered, it is apparent that the failure has been attributed to the assessee for not disclosing fully and truly all material facts. Ld. CIT(A) during the first appellate proceedings observed that the issue has arisen only out of audit objections and in regard to which even there was an office note from the Additional CIT wherein nothing adverse was noticed so requiring no action. It appears that merely on the basis of borrowed satisfaction the reopening was initiated.