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11-01-2019, Marhatta Chamber of Commerce, Section 147, 11, HIGH COURT OF BOMBAY
Appeal No. - INCOME TAX APPEAL (IT) NO. 965 OF 2016
Asstt. Year - 2003-04
PER : B. P. COLABAWALLA J.
1. This Income Tax Appeal filed under section 260A of the Income Tax Act, 1961 (for short the “I.T. Act, 1961”), takes exception to the order passed by the Income Tax Appellate Tribunal, Pune Bench “B”, Pune (for short the “ITAT”) under which the appeal filed by the revenue was dismissed. The appeal filed before the ITAT was against the order passed the Commissioner of Income Tax (Appeals) [for short “CIT(A)”] dated 6th December, 2012 which allowed the appeal of the assessee. The assessment year (for short “A.Y.”) in question was A.Y. 2003-04.
2. Mr Suresh Kumar, learned advocate appearing on behalf of the appellant – revenue would contend that the following questions, and as projected by him as substantial questions of law, require our consideration and read thus:-
“(I) Whether on the facts and circumstances in law, the Hon'ble Tribunal erred in setting aside the reassessment notice overlooking the crucial fact that the assessee's case is squarely covered by Explanation 1 to section 147 of the I.T. Act, 1961.
(II) Whether on the facts and circumstances the case and in law, the Hon'ble Tribunal erred in setting aside the reassessment notice overlooking the fact that the facts material to the computation of income were not disclosed fully and correctly by the assessee and the property purchased and sold by the assessee within one year of its acquisition was correctly brought to tax by the Assessing Officer as Short Term Capital Gain.”
3. The brief facts of this case would show that the respondent – assessee had filed its return of income as “NIL” after claiming exemption under Section 11 of the I.T. Act, 1961. The original assessment of the respondent – assessee was completed on 13th February, 2006 under Section 143(3) of the I.T. Act, 1961. Thereafter, the Assessing Officer (for short “A.O.”) recorded reasons for reopening the assessment under Section 147 of the I.T. Act, 1961 and notice under Section 148 was issued on 25th February, 2010. In the reasons recorded, the A.O. was of the view that the assessee had claimed excessive deduction / relief under the provisions of the I.T. Act, 1961 in respect of the Short Term Capital Gains of Rs.872 lacs which was neither exempted under Section 11(1A) nor eligible for accumulation or setting apart as per the provisions of Section 11(1)(a) or Section 11(2) of the I.T. Act, 1961. According to the A.O., since the income in excess of Rs.1 Lakh had escaped assessment, notice under Section 148 of the I.T. Act, 1961 could be issued for A.Y. 2003-04 up to six years i.e. on or before 31st March, 2010. The second point noted by the A.O. was that no assessment order for A.Y. 2003-04 was passed under Section 143(3) of the I.T. Act, 1961 till four years had elapsed.
4. The assessee replied to the aforesaid notice and inter alia pointed out that there was no failure on the part of the assessee to make full and true disclosure, as in the note attached with the return of income, the assessee had declared that it has sold the land and the manner in which the sale consideration of Rs.3034.50 Lakhs was proposed to be received and utilized. The objections of the assessee