G CHINNADURAI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The petitioner assails the order passed by the respondent dated 30.08.2015, containing the reasons for reopening the assessment for the year 2011-12, under Section 148 of the Income Tax Act, 1961, (Act).

(2.) For the purpose of adjudication of the present challenge the following facts are relevant. The petitioner filed his return of income for the assessment year 2011-12 admitting an income of Rs.1,71,470/- and claimed exemption under Section 54F of the Act for an amount of Rs.3,12,50,000/-. A survey under Section 133A of the Act, was conducted in the premises of the petitioner on 31.10.2014, in the course of such survey verification of the genuineness of the claim for deduction as claimed by the petitioner under Section 54F of the Act, which arose out of a sale transaction of the property owned by a partnership firm M/s.Karpagam Studios (hereinafter referred to as the 'firm') in which the petitioner was one of the partners and the petitioner had invested Rs.2,62,50,000/- in five flats at No.134, Arcot Road, Saligramam, Chennai, (subject property), out of the sale consideration of Rs.3,12,50,000/- was undertaken.

(3.) The firm and its partners (including the petitioner) entered into a deed of sale dated 29.10.2010, in terms of which the petitioner sold his share in the subject property for a sum of Rs.3,12,50,000/- and the consideration was invested towards purchase of constructed area of 9500 sq.ft., along with undivided share of land of an extent of 1807sq.ft., vide agreement dated 29.10.2010. Pursuant to a supplementary agreement, dated 05.09.2013, the allotable built up area was reduced to 8050 sq.ft. The sale proceeds having been fully utilised for the purchase of residential property, the petitioner claimed exemption under Section 54F of the Act. While so, the petitioner received a notice dated 27.03.2015, under Section 148 of the Act, stating that the respondent has reasons to believe that the income chargeable to tax had escaped assessment due to deliberate omission in the return of income of the petitioner as taxable income was not truly and fully disclosed to the department. The petitioner responded by letter dated 27.04.2015, and he filed a return claiming exemption to an extent of Rs.2,62,50,000/- and claiming Rs.50,00,000/- as allowable expenditure in computation of capital gains under Section 49 of the Act, apart from seeking for the reasons for reopening the assessment. The respondent vide reply dated 16.06.2015, stated that the petitioner has invested into five flats out of the sale consideration received, the construction of which was not completed upto 70%. On the relevant date, the petitioner is entitled to claim exemption only for a residential property, construction of which should have been completed within three years from the date of transfer, reckoned as 29.10.2010. In this Writ Petition, the petitioner challenges the notice for reopening along with the reasons recorded by the respondent.