SCA/3070/1999 6/ 8 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No.3070 of 1999
For
Approval and Signature:
HONOURABLE
MR.JUSTICE D.A.MEHTA Sd/-
HONOURABLE
MR.JUSTICE H.B.ANTANI
Sd/-
===================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
NO
2
To
be referred to the Reporter or not ?
NO
3
Whether
their Lordships wish to see the fair copy of the judgment ?
NO
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
NO
5
Whether
it is to be circulated to the civil judge ?
NO
===================================================
NIKHIL
K KOTAK - Petitioner(s)
Versus
MAHESH
KUMAR - Respondent(s)
===================================================
Appearance
:
MR VARUN K PATEL for
MR SN SOPARKAR for the Petitioner
MRS
MM BHATT for Respondent(s) :
1,
===================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MR.JUSTICE H.B.ANTANI
Date
: 02/07/2008
ORAL
JUDGMENT
(Per
: HONOURABLE MR.JUSTICE D.A.MEHTA)
This
petition challenges notice issued under Section 148 of the
Income-tax Act, 1961 (the Act) on 22.03.1999 by the respondent
assessing officer for Assessment Year 1992-93.
The
petitioner, an individual, filed return of income for Assessment
Year 1992-93 declaring total income of Rs.23,84,550/-. The Assessing
Officer issued notice under Section 143(2) of the Act. On 20.03.1995
the petitioner assessee filed a detailed reply whereunder in
Paragraph No.4 it was stated ýSThe details of the amount
invested in the new house being Rs.11,36,477 in each case were duly
enclosed alongwith the return of income. …ýý. The assessment
order was framed on 23.03.1995 under Section 143(3) of the Act after
referring to the working of long term gains in Paragraph No.3 of the
assessment order.
The
impugned notice dated 22.03.1999 has been assailed by the learned
advocate for the petitioner on the ground that the said notice has
been issued beyond a period of four years from the end of the
relevant assessment year and hence, as per provisions of Section 147
of the Act, more particularly the Proviso thereunder, the onus is on
the respondent authority to show that there is failure on part of
the petitioner-assessee as stipulated by the provisions of the
Proviso to Section 147 of the Act. It was submitted that in so far
as the first two conditions are concerned viz. filing of return and
responding to the statutory notice, it is not even the case of the
revenue that either of the said two conditions are violated. In so
far as the third condition relating to omission to disclose fully
and truly all material facts relevant for the assessment of the
assessment year in question it was submitted that even in the
reasons recorded, no such statement is made by the respondent
authority. It was, therefore, urged that the petition is required to
be allowed after quashing and setting aside the impugned notice.
On
behalf of the respondent authority Mrs.M.M.Bhatt, learned Standing
Counsel, has invited attention to the affidavit-in-reply dated
27.07.1999 as well as the reasons recorded which have been annexed
to the affidavit-in-reply. It was further submitted that the
assessment order was silent in relation to the claim made by the
petitioner. That in fact the sum of Rs.10,46,930/- being the cost
of improvement on new asset was not an allowable deduction and
incorrect exemption had been granted resulting in under-assessment
of income.
Section
147 of the Act permits re-opening of a completed assessment in a
case where income liable to tax has escaped assessment. However,
Proviso under the said section carves out an exception and shifts
the burden on revenue in a case where a period of four years has
elapsed from the end of the relevant assessment year. The Proviso
stipulates three conditions. Revenue is required to show from the
record and the facts of the case that any one of the three
conditions stands satisfied before the Assessing Officer can assume
jurisdiction to issue notice for re-assessment.
In
the present case, admittedly, the conditions regarding non-filing of
return and the condition regarding non-responding to statutory
notice are not applicable. The third condition requires the revenue
to establish that there was any omission or failure on part of the
petitioner-assessee to disclose fully and truly all material facts
relevant for the assessment of the assessment year in question. The
reasons recorded read as under:
ýSReasons
recorded for issue of notice u/s.148
Reg.:-
Shri Nikhil K. Kotak, A’bad
A.Y.:-
1992-93
The
assessee had claimed exemption u/s. 54 of Rs.11,36,477/- i.e. 1/3rd
share of Rs.34,09,430/- for investment in new house against the
income from long term capital gain. The details of investment was as
under:-
1) Purchase cost of new house Rs.23,62,500/- 2) cost
of improvement on new asset Rs.10,46,930/-
————-
Rs.34,09,430/-
————-
The
exemption u/s. 54 was actually allowable on the cost of purchase of
new asset (i.e. residential house) or cost construction of new asset
only. Thus, the cost of improvement of the property incurred later
on will not be qualify for exemption u/s. 54. The incorrect
exemption granted resulted in under-assessment of income of
Rs.348977/-.ýý
On
a plain reading of the aforesaid reasons recorded by the
respondent-authority it becomes clear that it is not even the case
of the revenue that there was any omission or failure on part of the
petitioner-assessee to disclose fully and truly all material facts
relevant for the assessment of the assessment year in question. In
fact when one goes through Annexure-B, which is the statement
showing computation of total income, it becomes clear that all
relevant details for computing long term capital gains have been
shown by the petitioner-assessee. Not only that, details of
exemption claimed under Section 54 of the Act in respect of
investment in new house have also been shown on a separate sheet. In
fact the figures recorded by the assessing officer, in the reasons
reproduced hereinabove, appear only from the details of exemption
placed on record by the petitioner-assessee.
In
the aforesaid set of facts and circumstances of the case, it is
apparent that there is no omission or failure on part of the
petitioner-assessee as required by provisions of the Proviso to
Section 147 of the Act. Hence, the impugned notice dated 22.03.1999
issued under Section 148 of the Act, which is admittedly issued
beyond a period of four years i.e. 31.03.1997, is bad in law and
without jurisdiction. Accordingly, notice under Section 148 of the
Act dated 22.03.1999 is hereby quashed and set aside.
The
petition is allowed accordingly. Rule made absolute. There shall be
no order as to costs.
Sd/-
[D.A.
MEHTA, J]
Sd/-
[H.B.ANTANI,
J]
***
Bhavesh*