Section 147

Tax queries 517 views 6 replies

Pragya

CHARTERED ACCOUNTANT

104 Points Posted on 17 November 2015

Hello All,

Need your guidance.

One of my client has sold his shop in 2010. He does an agreement for purchase of residential house in same year and gave advance equal to sale consideration. Hence assessee claimed exemption against capital gain and filed his return on time. After filing return in 2011 the seller cancelled the above agreement in august 2011. Assessee got partial amount as refund through cheque in august which he utilized in December 2011 for purchasing another new house. Balance amount was received through cash in jan-feb 2012, which was again invested for new house. And registry was done for new house in March 2012. But as assessee was unaware about the fact of exemption he purchased the new house in name of his wife.

Now in March 2015 department issued notice u/s 147 to the assessee. Reasons were – assessee has not disclosed capital gain in his return.

But in return capital gain was clearly mentioned. Hence i filed objection against 147. Now they are demanding evidences for Sec. 54F.

Please help me what to do now? If A.O. rejects my objection then what can I do? Whether I need to file Writ Petition in High Court? If Yes then What is the Procedure? Is my objection is correct?

If I go for appeal for 54F, is my case is strong? What is the best way – objecting 147 or go for appeal for 54F?

Please help. Reply urgent.

Thanks & Regards,

Replies (6)

Karthik.V.Kulkarni

Chartered Accountant

594 Points Posted on 17 November 2015

Kamal wahal case law should help you. If entire investment is from the transferor then he can claim exemption but income from house proprety will be clubbed in his hands.

CA Amit kumar gupta

Practice

64 Points Posted on 17 November 2015

show the proof to A.O regarding purchase of house property in the name of her wife. If A.O does not allow a exemption then go to CIT (Appeal), because thats a right channel defined by law. In most of the cases court not entertain the writ petition, so you lost the time of appeal to CIT(appeal). Its better to file an appeal to CIT(Appeal).

ABHIMANYU JHAMBA

partner

146 Points Posted on 19 November 2015

Hi Pragya,

It appears to be a strong case.

Was assessment done u/s 143(3) earlier??? Certain other facts need to be ascertained.

The next course of action would depend on that. Ideally one should go in for a Writ petition to avoid litigation and drag the matter through various foras.

Regards,

Abhimanyu Jhamba

CA, Advocate

9218999999, 9811803028

Pragya

CHARTERED ACCOUNTANT

104 Points Posted on 21 November 2015

Thank u all for your reply,..No abhimanyu ji, Assessment u/s 143 (3) was not done earlier. ITO is not entertaining exemption as it covers two case laws. First one, Agreement against which exemption was claimed has been canceled further second residential property is purchased in name of his spouse.Will CIT Appeals allow such exemption under section 54F? Payment for acquiring new house is made out of bank account of assessee.

S. Shiroor

Others

1212 Points Posted on 21 November 2015

You just have to show that the Capital gains is spent on a house. Spouce name is OK. IT dept are linient about it. They see that even if law is not followed Justice is given. Normally the capital gains should have been spent on a new house in the assesse's name. but now just showing that the capital gains is spent on a new House in name of close relative is sufficient

S. Shiroor

Others

1212 Points Posted on 21 November 2015

This is the reason that you should open a Capital gains account in any Nationalized bank. Th moment you get proceeds of selling an old house - deposit in that account. One should make all transactions thro Capital gains acccount only. This is a valid proof that the capital gains in reality is spent on a new house.