Law: Income Tax Act, 1961

Section: 45,147,158BC

Section 147, read with sections 45 and 158BC, of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts (Change of opinion) - Assessment year 2002-03 - In case of assessee, assessment was reopened on ground that certain amount was liable to be added to assessee's income as deemed dividend - In reassessment proceedings, Assessing Officer made another addition in respect of long term capital gain arising from sale of shares - It was noted that said amount was duly disclosed by assessee in his return under section 139 and it was also considered in block assessment order passed in assessee's case under section 158BC - Whether since information regarding long-term capital gains was already existing on file of assessee and it did not come up as an issue for first time during reassessment proceedings, said amount could not be treated as an escaped income chargeable to tax under section 147 - Held, yes [Paras 11 and 14][In favour of assessee] Circulars and Notifications : Circular No. 5 dated 22-11-2010 FACTS â–  The assessee filed his return declaring certain income under head 'long-term capital gains' arising from sale of shares. In said return, the assessee claimed deduction under section 54F indicating that said amount was invested in the construction of a house. â–  Before the return could be processed, a search and seizure operation was carried out under section 132 at assessee's residence and business premises. Based on search operation, block assessment proceedings under section 158BC was initiated wherein assessing authority passed an order holding that the whole transaction was a sham transaction with regard to the claim of long-term capital gain and that it was merely an entry for claiming false exemption under section 54F. He thus added said amount to the income of the assessee as undisclosed income. â–  The appellate authority held that said amount could not be added as an undisclosed income of the assessee as it was not based on the material seized during the course of search and seizure operation under section 132. â–  The Tribunal upheld the order passed by Commissioner (Appeals). â–  After the…

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