Nonchalance reopening action on inexplicable reasons (without application of mind) quashed by delhi ITAT as reflected from manner of recording of reasons (Delhi high court Suren 357 ITR 24 applied) and Fresh/external material must to reopen a case otherwise action would become impermissible review; Reasons cannot be improved says Allahabad high court and Capital gains section 54/54f exemption liberal and wider interpretation in favor of assessee explained ay length in case of CIT vs Kuldeep Singh by Delhi high court taking support from SC decision in Sanjeev Lal vs CIT; Pune ITAT on section 54B (agreement based deduction allowed)
Kapil Goel
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 12.05.2014
Pronounced on: 14.08.2014 W.P.(C) 1320/2014, C.M. NO.2744/2014 & 2745/2014
MADHUKAR KHOSLA The reasons must
indicate specifically what such objective and new material facts are,
on the basis of which a reopening is initiated under Section 148. This
reassessment is clearly not on the basis of new (or “tangible”)
information or facts that which the Revenue came by. It is in effect a
re-appreciation or review of the facts that were provided along with
the original return filed by the assesse. The foundation of the AO’s jurisdiction and the raison d’etre of
a reassessment notice are the “reasons to believe”. Now this should
have a relation or a link with an objective fact, in the form of
information or facts external to the materials on the record. Such external facts or material constitute the driver, or the key which
enables the authority to legitimately re-open the completed
assessment. In absence of this objective “trigger”, the AO does not
possess jurisdiction to reopen the assessment. It is at the next stage
that the question, whether the re-opening of assessment amounts to
“review” or “change of opinion” arises. In other words, if there are no
“reasons to believe” based on new, “tangible materials”, then the
reopening amounts to an impermissible review.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘A’ : NEW DELHI ITA No.3328/Del/2013
Assessment Year : 2004-05
Shri Narain Dass Taneja Now, reopening on the basis of same material which is already
available on record would be a clear case of change of opinion. In view
of the above, we, respectfully following the decision of Hon’ble Apex Court in the case of ICICI Securities Primary Dealership Ltd. (supra), of
Hon'ble Jurisdictional High Court in the case of Usha International Ltd.
(supra) and also in view of the proviso to Section 147, hold that the
reopening of assessment by the Assessing Officer under Section 147
was not valid. We, therefore, quash the notice issued under Section
148 beyond the period of four years from the end of the relevant
assessment year and consequentially, the assessment order framed in
pursuance to such notice is also quashed.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘B’ : NEW DELHI
ITA No.4281/Del/2010
Assessment Year : 2001-02 M/s Comero Leasing & Financial
Pvt.Ltd
The facts in the assessee’s case are identical. In this case also,
the Assessing Officer, except preparing the table of alleged
accommodation entries from the details claimed to have been received
from the Investigation Wing, has not at all applied his mind. From a
bare perusal of the table of the alleged accommodation entries, it is
evident that the same entries have been repeated five times. This is
the clear indication of non-application of mind by the Assessing Officer. Therefore, the above decision of Hon'ble Jurisdictional High Court
would be squarely applicable to the facts of the assessee’s case. In the appeal before us, the
contention of the assessee is that the Assessing Officer issued the
notice under Section 148 mechanically simply on the basis of
information alleged to have been received from the Investigation Wing
without application of mind. On the facts of the case, we find this
contention of the learned counsel to be correct and moreover, on
identical facts, Hon'ble Jurisdictional High Court in the case of Suren
International P.Ltd. (supra) held that the reasons recorded without any
application of mind cannot be said to be a proper belief with regard to
escapement of income. We, therefore, respectfully following the
decision of Hon'ble Jurisdictional High Court in the case of Suren
International P.Ltd. (supra), uphold the order of learned CIT(A) and
dismiss the appeal filed by the Revenue.
HIGH COURT OF JUDICATURE AT ALLAHABAD
Chief Justice's Court AFR
Case :- INCOME TAX APPEAL No. - 127 of 2014
Appellant :- The Commissioner Of Income Tax-I, Kanpur
Respondent :- Shri Samraj Krishan Chaudhary, Kanpur
Counsel for Appellant :- Shambhu Chopra
Counsel for the respondent:- Shubham Agraw
It has been urged on behalf of the
revenue that the Tribunal has not given due regard to the submission of the
revenue that the assessee had reduced the capital gain by increasing the cost
of acquisition and the cost of improvement of the property. The difficulty in
accepting the submission is that, in fact, this was not the basis on which the
assessment was reopened under Section 148. The validity of the reopening of the
assessment has to be determined on the basis of reasons which are disclosed by
the Assessing Officer. The legality of the notice reopening the assessment has
to be determined, when it is questioned, on the basis of the reasons which are
recorded by the Assessing Officer. Those reasons cannot be allowed to be
supplemented subsequently. This was also so observed in a judgement of a
Division Bench of the Bombay High Court in Balkrishna Hiralal Wani vs.
Income-Tax Officer and others3 where it was held as follows:
"...For the purpose of determining the validity of the challenge to the
notice under section 148, the court would have to refer to the reasons recorded
by the Assessing Officer and to those reasons alone."
THE HIGH COURT OF DELHI AT NEW DELHI + ITA No. 117/2014 Reserved on: 18th July, 2014 % Date of Decision: 12th August, 2014
The Commissioner of Income Tax II ....Appellant
Versus Kuldeep Singh
Finding of the tribunal in the said aspect is quite clear and on the basis of the said facts, the tribunal has rightly held that the aforesaid expenditure was incurred and was wholly connected with the sale transaction dated 3rd June, 2005. By cancelling earlier transaction and ensuring that the rights created by the earlier agreement to sell do not obstruct the sale transaction, aforesaid payments of Rs.5,00,000/- to Ashok Singhal and Rs.2,50,000/- to Rajat Kapur, have been made.
11. What has been stated in the judgment of the Madhya Pradesh High Court in 1997, in practical terms and in reality still holds good. This is a matter of common knowledge that flats or apartments being constructed by builders take time. The Government Housing Boards also take time and seldom adhere to the promised date. Similar view has been taken in Bharati C. Kothari (supra) wherein reference was made to the decision of Andhra Pradesh High Court in CIT vs. Shahzada Begum (Mrs.) [1988] 173 ITR 397 and it was observed that assessee had entered into an agreement within two years for purchase of a flat which was under construction. Payment for the said flat was made within three years from the date of sale of the first property. No doubt the assessee was not constructing the new asset herself but she had purchased the flat. It was observed that the basic purpose behind Section 54 is to ensure that the assessee is not taxed on the capital gains, if he replaces his house with another house and spends money earned on the capital gains within the stipulated period.
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH “A”, PUNE ITA.No.1490/PN/2011
(Assessment Year 2005-06)
ITO, Ward-1, Ahmednagar .. Appellant
Vs.
Shri Nirmal Sharad Mutha, Date of Pronouncement : 31-07-2014
). Admittedly, when the AO accepts the sale as
genuine on the basis of an agreement to sale, we fail to understand as to how the same parameters will not be applicable for purchase of the
Agricultural land in the same manner.
9.1 We find merit in the submission of the Ld. Counsel for the
assessee that if the purchase of agricultural land through an
agreement to purchase cannot be considered as purchase for the
purpose of claiming deduction u/s.54B, then the same logic should
be applicable for sale of the land through an agreement to sale and in
that case no capital gain will arise to the assessee on account of sale
through an agreement to sale without registering the documents
through the office of the sub-registrar. In this view of the matter and
in view of the reasoning given by the CIT(A) while allowing the
claim of deduction u/s.54B of the I.T. Act, 1961 we find no infirmity in his order.
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH “ B ” I.T.A. No.914/Bang/2013
(Assessment Year : 2007-08)
Shri Bhadra Rama Reddy, Date of Pronouncement : 31.5. 2014.
Section 54 of the Act, which we are
dealing with in the case on hand, talks of the purchase / construction of a residential
house, which has admittedly taken place and there are no conditions stipulated therein
that the house should be of a particular quality, size, nature etc. or that it should generate income from house property, etc