Income Tax Officer-Ward-30(3), Kolkata, Kolkata V. Ishwar Chinta Haran Shiv Thakur, Kolkata

ITA 2841/KOL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1476 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-10-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Cost of acquisition; Tangible material; Difference of opinion; Valuation report; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 12A; 147; 148; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 2841/KOL/20 13 ASSESSMENT YEAR : 2004-0 5 ITO, WARD-30(3), KOLKATA -VS- ISHWAR CHINTA HARAN SHIV THAKUR [PAN: AAAJS 0560R] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI AMITAVA BHATTACH ARYA, ADDL. CIT SR. DR FOR THE RESPONDENT : SHRI J.P. KHAITAN, SR. ADV OCATE. DATE OF HEARING : 31.08.2017 DATE OF PRONOUNCEMENT : 08 .09.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE OR DER OF THE COMMISSIONER OF INCOME TAX-XIV, KOLKATA [IN SHORT THE LD. CIT(A)] IN APPEA L NO. 292/CIT(A)-XIV/KOL/09-10 DATED 11.09.2013 AGAINST THE ORDER PASSED BY THE IT O, WARD-30(3), KOLKATA [IN SHORT THE LD. AO] U/S 143(3)/147 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] DATED 24.12.2004 FOR THE ASSESSMENT YEAR 200 4-05. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN ANNULLING THE RE-ASSESSMENT O N THE INCORRECT ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT BY THE LD AO, IN TH E FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE IS AN ARTIFICIAL JURIDICAL PERSON (AJP) UNDER THE NAME & STYLE OF M/S SHRI SHRI ISWAR CHINTAHARAN SHIVTHAKUR. THE MANAGING COMMITTEE OF AJP CONSISTS OF 5 PERSONS. THEY ARE SEBAITS OF THE DEITY AT THE TEMPLE PREMISES OF THE AJP. THE RETURN OF INCOME FOR THE ASST YEAR 2004-05 WAS FILED ON 26.10.2004 DECLARING NIL INCOME. THE PRINCIPAL SOURCE OF 2 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 2 INCOME IS FROM RENT, DONATIONS, SALE OF FLATS AND I NTEREST FROM INVESTMENTS. THE LD AO OBSERVED THAT THE ASSESSEE APPLIED FOR EXEMPTION U/ S 11(1) AND 11(1A) OF THE ACT SEEKING EXEMPTION OF CAPITAL GAINS THEREON, WHICH I S AVAILABLE TO CHARITABLE AND RELIGIOUS TRUSTS. SINCE THE ASSESSEE HAS NOT BEEN GRANTED THE REQUISITE REGISTRATION U/S 12A OF THE ACT WHICH IS MANDATORY FOR CLAIMING EXEM PTION U/S 11 OF THE ACT, THE LD AO DENIED THE SAME TO THE ASSESSEE. THIS WAS BROUGHT TO THE NOTICE OF THE ASSESSEE BY THE LD AO WHICH WAS ACCEPTED BY THE ASSESSEE. EXPLANATIO N IN REGARD TO TAXABILITY OF SALE PROCEEDS OF THE FLATS WAS ASKED FROM THE ASSESSEE A ND ASSESSABILITY OF CAPITAL GAINS THEREON WAS EXAMINED. THE ASSESSEE AGREED FOR THE ASSESSMENT OF TAXATION OF CAPITAL GAINS FROM SALE OF TWO FLATS, FOR WHICH IT GAVE TWO OPTIONS FOR TAKING THE VALUE OF COST OF ACQUISITION. THE FIRST METHOD IS AS PER THE VALUE OF CONSIDERATION RECEIVED FROM THE APPROPRIATE AUTHORITY OF THE INCOME TAX DEPARTMENT WHICH WAS GIVEN U/S 269UL(3) OF THE ACT ON 4.8.1995 BASED ON THE DEVELOPMENT AGREEM ENT MADE ON 16.6.1995. AS PER THIS VALUATION, THE APPARENT CONSIDERATION WAS RS 4 ,56,64,225/- AND THE INDEXED COST OF ACQUISITION WOULD BE RS 7,52,40,342/- ( 45664225 * 463 / 281). SO THE LONG TERM CAPITAL LOSS WOULD BE RS 6,83,30,842/- ( 75240342 6909500). THE SECOND OPTION WAS MARKET VALUATION GIVEN BY A REGISTERED VALUER S RI D K DATTA BASED ON ADVERTISEMENT PUBLISHED BY THE DEPARTMENT IN THE STATESMAN ON 28. 7.1996 FOR AUCTION OF IMMOVABLE PROPERTY SITUATED AT 6, SUNNY PARK, BALLYGUNGE FOR WHICH THE RESERVE PRICE WAS FIXED AT RS 27,00,000/- FOR AN APARTMENT OF 1530 SQ.FT. BY THIS METHOD, THE COST OF ACQUISITION OF EACH FLAT WOULD BE RS 35,00,000/- AND INDEXED CO ST OF ACQUISITION WOULD BE RS 1,15,33,805/- ( 3500000 * 463/281*2). SO THE LONG TERM CAPITAL LOSS WOULD BE RS 46,24,305/- ( 11533805 6909500). 2.2. THE LD AO OBSERVED THAT BOTH THE METHODS WERE JUDGED CAREFULLY AND THE SECOND OPTION WAS ADOPTED BY HIM , SINCE THE VALUER HAD TA KEN VALUATION RATE FIXED BY THE DEPARTMENT FOR A PROPERTY OF NEARBY VICINITY UNDER THE SAME PIN CODE AND BALLYGUNGE AREA WHICH IS MORE ACCEPTABLE CONSIDERING THE CIRCU MSTANCES OF THE LOCALITY AND CIVIC 3 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 3 AMENITIES AVAILABLE. ACCORDINGLY, HE ADOPTED THE LONG TERM CAPITAL LOSS OF RS 46,24,305/- WHILE COMPLETING THE ASSESSMENT. THE OR IGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT ON 31.10.2006 COMPU TING THE TOTAL INCOME AT RS NIL. IN THE SAID ASSESSMENT ORDER, THE LD AO STATED THAT THE AUTHORIZED REPRESENTATIVES OF THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED TH E RELEVANT DOCUMENTS AND PAPERS AND BANK STATEMENTS, COPY OF ORIGINAL APARNAMA, COP Y OF AGREEMENT BETWEEN DEVELOPER AND ASSESSEE, COPY OF ORDER PASSED BY HONBLE APPRO PRIATE AUTHORITY AND THE SUBMISSIONS OF THE ASSESSEE WHICH HAVE BEEN CHECKED AND EXAMINED BY HIM. 2.3. THE INCOME WAS DETERMINED BY THE LD AO IN THE SAID ASSESSMENT AS UNDER:- INCOME FROM OTHER SOURCES EXCESS OF INCOME OVER EXPENDITURE (AS PER I&E A/C) 64,84,989 LESS: CONSIDERED SEPARATELY : SALE OF FLATS 69,09,500 RENT 1,61,920 ------------- 70,71,420 ---------------- (5,86,431) ADD: DISALLOWANCE OF EXPENSES 1,08,468 --------------- (4,77,963) INCOME FROM HOUSE PROPERTY 6 RAMNARAYAN LANE ANNUAL VALUE 1,920 LESS: STANDARD DEDUCTION 576 ---------- 1,344 8 EKDALIA ROAD RENT RECEIVABLE 1,60,000 LESS: UNREALISED 1,60,000 ------------- 0 --------------- 1,344 4 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 4 CAPITAL GAIN / (LOSS) LONG TERM CAPITAL LOSS (AS DISCUSSED) (CARRIED FORW ARD) ( 46,24,305) TOTAL INCOME NIL 3. SUBSEQUENTLY THE LD AO ISSUED NOTICE U/S 148 OF THE ACT ON 5.3.2009 AND REOPENED THE ASSESSMENT. THE REASONS RECORDED FOR REOPENI NG THE ASSESSMENT ARE AS UNDER :- SHRI ISHWAR CHINTAHARAN SHIVTHAKUR (AJP) (A.Y. 2004-05) REASON FOR ISSUING NOTICE U/S 148 THE ASSESSEE SUBMITTED RETURN ON 26.10.2004, DECLAR ING NIL INCOME ON THE GROUND THAT INCOME EARNED FROM VARIOUS SOURCES WAS EXEMPT U/S 11(1) AND 11(1A). BUT SINCE REQUISITE REGISTRATION WAS NOT GRANTED. IT WAS DENI ED EXEMPTION IN THE ASSESSMENT COMPLETED U/S 143(3) ON 31.10.2006. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE ACQUI RED 18 OUT OF 26 FLATS BY VIRTUE OF AN AGREEMENT WITH DEVELOPERS, OUT OF WHICH 2 FLATS WERE ADMEASURING 3907 SQ.FT. WERE SOLD OUT: SL. NO. NAME OF PURCHASER DATE OF POSSESSION FVC RE CD. ON TRANSFER 1. ANGSUMAN GUHA 11.03.2004 33,50,000/- 2. SATISH KR. BHASIM 25.03.2004 35,59,500/- TOTAL 69,09,500/- SINCE, ABOVE 2 FLATS WERE HELD BY ASSESSEE FOR A PE RIOD OF LESS THAN 36 MONTHS, FVC WAS CHARGEABLE TO TAX UNDER THE HEAD STCG, HOWEVER, IN ASSESSMENT, COMPUTATION WAS MADE UNDER THE HEAD LTCG AS UNDER: FULL VALUE OF CONSIDERATION (FVC) 69,09,50 0/- LESS:- INDEXED COST OF ACQUISITION FOR 2 FLATS 35,00,000 * 463/281 *2 1,15,33,808/- LONG TERM CAPITAL LOSS . 46,24,308/- ABOVE NOTED COMPUTATION RESULTED IN ORDER ASSESSMEN T OF INCOME ON TWO COUNTS:- FIRSTLY, THROUGH ASSET IN QUESTION WAS SHORT TERM, IT WAS TR EATED AS LONG TERM AND BENEFIT OF INDEXATION WAS WRONGLY ALLOWED. SECONDLY, THE COST OF ACQUISITION (35,00,000/-) WAS 5 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 5 BASED ON AN ADVERTISEMENT, PUBLISHED IN THE STATESM AN DATED 28.07.2006 FOR AUCTION OF IMMOVABLE PROPERTY BY DEPTT. AT 6, SUNNY PARK, KOLK ATA-700019, FOR WHICH RESERVE PRICE WAS FIXED AT 2,70,00,000/- . THIS WAS ERRONEO US IN SO FAR AS APARTMENT CONSIST OF 26 FLATS ( + PROPOSED CAR PARKING SPACE) MEASURING APPROX. 61607.625 SQ. FT. WAS FIXED BY THE APPROPRIATE AUTHORITY AT RS. 4,56,64,225/- U /S 269 UL (3). THEREFORE, COST OF ACQUISITION OF 3907 SQ. FT. SOLD DURING THE YEAR WO ULD BE RS. 28,95,910/- [4,56,64,225 * 3907/61607.625]. AND SHORT TERM CAPITAL GAIN WOULD COME TO :- FULL VALUE OF CONSIDERATION 69,09,500/- LESS:- COST OF ACQUISITION . 28,95,910/- SHORT TERM CAPITAL GAIN 40,13,590/- IN THIS WAY, THERE WAS ESCAPEMENT OF STCG TO THE TU NE OF RS. 40,13,590/-. FURTHER, THE ASSESSEE EXCHANGED 33 COTTAH 10 CHITT ACKS OF LAND FOR 20 FLATS, PLUS PROPORTIONATE CAR PARKING SPACE. THIS AMOUNTED TO T RANSFER OF CAPITAL ASSETS U/S 2(47). LTCG CHARGEABLE ON SUCH TRANSFER WAS NOT ASSESSED I N THE ORDER MADE U/S 143(3) DATED 31.10.2006, AND INCOME OF RS. 2,33,18,266/- ALSO ES CAPED ASSESSMENT. IN VIEW OF REASONS MENTIONED IN PROCEEDING PARAGRAP HS, IT IS PROPOSED TO REOPEN THE PROCEEDINGS AS PER OF SECTION 147. 3.1. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS , THE LD AO ISSUED ANOTHER SHOW CAUSE NOTICE TO THE ASSESSEE AS UNDER:- I HAVE EXAMINED YOUR LETTER UNDER REFERENCE THOROU GHLY, BUT I DO NOT FIND ANY REASON TO ACCEPT THE PLEA AS MENTIONED IN YOUR LETTER FOR THE REASON AS MENTIONED UNDER:- SHORT TERM CAPITAL GAIN IT TRANSPIRES FROM THE DOCUMENTS SUBMITTED BY YOU T HAT YOU HAD TAKEN POSSESSION OF 18 FLATS DURING THE FINANCIAL YEAR RELEVANT TO THE ASS ESSMENT YEAR 2004-05. OUT OF WHICH YOU HAVE SOLD ONE FLAT AT RS. 33,50,000/- ON 11.03. 2004 AND ANOTHER FLAT AT RS. 35,59,500/- ON 25.03.2004. SINCE, DATE OF ACQUISITI ON OF THE ABOVE 18 FLATS WILL BE THE DATE FROM WHICH THE ASSESSEE HAD TAKEN POSSESSION O F THE SAID FLATS. SO, IT IS EVIDENT THAT THE PERIOD OF HOLDING OF THE ABOVE TWO FLATS IS LE SS THAN THREE YEARS. SECTION 49(1) OF THE I.T. ACT PROVIDES WHERE THE CAPITAL ASSET BECAME TH E PROPERTY OF THE ASSESSEE THE COST OF ACQUISITION OF THE ASSETS SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED. IN THE INSTANT CASE THE COST OF ACQUISITION WAS DETERMINED BY THE APPROPRIATE AUTHORITY AND THAT WAS TAKEN AS COST OF ACQUISITION OF THE 26 FLATS WHICH WAS TRANSFERRED TO THE ASSESSEE IN LIEU OF 88 COTTAS 10 CHATTACKS OF LAND DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2004-05. ACCOR DING TO THE SPIRIT OF SECTION 2(47)(V) OF THE I.T. ACT THE DATE OF POSSESSION OF THE FLAT IS THE DATE OF ACQUISITION. 6 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 6 HENCE, YOUR PLEA TO CONSIDER LTCG FROM THE SALE OF THE ABOVE TWO FLATS IS NOT ACCEPTABLE . IN VIEW OF THIS SHORT TERM CAPITAL GAIN IS COMPUTE D AS UNDER: TOTAL SALE CONSIDERATION RECEIVED AGAINST TWO FLATS RS. 69,09,5000/-(A) LESS: COST OF ACQUISITION OF FLATS AS DETERMINED BY THE APPROPRIATE AUTHORITY RS. 4,56,64,225/61607625*3907 = RS. 28,95,910/- INDEXED COST OF ACQUISITION RS. 28,95,910/- * 463/ 282= RS. 47,54,632/-(B) SHORT TERM CAPITAL GAIN= (A-B) = RS. 21,54,868/- IN VIEW OF THE ABOVE, YOU ARE REQUESTED TO SHOW CAU SE AS TO WHY RS. 21,54,868/- WILL NOT BE TREATED AS SHORT TERM CAPITAL GAIN. LONG TERM CAPITAL GAIN THE EXPRESSION TRANSFER IN SEC. 45 OF THE I.T. AC T, 1961 WILL HAVE TO BE READ IN THE LIGHT OF ITS DEFINITION IN SECTION 2(47). A COMBINED READ ING OF SECTION 45 WITH SEC. 2(47) SHOWS THAT ANY PROFITS OR GAINS ARISING FROM THE TR ANSFER OF CAPITAL ASSET, WHICH EXPRESSION INCLUDES SAME, EXCHANGE OR RELINQUISHMEN T OF THE ASSET OR THE EXTINGUISHMENT OF RIGHTS THEREIN WILL BE CHARGEABLE TO TAX AS CAPITAL GAINS. THE CONDITIONS PRECEDENT FOR THE OPERATION OF SEC. 45 A RE (I) THERE SHOULD BE A TRANSFER OF A CAPITAL ASSET AND (II) AS A RESULT OF SUCH TRANSFER , GAINS SHOULD HAVE ACCRUED OR ARISEN TO THE TRANSFEROR. AS PER AGREEMENT DATED 16.06.199 5 FOR DEVELOPING AND PROMOTING ITS LAND AT 8, EKDALIA ROAD, BALLYGUNGE, KOLKATA YOU HA VE AGREED TO EXCHANGE 88 COTTAS 10 CHATTACKS OF LAND IN LIEU OF 26 LAKHS AND PROPORTI ONATE CAR PARKING SPACE. BY VIRTUE OF THIS AGREEMENT YOU HAVE ACQUIRED POSSESSION OF THE 18 FLATS DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2004-05. HENCE, PRO VISION OF SECTION 2(47) IS CLEARLY ATTRACTED. SO, CAPITAL GAIN ON EXCHANGE OF LAND FOR ALLOTTED 18 FLATS SHALL BE TAXABLE AS LONG TERM CAPITAL GAIN. ON PERUSAL OF THE DOCUMENTS THE LONG TERM CAPITAL GAIN IS COMPUTED AS UNDER :- COST OF 18 FLATS ACQUIRED DURING THE FINANCIAL YEA R 2003-04 18/26 X 61607.625 X 1768* = RS. 7,54,07,733/- (A) *VALUATION RATE OF SALE PER SQ. FT. IS DETERMINED O N THE BASIS OF RATE PER SQ. FT. OF TWO FLATS SOLD COST OF ACQUISITION OF LAND EQUIVALENT TO 26 FLATS COMPRISING 61607.625 SQ. FT. OF BUILT UP AREA AS FIXED BY APPROPRIATE AUTHORITY RS. 4,56,64, 225/- COST OF INDEXATION OF ACQUISITION OF 18 FLATS = 18/ 26 X 45664225 X 463/281 = RS. 5,20,79,467/-(B) 7 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 7 LONG TERM CAPITAL GAIN = (A-B) = RS. 2,33,18,266/- IN VIEW OF THE ABOVE, YOU ARE REQUESTED TO SHOW CAU SE AS TO WHY RS. 2,33,18,266/- WILL NOT BE TREATED AS LONG TERM CAPITAL GAIN. YOU ARE REQUESTED TO SUBMIT YOUR REPLY WITHIN 7 DAY S FROM THE DATE OF RECEIPT OF THIS LETTER, FAILING WHICH ORDER WILL BE PASSED ON THE B ASIS OF THE MATERIAL AVAILABLE ON RECORD WITHOUT ANY FURTHER REFERENCE TO YOU. 3.2. THE LD AO COMPLETED THE RE-ASSESSMENT PROCEEDI NGS ON 143(3) / 147 OF THE ACT ON 24.12.2009 DETERMINING SHORT TERM CAPITAL GAIN [IN SHORT STCG] AT RS 21,54,860/- AND LONG TERM CAPITAL GAIN [ IN SHORT LTCG] AT RS 2,33,18,266/-. IT WAS SUBMITTED BY THE ASSESSEE THAT THE REASONS MENTIONED BY THE L D AO ARE NOTHING BUT MERE CHANGE OF OPINION ON SAME SET OF FACTS. IT WAS OBJECTED THAT THE REASSESSMENT BASED ON CHANGE OF OPINION WAS NOT PERMITTED UNDER THE PROVISIONS OF T HE ACT. IT WAS STATED THAT WHILE PASSING THE ORIGINAL ASSESSMENT ORDER U/S 143(3) OF THE ACT, THE LD AO HAD ALL THE FACTS ON RECORD AND THE INITIATION OF REOPENING PROCEEDIN GS FOR THE ASST YEAR 2004-05 WAS BASED ON MERE CHANGE OF OPINION. THE ASSESSEE PLA CED RELIANCE ON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTIONS:- A) CIT VS KELVINATOR OF INDIA LTD REPORTED IN 320 I TR 561 (SC) B) CIT VS KELVINATOR OF INDIA LTD REPORTED IN 256 I TR 1 (DELHI) (FB) C) ANDHRA BANK VS CIT REPORTED IN 225 ITR 447 (SC) D) INDIAN OIL CORPORATION VS ITO REPORTED IN 159 IT R 956 (SC) E) ITO VS LAKHMANI MEWAL DAS REPORTED IN 103 ITR 43 7 (SC) F) CALCUTTA DISCOUNT CO. LTD VS ITO REPORTED IN 41 ITR 191 (SC) G) SUNROLLING MILLS P LTD VS ITO REPORTED IN 160 IT R 412 (CAL) H) ASIAN PAINTS LIMITED VS DCIT REPORTED IN 308 ITR 195 (BOM) I) ASTEROIDS TRADING AND INVESTMENTS VS DCIT REPORT ED IN 308 ITR 190 (BOM) J) ICICI PRUDENTIAL LIFE INSURANCE CO. LTD VS ACIT & UOI REPORTED IN 325 ITR 471 (BOM) K) D T AND T D C LTD VS ACIT REPORTED IN 324 ITR 23 4 (DEL) 3.3. IT WAS ALSO STATED THAT THE ENTIRE ISSUE OF AS SESSMENT OF CAPITAL GAINS ON SALE OF FLATS WERE SUBJECT MATTER OF PROPER EXAMINATION BY THE LD AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS FOR WHICH A SEPARATE SHOW CAUSE NOTICE WAS ISSUED BY THE LD AO TO THE 8 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 8 ASSESSEE. THE ASSESSEE HAD REPLIED FOR THE SAME VI DE ITS LETTER DATED 13.9.2006 WHICH WAS DULY EXAMINED BY THE LD AO IN THE ORIGINAL ASSE SSMENT PROCEEDINGS. THE LD AO HAVING BEEN SATISFIED WITH THE REPLY GIVEN BY THE A SSESSEE , HAD ON ITS OWN ADOPTED THE SECOND METHOD OF COMPUTATION OF CAPITAL GAINS AND R EJECTED THE FIRST METHOD ON THE REASONS STATED IN THE ASSESSMENT ORDER ISSUED U/S 1 43(3) OF THE ACT . IT WAS SUBMITTED THAT ONCE THE LD AO ACCEPTED THE MODE OF COMPUTATI ON OF CAPITAL GAINS BY GIVING REASONS FOR ACCEPTING THE SAME IN THE ASSESSMENT OR DER, HE IS NOT PERMITTED TO REVIEW THE SAME COMPUTATION IN HIS REASSESSMENT ORDER ISSUED U /S 147 OF THE ACT WHICH WOULD TANTAMOUNT TO CHANGE OF OPINION. MOREOVER, WHEN AL L THE MATERIAL FACTS INCLUDING THE DEVELOPMENT AGREEMENT, VALUATION REPORT ETC WERE FI LED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, THE LD AO CANNOT REOPEN THE ASSESSMENT U/S 148 OF THE ACT WITHOUT ANY NEW MATERIAL ON RECORD AND AS SUCH IT W OULD TANTAMOUNT TO REOPENING ASSESSMENT WITHOUT ANY TANGIBLE MATERIAL ON RECORD. 3.4. FURTHER THE LD AO IN THE LETTER ISSUED TO COMM UNICATE THE REASONS FOR REOPENING THE ASSESSMENT HAD FURTHER ALLEGED THE FOLLOWING:- FURTHER , THE ASSESSEE EXCHANGED 88 COTTAH 10 CHIT TACKS OF LAND FOR 20 FLATS PLUS PROPORTIONATE CAR PARKING SPACE. THIS AMOUNTED TO T RANSFER OF CAPITAL ASSETS U/S 2(47) . LTCG CHARGEABLE ON SUCH TRANSFER WAS NOT AS SESSED IN THE ORDER MADE U/S 143(3) DT. 31/10/2006, AND INCOME OF RS 2,33,18 ,266/- ALSO ESCAPED ASSESSMENT. IN THIS CONNECTION, IT WAS REPLIED THAT ALL THE DOC UMENTS AND DETAILS WERE MADE AVAILABLE BEFORE THE LD AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND AFTER CONSIDERING THE SAME, THE LD AO PASSED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT ON 31.10.2006. REFERENCE WAS ALSO INVITED TO THE SECOND PARAGRAPH OF THE ASSESSMENT ORDER FOR THE CAPTIONED ASSESSMENT YEAR WHEREIN THE LD AO HAD STA TED THAT RELEVANT DOCUMENTS AND PAPERS AND BANK STATEMENTS, COPY OF ORIGINAL APARNA MA, COPY OF THE AGREEMENT BETWEEN THE DEVELOPER AND THE ASSESSEE, COPY OF THE ORDER P ASSED BY THE HONBLE APPROPRIATE AUTHORITY ETC WERE FILED BEFORE HIM ALONG WITH THE RELEVANT SUBMISSION. AFTER 9 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 9 VERIFICATION OF ALL THESE DOCUMENTS, THE LD AO HAD COME TO THE CONCLUSION THAT THE TRANSFER OF LAND TO THE DEVELOPER BY VIRTUE OF THE DEVELOPMENT AGREEMENT DATED 16.6.1995 WOULD NOT BE CHARGEABLE TO TAX IN THE PRE VIOUS YEAR RELEVANT TO THE ASST YEAR 2004-05. FURTHER, THE LD AO ALSO RELIED ON THE ORD ER OF THE HONBLE APPROPRIATE AUTHORITY DATED 7.8.1995 U/S 269UL(3) OF THE ACT WH EREIN IT WAS CLEARLY MENTIONED THAT AS PER THE TERMS AND CONDITIONS MENTIONED IN THE DE VELOPMENT AGREEMENT, THE SIGNING OF THE SAID AGREEMENT WOULD CONSTITUTE TRANSFER AND AS SUCH THE DATE OF TRANSFER WAS TAKEN BY THE APPROPRIATE AUTHORITY AS THE DATE OF SIGNING OF THE AGREEMENT I.E 16.6.1995. ACCORDINGLY, IT WAS SUBMITTED THAT THE LD AO AFTER REVIEW OF THE DEVELOPMENT AGREEMENT AND THE ORDER ISSUED BY THE APPROPRIATE AUTHORITY A CCEPTED THAT THE TRANSFER OF LAND WAS NOT CHARGEABLE TO TAX DURING THE RELEVANT ASST YEAR . HENCE THE LD AO IS NOT PERMITTED TO REVIEW THE YEAR OF CHARGEABILITY OF THE TRANSFER OF LAND IN HIS REASSESSMENT ORDER ISSUED U/S 147 OF THE ACT WHICH WOULD IN ANY EVENT TANTAMO UNT TO CHANGE OF OPINION. THE ASSESSEE PLACED RELIANCE ON THE LARGER BENCH DECISION OF THE HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS USHA INTERNATIONAL LIMITED RE PORTED IN 348 ITR 485 (DEL) IN THIS REGARD. THE ASSESSEE ALSO PLACED RELIANCE ON THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS ICICI SECURITIES PRIMARY DEA LERSHIP LTD REPORTED IN 348 ITR 299 (SC) . 3.5. IN THE INSTANT CASE, THE LD AO HAD ALREADY FOR MED AN OPINION IN REGARD TO THE FOLLOWING ISSUES IN THE ORDER PASSED U/S 143(3) OF THE ACT :- (I) THE GAINS ARISING FROM THE SALE OF FLATS WOULD BE TREATED AS LONG TERM CAPITAL GAINS. (II) THE BALANCE OF 18 FLATS WHICH WAS HANDED OVER TO THE ASSESSEE BY THE DEVELOPER DURING THE FINANCIAL YEAR RELEVANT TO THE ASST YEAR 2004-05 WOULD NOT BE CHARGEABLE TO TAX AS THE DEVELOPMENT AGREEMENT WAS EXECUTED AND P OSSESSION OF LAND WAS HANDED OVER TO THE DEVELOPER AS AND WHEN THE DEVELOPMENT A GREEMENT WAS SIGNED WHICH WAS IN ASST YEAR 1996-97. 10 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 10 LATER ON SINCE THE LD AO HAD CHANGED HIS OPINION AN D TAXED THE GAINS ARISING FROM THE SALE OF FLATS AS SHORT TERM CAPITAL GAINS AND FURTH ER IN REGARD TO 18 FLATS WHICH WERE HANDED OVER TO THE ASSESSEE DURING THE RELEVANT YEA R WAS TREATED AS TRANSFER AND TAXED ACCORDINGLY IN THE ORDER U/S 143(3) / 147 OF THE AC T WHICH WOULD CLEARLY BE TERMED AS CHANGE OF OPINION. ACCORDINGLY, THE ASSESSEE PR AYED FOR ANNULLING THE REASSESSMENT PROCEEDINGS BEFORE THE LD CITA. 3.6. ON MERITS, IT WAS CONTENDED THAT THE DEVELOPME NT AGREEMENT WAS ENTERED INTO BETWEEN THE ASSESSEE AND PARK CHAMBERS LTD ON 16.6. 1995. UNDER THE TERMS OF THE AGREEMENT, THE CONSTRUCTION WAS TO TAKE PLACE ON TH E LAND OF THE ASSESSEE, WHICH WOULD BE DIVIDED BETWEEN THE DEVELOPER AND THE ASSESSEE I N THE RATIO OF 50:50. AS A RESULT OF THE AFORESAID, THE DEVELOPER WOULD CONSTRUCT THE BU ILDING SUPERSTRUCTURE ON THE ENTIRE LAND (INCLUDING ASSESSEES SHARE OF LAND) FOR WHICH THE CONSIDERATION WOULD BE 50% OF THE TOTAL LAND IN POSSESSION OF THE ASSESSEE. TO T HAT EXTENT, ON FACTS, IT MAY BE STATED HERE THAT THE POSSESSION AND / OR CONTROL OVER 50% OF THE LAND WAS PARTED TO THE DEVELOPER AND AS SUCH IT MAY BE STATED THAT THE ASS ESSEE HAD FULFILLED ALL THE CONDITIONS THROUGH THE AGREEMENT DATED 16.6.1995 AS ENVISAGED U/S 53A OF THE TRANSFER OF PROPERTY ACT 1882. IT WAS ALSO STATED THAT AFTER ENTERING I NTO THE DEVELOPMENT AGREEMENT, THE ASSESSEE EXECUTED THE POWER OF ATTORNEY IN FAVOUR O F THE DEVELOPER AND HANDED OVER THE SAME TO THE DEVELOPER. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPA DIA VS CIT REPORTED IN 260 ITR 491 (BOM) WHEREIN IT HAS BEEN OPINED THAT WHERE, IN CASE OF A DEVELOPMENT AGREEMENT, IF IT IS INDICATED IN THE CONTRACT THAT THE COMPLET E CONTROL OVER THE PROPERTY HAS BEEN PASSED OR TRANSFERRED IN FAVOUR OF THE DEVELOPER, T HE DATE OF CONTRACT WOULD BE RELEVANT IN DECIDING THE YEAR OF CHARGEABILITY OF CAPITAL GA INS. IN THE INSTANT CASE, THE ABOVE AGREEMENT WAS CHALLENGED IN THE HONBLE CALCUTTA HI GH COURT BY WAY OF INJUNCTION BY ONE A.S.OVERSEAS PVT LTD. THE HONBLE CALCUTTA HIG H COURT VIDE ORDER DATED 11 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 11 27.5.1997 GAVE NECESSARY INSTRUCTION VIDE ORDER TO CHANGE THE RATIO FROM 50:50 TO 48.5 : 46.5 BETWEEN THE ASSESSEE AND THE DEVELOPER AND THE REMAINING 5% SHARE WOULD GO TO A.S.OVERSEAS PVT LTD. ACCORDINGLY IT WAS PLEADED THAT THE DEVELOPMENT AGREEMENT WAS ENTERED INTO ON 16.6.1995 AND POWER OF ATTORNEY WAS EXECUTED ON THE SAME DATE IN FAVOUR OF THE DEVELOPER AND POSSESSION OF THE LAND WAS HANDED OVER TO THE DEVELOPER ON 16.6.1995 ITSELF RELEVANT TO ASST YEAR 1996-97 AND HENCE THE CHARGEABILITY OF THE TRANSFER TO CAPITAL GAINS TAX THEREON WOULD ARISE O NLY IN ASST YEAR 1996-97 AND NOT THEREAFTER IN TERMS OF SECTION 2(47)(V) OF THE ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882. THE ASSESSEE FURTHER PLACE D RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DLF UNIVERSAL LIMITED VS APPROPRIATE AUTHORITY REPORTED IN 243 ITR 730 (SC) WHEREIN THE HONBLE CO URT HAD HELD THAT THE AGREEMENT FOR TRANSFER WHICH HAS BEEN REDUCED INTO WRITING IN FORM 37I PERTAINS TO IMMOVABLE PROPERTY AND AMOUNTS TO TRANSFER OF IMMOVABLE PROPE RTY WITHIN THE MEANING OF CLAUSES (D) AND (F) OF SECTION 269UA OF THE ACT. THUS, IN THIS CONNECTION, IT MAY BE STATED THAT AS THE DEFINITION OF TRANSFER STATED IN SECTION 2(4 7)(V) AND SECTION 269UA(F) OF THE ACT ARE SAME AND HENCE THE DATE OF THE ISSUANCE OF THE CERTIFICATE OF NO OBJECTION ISSUED BY THE APPROPRIATE AUTHORITY WOULD HAVE TO BE CONSIDER ED AS THE DATE OF THE TRANSFER U/S 2(47)(V) OF THE ACT. HENCE IT WAS PLEADED THAT TH E TRANSFER OF THE LAND HAD NOT TAKEN PLACE IN THE ASST YEAR 2004-05 AS IT HAS TAKEN PLA CE MUCH BEFORE RECEIPT OF POSSESSION OF THE FLATS. 4. THE LD CITA WENT THROUGH THE CERTIFIED COPIES OF THE ORDER SHEET ENTRIES RECORDED BY THE LD AO IN THE ORIGINAL ASSESSMENT AND LATER IN T HE REASSESSMENT PROCEEDINGS WHICH ARE AS UNDER:- SL. NO. DOCUMENTS REQUISITIONED DATE OF REQUISITION AS PER ORDER SHEET DURING ASSESSMENT PROCEEDINGS. DATE OF REQUISITION AS PER ORDER SHEET DURING REASSESSMENT PROCEEDIN GS. 1 COPY OF THE TRUST DEED 19 TH JUNE, 2006 2 BANK STATEMENT 19 TH JUNE, 2006 4 TH DECEMBER, 2009 12 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 12 3 DEVELOPMENT AGREEMENT 19 TH JUNE, 2006 4 TH DECEMBER, 2009 4 DETAILS OF CAPITAL GAIN INCLUDING THE PROPERTY ACQUIRED AND PROPERTY SOLD AND VALUATION OF PROPERTY 19 TH JUNE, 2006 5 COPY OF THE VALUATION REPORT 24 TH JULY, 2006 6 EXPLANATION FOR SHORT TERM CAPITAL GAINS 7 TH SEPTEMBER, 2009. BASED ON THE AFORESAID TABLE, THE LD CITA AGREED WI TH THE CONTENTIONS OF THE ASSESSEE THAT NO NEW MATERIAL HAD COME TO THE POSSESSION OF THE LD AO AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS SO AS TO JUSTIFY THE INITIAT ION OF THE REASSESSMENT PROCEEDINGS. THE LD CITA CONCLUDED THAT THE DOCUMENTS REVIEWED A T THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND REASSESSMENT PROCEEDINGS WERE THE S AME. THE LD CITA OBSERVED THAT THE LD AO BY REVIEWING THE SAME DOCUMENTS HAD REACH ED TO A DIFFERENT CONCLUSION FROM THE ONE ORIGINALLY TAKEN BY HIM IN THE ORIGINAL ASS ESSMENT PROCEEDINGS. THE LD CITA FURTHER OBSERVED THAT THE LD AO HIMSELF IN THE LAST PARAGRAPH OF THE REMAND REPORT HAD STATED THAT ON A FURTHER REVIEW OF THE DEVELOPMENT AGREEMENT AND OTHER DOCUMENTS WHICH WERE ALREADY PROVIDED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, THE FACT THAT THE POSSESSION OF LAND WAS HANDED OVER BY THE ASSESSEE IN LIEU OF 26 FLATS CAME TO LIGHT. THE LD CITA FURTHER OBSERVED THAT IN PARAGR APH 2 OF PAGE 2 OF THE REMAND REPORT, THE LD AO HAD STATED THAT ON THE BASIS OF THE ABOVE INFORMATION HE HAS FORMED A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. FURTHER IN FI FTH PARAGRAPH OF PAGE 2 OF THE REMAND REPORT, THE LD AO HAD STATED THAT WHEN THE REASSESS MENT IS BASED ON SUFFICIENT MATERIAL ON RECORD, THE ALLEGATION OF CHANGE OF OPINION CANN OT BE LEVELED AGAINST HIM. THE LD CITA BASED ON THESE STATEMENTS OF THE LD AO IN HIS REMAND REPORT, CONCLUDED THAT ALL THE ABOVE FACTS PROVE BEYOND DOUBT THAT THE LD AO H AD STARTED THE REASSESSMENT PROCEEDINGS BASED ON THE SAME MATERIAL WHICH WERE A LREADY AVAILABLE ON RECORD AND WERE IN THE POSSESSION OF THE LD AO DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS. 13 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 13 LATER BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD REPORTED IN 320 ITR 561 (SC) WHEREIN IT WAS HELD THAT ALTHOUGH THE AO HAS NO POWER TO REVIEW IT HAS POWER TO REASSESS. HOWEVER, SUCH POWER TO REASSESS CANNOT BE BASED ON CHANGE OF OPINION. HENCE, AFTER 1.4.1989, AO HAS POWER TO REOPEN, PROVIDED THERE IS TANGIBLE MATERI AL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. T HE LD CITA FURTHER PLACED RELIANCE ON THE FOLLOWING DECISIONS :- A) ITO VS LAKHMANI MEWAI DAS REPORTED IN 103 ITR 43 7 (SC) WHEREIN THE HONBLE COURT HAD STATED : THE DUTY OF THE ASSESSEE IN ANY CASE DOES NOT EXTE ND BEYOND MAKING A TRUE AND FULL DISCLOSURE OF PRIMARY FACTS. ONCE, HE HAS DONE THAT HIS DUTY ENDS. IT IS FOR THE ITO TO DRAW THE CORRECT INFERENCE FROM THE PRIMARY FACTS. IT IS NO RESPONSIBILITY OF THE ASSESSEE TO ADVISE THE ITO WITH REGARD TO THE INFERENCE WHIC H HE SHOULD DRAW FROM THE PRIMARY FACTS. IF AN ITO DRAWS AN INFERENCE WHICH APPEARS S UBSEQUENTLY TO BE ERRONEOUS, MERE CHANGE OF OPINION WITH REGARD TO THAT INFERENCE WOU LD NOT JUSTIFY INITIATION OF ACTION FOR REOPENING ASSESSMENT. B) SUNROLLING MILLS P LTD VS ITO REPORTED IN 160 IT R 412 (CAL) WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAD HELD AS UNDER:- IT IS NOW WELL SETTLED THAT THE ITO CAN INVOKE JUR ISDICTION UNDER SECTION 147(B) IF HE HAS INFORMATION IN HIS POSSESSION TO FORM THE BELIE F THAT INCOME HAS ESCAPED ASSESSMENT. SECTION 147 POSTULATES THAT INFORMATION MUST HAVE COME TO THE POSSESSION OF THE ITO AFTER HE HAD PASSED THE ORIGINAL ASSESSM ENT ORDER AND IT IS ONLY ON SUCH INFORMATION THE ITO IS ENTITLED TO ACT. IF THE INFO RMATION WAS ALREADY WITH HIM AND HE DID NOT ACT ON THE BASIS OF SUCH INFORMATION BEFORE THE ASSESSMENT WAS COMPLETED, THEN SECTION 147(B) WOULD NOT PERMIT HIM TO APPLY HIS MI ND TO THE SAME ASSESSMENT WITH A VIEW TO CORRECT HIS OWN MISTAKE. THE ITO CANNOT ACT ON THE BASIS OF THE CHANGE OF OPINION. THE ITO MUST HAVE KNOWLEDGE OF ANY FACT OR LAW COMING TO HIS POSSESSION SUBSEQUENT TO THE COMPLETION OF THE ORIGINAL ASSESS MENT. C) ASIAN PAINTS LIMITED VS DCIT REPORTED IN 308 ITR 195 (BOM) , WHEREIN IT WAS HELD AS UNDER:- IT IS FURTHER TO BE SEEN THAT THE LEGISLATURE HAS NOT CONFERRED POWER ON THE ASSESSING OFFICER TO REVIEW ITS OWN ORDER. THEREFORE, THE POW ER UNDER SECTION 147 CANNOT BE USED TO REVIEW THE ORDER. IN THE PRESENT CASE, THOUGH TH E ASSESSING OFFICER HAS USED THE PHRASE REASON TO BELIEVE, ADMITTEDLY BETWEEN THE DATE OF THE ORDER OF ASSESSMENT 14 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 14 SOUGHT TO BE REOPENED AND THE DATE OF FORMATION OF OPINION BY THE ASSESSING OFFICER, NOTHING NEW HAS HAPPENED, THEREFORE, NO NEW MATERIA L HAS COME ON RECORD, NO NEW INFORMATION HAS BEEN RECEIVED, IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME ASSESSING OFFICER TO THE SAME SET OF FACTS AND THE REASON THAT HAS BEEN GIVEN IS THAT THE SOME MATERIAL WHICH WAS AVAILABLE ON RECORD WHILE A SSESSMENT ORDER WAS MADE WAS INADVERTENTLY EXCLUDED FROM CONSIDERATION. THIS WIL L, IN OUR OPINION, AMOUNT TO OPENING OF THE ASSESSMENT MERELY BECAUSE THERE IS CHANGE OF OPINION. THE FULL BENCH OF THE DELHI HIGH COURT IN ITS JUDGMENT IN THE CASE OF KEL VINATOR [2002] 256 ITR 1 REFERRED TO ABOVE, HAS TAKEN A CLEAR VIEW THAT REOPENING OF ASS ESSMENT UNDER SECTION 147 MERELY BECAUSE THERE IS A CHANGE OF OPINION CANNOT BE ALLO WED. IN OUR OPINION, THEREFORE, IN THE PRESENT CASE ALSO, IT WAS NOT PERMISSIBLE FOR R ESPONDENT NO. 1 TO ISSUE NOTICE UNDER SECTION 148. 4.1. THE LD CITA ANNULLED THE REASSESSMENT BY OBSER VING AS UNDER:- THUS, THE COMMON THREAD RUNNING THROUGH ALL THE AB OVE DECISIONS RENDERED BY THE HON'BLE SUPREME COURT, CALCUTTA HIGH COURT AND THE HONBLE BOMBAY HIGH COURT IT IS SEEN THAT SECTION 147 OF THE ACT POSTULATES THAT IN FORMATION MUST HAVE COME TO THE POSSESSION OF THE AO AFTER HE HAD PASSED THE ORIGIN AL ASSESSMENT ORDER AND IT IS ONLY ON SUCH INFORMATION THE AO IS ENTITLED TO ACT. IF THE INFORMATION WAS ALREADY WITH HIM AND HE DID NOT ACT ON THE BASIS OF SUCH INFORMATION BEF ORE THE ASSESSMENT WAS COMPLETED, THEN SECTION 147 OF THE ACT WOULD NOT PERMIT HIM. T HE AO CANNOT ACT ON THE BASIS OF THE CHANGE OF OPINION. THE AO MUST HAVE COMPLETION OF T HE ORIGINAL ASSESSMENT. HENCE, FOLLOWING THE PRINCIPLES ENUNCIATED REASSESSMENT WA S BASED ON CHANGE OF OPINION AS THE AO CAME TO A DIFFERENT CONCLUSION BY REVIEWING THE SAME DOCUMENTS WHICH WERE THERE WITH HIM DURING THE COURSE OF ASSESSMENT PROC EEDINGS. IN VIEW OF MY ABOVE FINDINGS, FACTS OF THE CASE AND CASE LAWS CITED IN PARA NOS. 6.5, 6.6, 6.7 AND 6.8 (SUPRA), I AM INCLINED TO AGREE WI TH THE CONTENTIONS & ARGUMENTS OF THE LEARNED AR OF THE APPELLANT. I, THEREFORE, TREATED THE REASSESSMENT PROCEEDINGS AND THE IMPUGNED ORDER OF ASSESSMENT PASSED U/S 143(3)/147 OF THE I.T. ACT, 1961 BY THE AO IS BAD IN LAW AND HENCE VOID. IN THE RESULT, I ANNUL THE SAID IMPUGNED ORDER OF ASSESSMENT AND ALLOW ADDITIONAL GROUND NO. 1 OF THE INSTANT AP PEAL. 4.2. APART FROM THIS, THE LD CITA ALSO PROCEEDED TO ADJUDICATE THE ISSUE ON MERITS HELD THAT THE TRANSFER OF LAND HAD TAKEN PLACE IN TERMS OF SECTION 2(47)(V) OF THE ACT PURSUANT TO THE DEVELOPMENT AGREEMENT ENTERED INTO ON 16.6.1 995 RELEVANT TO ASST YEAR 1996-97 AND POSSESSION OF THE LAND WAS ALSO HANDED OVER TO THE DEVELOPER IN THE ASST YEAR 1996- 97 BY EXECUTING A VALID POWER OF ATTORNEY. HENCE T HERE CANNOT BE ANY CAPITAL GAINS ON TRANSFER OF LAND IN ASST YEAR 2004-05 I.E AT THE TI ME OF HANDING OVER THE FLATS TO THE ASSESSEE BY THE DEVELOPER. HE ACCORDINGLY HELD AS UNDER ON MERITS :- 15 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 15 7.1 IN THE GROUNDS OF APPEAL BEFORE ME I FOUND THA T THE APPELLANT HAS CLAIMED THE GAINS ARISING FROM THE SALE OF FLATS AS A LONG TERM CAPITAL GAINS. THE SUBMISSION OF THE APPELLANT AND THE CONTENTION OF THE AO ARE CAREFULL Y CONSIDERED AND THE FACTS OF THE CASE PERUSED. IT IS SEEN THAT WHEN THE FLATS WERE S OLD DURING THE YEAR UNDER CONSIDERATION TWO DIFFERENT ASSETS NAMELY THE BUILD ING SUPERSTRUCTURE AND THE UNDIVIDED SHARE IN THE LAND ON WHICH THE SUPERSTRUCTURE WERE SOLD SEPARATELY AND NOT THE BUILDING ONLY. SINCE, THE SALE TOOK PLACE SOON AFTER OBTAINI NG POSSESSION OF FLATS, THE BUILDING SUPERSTRUCTURE WOULD BE TREATED AS SHORT TERM CAPIT AL ASSETS AND ANY GAINS FROM SUCH SALE WOULD BE TREATED AS SHORT TERM CAPITAL GAINS. FURTHER, THE GAINS ARISING FROM THE SAME OF UNDIVIDED PORTION OF LAND INCLUDED IN THE S UPERSTRUCTURE WOULD BE A LONG TERM CAPITAL ASSET AND THE GAINS IF ANY WOULD BE TREATED AS LONG TERM CAPITAL GAINS. 7.2 NOW THE MOOT QUESTION IS THAT HOW TO FIND OUT T HE SALE VALUE OF LAND AND BUILDING SUPERSTRUCTURE SEPARATELY WHEN THE BIFURCATION IS N OT SPECIFIED IN THE SALE DEED. IN THIS CONNECTION MY ATTENTION WAS DRAWN TO THE DECISIONS OF THE HONBLE KOLKATA TRIBUNAL IN THE CASE OF STATESMAN LTD. VS. ACIT AND ITC LTD. VS . DCIT WHEREIN THE PRINCIPLES SET OUT BY THE DECISION OF THE HONBLE TRIBUNAL, I AM O F THE CONSIDERED OPINION THAT THE BIFURCATION OF THE SALE PRICE SHOULD BE DONE BY CAL LING FOR A VALUATION REPORT OF ANY REGISTERED VALUER ON THE DATE OF SALE TO ESTIMATE T HE ALLOCATION OF SALE PRICE BETWEEN THE BUILDING SUPERSTRUCTURE AND THE UNDIVIDED PORTION O F THE LAND AND THEREAFTER DEDUCTING THE VALUE OF THE LAND AS ON 1 ST APRIL, 1981 (AFTER INDEXATION) WHICH MAY ALSO FOUN D OUT BY TAKING A VALUATION REPORT FROM ANY REGISTERED VA LUER FROM THE SALE PRICE OF LAND AS STATED ABOVE TO ARRIVE AT THE LONG TERM CAPITAL GA INS. THE SHORT TERM CAPITAL GAINS FROM THE SALE OF BUILDING SUPERSTRUCTURE WOULD HOWEVER B E COMPUTED WITHOUT DEDUCTING ANY COST AS THE APPELLANT WOULD NOT BE INCURRING ANY CO ST FOR THE SAME. IN THE LIGHT OF THE ABOVE FACTS AND LAW. I AM NEITHER INCLINED TO ACCEP T THE CONTENTION OF THE APPELLANT NOR WITH THE CONTENTION OF THE AO THAT THE GAINS ARISIN G FROM THE SALE OF FLATS WOULD ONLY CONSTITUTE LONG TERM OR ONLY SHORT TERM AS THE CASE MAY BE. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN TREATING THE REOPENIN G OF THE CASE AB INITIO VOID, BY IGNORING THE FACTS OF THE CASE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN NOT CONSIDERING THE F ACT THAT THE AO RELIED UPON A DOCUMENT I.E. POSSESSION LETTER OF FLATS, FOR REOPE NING THE CASE AND IT WAS NOT A MERE CHANGE OF OPINION. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN NOT CONSIDERING THE F ACT THAT TRANSFER OF LAND IN LIEU OF FLATS WAS A TRANSFER OF CAPITAL ASSET AS PER SEC . 2(47) OF THE ACT AND ASSESSEE WAS LIABLE FOR LONG TERM CAPITAL GAIN. 16 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 16 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, M ODIFY, DELETE OR INCLUDE ANY OF THE GROUNDS OF APPEAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD DR STATED THAT THE PERIOD OF HOLDING OF FLATS BY THE ASSESSEE WAS NEVER EXAMINED BY THE LD AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS WHICH WOULD BE CRUCIAL FOR DETERMINING THE SUBJECT MENTIONED GAINS AS SHORT TERM CAPITAL GAINS. HENCE IT IS A MISTAKE OF FACT WHICH HAD LED TO INITIATION OF REASSESSMENT PROCEEDINGS AND ACCORDINGLY THE LD CIT A OUGHT NOT TO HAVE ANNULLED THE REASSESSMENT PROCEEDINGS. HE PLACED RELIANCE ON TH E DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF EXPORT CREDIT GUARANTEE C ORPORATION OF INDIA LTD VS ADDITIONAL CIT REPORTED IN 350 ITR 651 (BOM) . IN RESPONSE TO THIS, THE LD AR ARGUED THAT THE ENTIRE DOCUMENTS AND RECORDS WERE MADE AVA ILABLE BEFORE THE LD AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND HE REITERATED T HE FINDINGS OF THE LD CITA. HE FURTHER PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY VS CIT REPORTE D IN 119 ITR 996 (SC). HE FURTHER STATED THAT THIS IS A FIT CASE FOR INVOKING REVISIONARY JURISDICTION U/S 263 OF THE ACT BY THE LD CIT WHICH HAD BEEN MISSED BY THE DEPA RTMENT AND REASSESSMENT U/S 147 OF THE ACT IS NOT THE RIGHT RECOURSE AVAILABLE TO T HE DEPARTMENT IN THE FACTS OF THE INSTANT CASE. 6.1. WE FIND THAT THIS CASE LAW RELIED UPON BY THE LD AR SQUARELY COVERS THE CASE OF THE ASSESSEE WHEREIN IT WAS HELD THAT :- 14. NOW, IN THE CASE BEFORE US, THE ITO HAD, WHEN HE M ADE THE ORIGINAL ASSESSMENT, CONSIDERED THE PROVISIONS OF SECTIONS 9 AND 10. ANY DIFFERENT VIEW TAKEN BY HIM AFTERWARDS ON THE APPLICATION OF THOSE PROVISIONS W OULD AMOUNT TO A CHANGE OF OPINION ON MATERIAL ALREADY CONSIDERED BY HIM. THE REVENUE CONTENDS THAT IT IS OPEN TO HIM TO DO SO AND, ON THAT BASIS, TO REOPEN THE ASSESSMENT UNDER SECTION 147(B). RELIANCE IS PLACED ON KALYANJI MAVJI & CO. V. CIT [1976] 102 ITR 287 , WHERE A BENCH OF LEARNED JUDGES OF THIS COURT OBSERVED THAT A CASE WHERE INC OME HAD ESCAPED ASSESSMENT DUE TO THE 'OVERSIGHT, INADVERTANCE OR MISTAKE' OF THE ITO MUST FALL WITHIN THE MEANING OF SECTION 34(1)(B ) OF THE INDIAN INCOME-TAX ACT, 192 2. IT APPEARS TO US, WITH RESPECT, THAT THE PROPOSITION IS STATED TOO WIDELY AND TRAVELS FU RTHER THAN THE STATUTE WARRANTS INSOFAR 17 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 17 AS IT CAN BE SAID TO LAY DOWN THAT IF ON REAPPRAISI NG THE MATERIAL CONSIDERED BY HIM DURING THE ORIGINAL ASSESSMENT THE ITO DISCOVERS TH AT HE HAS COMMITTED AN ERROR IN CONSEQUENCE OF WHICH INCOME HAS ESCAPED ASSESSMENT, IT IS OPEN TO HIM TO REOPEN THE ASSESSMENT. IN OUR OPINION, AN ERROR DISCOVERED ON A RECONSIDERATION OF THE SAME MATERIAL (AND NO MORE) DOES NOT GIVE HIM THAT POWER . THAT WAS THE VIEW TAKEN BY THIS COURT IN MAHARAJ KAMAL KUMAR SINGH'S CASE (SUPRA) , A. RAMAN & CO.'S CASE (SUPRA) AND BANKIPUR CLUB LTD. V. CIT [1971] 82ITR 831 AND WE DO NOT BELIEVE THAT THE LAW HAS SINCE TAKEN A DIFFERENT COURSE. ANY OBSERVATIONS IN KALYANJI MAVJI'S CASE (SUPRA) SUGGESTING THE CONTRARY DO NOT, WE SAY WITH RESPECT , LAY DOWN THE CORRECT LAW. 15. A FURTHER SUBMISSION RAISED BY THE REVENUE ON SECT ION 147(B) OF THE ACT MAY BE CONSIDERED AT THIS STAGE. IT IS URGED THAT THE EXPR ESSION 'INFORMATION' IN SECTION 147(B) REFERS TO THE REALISATION BY THE ITO THAT HE HAS CO MMITTED AN ERROR WHEN MAKING THE ORIGINAL ASSESSMENT. IT IS SAID THAT WHEN UPON RECE IPT OF THE AUDIT NOTE THE ITO DISCOVERS OR REALISES THAT A MISTAKE HAS BEEN COMMI TTED IN THE ORIGINAL ASSESSMENT, THE DISCOVERY OF THE MISTAKE WOULD BE 'INFORMATION' WIT HIN THE MEANING OF SECTION 147(B ). THE SUBMISSION APPEARS TO US INCONSISTENT WITH THE TERMS OF SECTION 147(B). PLAINLY, THE STATUTORY PROVISION ENVISAGES THAT THE ITO MUST FIR ST HAVE INFORMATION IN HIS POSSESSION, AND THEN IN CONSEQUENCE OF SUCH INFORMATION HE MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE REALISATION THAT INCOME HAS ESCAPED ASSESSMENT IS COVERED BY THE WORDS 'REASON TO BELIEVE', AND IT FO LLOWS FROM THE 'INFORMATION' RECEIVED BY THE ITO. THE INFORMATION IS NOT THE REA LISATION, THE INFORMATION GIVES BIRTH TO THE REALISATION. 6.2. NOW COMING TO THE DECISION OF THE HONBLE BOMB AY HIGH COURT RELIED UPON BY THE LD DR IN 350 ITR 651 SUPRA , WE FIND THAT IN THAT C ASE, THE ASSESSEE HAD FAILED TO DISCLOSE MATERIAL FACTS COUPLED WITH COMPLETE FAILU RE ON THE PART OF THE AO TO APPLY HIS MIND DURING ORIGINAL ASSESSMENT PROCEEDINGS. ACCOR DINGLY IT WAS HELD THAT THERE WAS TANGIBLE MATERIAL AND REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. WE HOLD THAT THIS DECISION IS FACTUALLY DISTINGUISHABLE TO THE FACTS OF THE ASSESSEE BEFORE US, AS ADMITTEDLY, THERE WAS ABSOLUTELY NO FAILURE ON THE PART OF THE ASSESSEE FROM FURNISHING THE FACTS TOGETHER WITH RELEVANT DOCUMENTS BEFORE T HE LD AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS. INFACT THE LD AO HAD CONCEDED THIS FA CT IN THE REMAND REPORT THAT HE HAD ONLY VERIFIED THE VERY SAME DOCUMENTS THAT WERE ALR EADY AVAILABLE IN THE FILE WHICH MADE HIM TO FORM A BELIEF THAT INCOME HAD ESCAPED A SSESSMENT. HENCE IT COULD BE SAFELY CONCLUDED THAT THERE WAS NO TANGIBLE MATERIA L AVAILABLE WITH THE LD AO TO FORM A BELIEF THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSE SSMENT. HENCE THE DECISION OF THE 18 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 18 HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINA TOR OF INDIA LTD REPORTED IN 320 ITR 561 (SC) WOULD CLEARLY SUPPORT THE CASE OF THE ASSESSEE WHI CH HAS BEEN RIGHTLY APPLIED BY THE LD CITA WHILE ANNULLING THE ASSESSME NT. WE HOLD THAT THE LD AO HAD ONLY TRIED TO REVIEW HIS OWN ORDER IN THE GARB OF R EASSESSMENT BY LOOKING INTO THE VERY SAME MATERIALS THAT WERE ALREADY AVAILABLE ON RECOR D. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA ON ANNULLING THE REASSESSMENT. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. SINC E WE HAVE CONFIRMED THE ORDER OF THE LD CITA IN ANNULLING THE ASSESSMENT, WE REFRAIN TO GIVE OUR OPINION ON THE MERITS OF THE ISSUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 08.09.2017 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08.09.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-30(3), KOLKATA, AAYAKAR BHAVAN DAKSIN, 2, GARIAHAT ROAD SOUTH, 5 TH FLOOR, KOLKATA-700068. 2. ISHWAR CHINTA HARAN SHIV THAKUR, 8, PC SARKAR SA RANI, KOLKATA-700019. 3. C.I.T(A)-XIV, KOLKATA. 4. C.I.T.- KOLK ATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 19 ITA NO.2841/KOL/2013 ISHWAR CHINTA HARAN SHIV THAKUR A.YR.2004-05 19