INCOME TAX ACT, 1961

Section 147

Reassessment - Full and ture disclosure - Exemption under section 54 - Allegedely asset by short-term capital asset in nature

Assessee challenged reassessment contending that notice for reassessment was issued beyond the period of four years from relevant date. Revenue concluded that capital asset transferred was only a short-term capital asset as it was held for a period less than thirty six months and therefore assessee was not entitled to Long-Term Capital Gain under section 54. Held: While conducting proceedings, an AO is bound by the proviso to section 147 of the Income Tax Act, 1961. While exercising powers vested with an officer at the time of re-assessment under section 147 pursuant to issue notice under section 148, the officer concerned has to not only keep in mind the express language of the proviso to section 147 of the Income Tax Act, 1961 but also well settled principles of law. Revenue could not have a re-look into issue arising out of claim of assessee for Long-Term Capital Gains which was allowed in assessment order passed as there was true and full disclosure of all material required for assessment by assessee for claiming deduction. Therefore, proposal to re-determine the taxable income and the tax payable by assessee for reasons stated in the said communication was unsustainable.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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