INCOME TAX ACT, 1961

Section 147

Reassessment - Reason to believe - Direct nexus between tangible material and formation of belief as to escapement -

AO received information about transfer of immovable properties by the assessee during the concerned assessment year. Accordingly, AO conducted enquiry by issuing notice under section 133(6) calling for certain information from assessee. Thereafter, AO issued notice under section 148 after recording the reasons that income on account of capital gain arising from transfer of immovable properteis had escaped assessment. Assessee submitted that when assesee had disclosed the facts in return of income after claiming deduction under section 54F, then reopening of assessment without considering the facts disclosed in return of income was without application of mind. Assessee further contended that even approval granted by Pr. CIT under section 151 was without application of mind being mechanical one.Held: It was manifest from reasons recorded by AO that AO had received information from DIT (I&CI) regarding transfer of immovable properties in question by the assessee. Further, as per the said information, the sale consideration was given as Nil, whereas Sub- Registrar had adopted value for stamp duty purposes at Rs. 26,57,797. These facts showed that no stamp duty was paid by parties at the time of this transfer because agreement to sale was not registered with Sub-Registrar. Subsequently, Sub-Registrar valued these properties at Rs. 26,57,797 for the purpose of stamp duty. These facts were not in dispute. AO then issued notice under section 133(6) to assessee for ascertaining facts about taxability of capital gain. In reply, assessee claimed that he had filed the return of income and shown this transaction but claimed deduction under section 54F as well as Indexed Cost. Reply of assessee was very brief and not with the details of deduction under section 54F. Further, assessee had not furnished any evidence during said enquiry conducted by AO prior to recording the reasons. Therefore, assessee, despite enquiry conducted by AO, had not disclosed the facts regarding investment made by him for purchase or construction of new residential house. This fact indicated that assessee had made the claim without any supporting evidence and even during reassessment proceedings assessee could not produce documentary evidence to the satisfaction of AO and claim of assessee under section 54F was rejected. Accordingly, when reasons were itself self-explanatory and speaking the link between material and formation of belief then approving authority, i.e., Pr. CIT was not required further to supplement the reasons to believe as recorded by AO and reopening was, therefore, sustained as valid.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 54F

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