Shri Sanjay Kumar Linjara, JAIPUR V. ITO, UDAIPUR

ITA 454/JODH/2013

• Counselvise Citation: 45423314 RSA 2013
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Invalid notice; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 147; 148

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 454 /JODH/2013 (A.Y. 200 4 - 05 ) SHRI SANJAY KUMAR LINJARA, 6 - A , JAWAHAR NAGAR, UDAIPUR (RAJ.) VS. ITO, WARD - 1(4) UDAIPUR. PAN NO. ABHPL 0385 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA . DEPARTMENT BY : SHRI JAI SINGH - D.R. DATE OF HEARING : 26 / 0 8 /201 4 . DATE OF PRONOUNCEMENT : 25 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 26 /0 6 /2013 OF L D . CIT(A), UDAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. 1 THE VERY ACTION TAKEN U/S. 147 R/W 148 IS BAD IN LAW WITHOUT JURISDICTION AND BEING VOID AB - INITIO, INVALID, THE SAME MAY KINDLY BE QUASHED. CONSEQUENTLY, THE IMPUGNED ASSESSMENT FRAMED U/S. 143(3)/148 DATED 18/11/2007 MAY ALSO KINDLY BE QUASHED. 2 1. 2. THE IMPUGNED ORDER U/S. 143(3)/148 R.W.S. 147 DATED 18/11/2011 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2. RS. 3,81,257/ - THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN SUSTAINING THE ADDITION OF RS. 3,81,257/ - (RS. 5,96,257/ - DETERMINED BY A.O. LESS RS. 2,15,000/ - SHOWN BY THE ASSESSEE) ON ACCOUNT OF SHORT TERM CAPITAL GAIN BY APPLYING THE PROVISION OF S. 50C WITHOUT APPRECIATING CORRECT FACTS AND ON WRONG CALCULATION BY THE LD. CIT(A) IS CONTRA RY TO THE PROVISIONS OF LAW AND FACTS AND HENCE THE SAME MAY KINDLY BE DELETED IN FULL. 3. THE LD. A.O. ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING OF INTEREST U/S. 234A, B & C AS CONSEQUENTIAL IN NATURE . THE APPELLANT TOTALLY DENIES IT LIABILITY OF CHARGING OF ANY SUCH INTEREST. HENCE THE INTEREST SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 4. THE APPELLANT PRAYS YOUR HONORS INDULGENCE TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 2 VIDE GROUND NO. 1.1 & 1.2 , THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U/S. 147 R.W.S.148 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE ORIGINALLY FILED THE RETURN OF INCOME ON 28/02/2005 DECLARING AN INCOME OF RS. 2,39,200/ - WHICH WAS ASSESSED U/S. 143(3) OF THE ACT BY THE ASSESSING OFFICER ON 31/ 0 8/2006 AT AN INCOME OF RS. 2,59,200/ - . IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD SHOWN CAPITAL GAIN AT RS. 16,270/ - . LATER ON, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAD TAKEN 3 S ALE CONSIDERATION OF THE LAND AT RS. 4,95,000/ - AS AGAINST THE VALUE ADOPTED BY SUB - REGISTRAR AT RS. 7,67,200/ - WHILE COMPUTING THE SHORT TERM CAPITAL GAIN AND THAT THERE WAS DIFFERENCE IN THE AREA OF LAND PURCHASED AND SOLD. IN THAT VIEW OF THE MATTER, THE ASSESSING OFFICER HAD REASONED TO BELIEVE TH AT THE INCOME HAD ESCAPED ASSESSMENT AND THERE WAS TANGIBLE MATERIAL TO COME TO THE CONC L USION THAT THERE IS ESCAP E MENT OF INCOME . ACCORDINGLY, THE PROCEEDINGS U/S. 147/148 OF THE ACT WERE INITIATED. THE ASSESSING OFFICER FRAMED THE REASSESSMENT AT AN INCOME OF RS. 6,20,450/ - . 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND CHALLENGED THE LEGALITY OF THE REASSESSMENT PROCEEDINGS BY STATING THAT THERE WAS NO INCOME WHICH HAD ESCAPED ASSESSMENT DURING THE YEAR UNDER CONSIDERATION FOR RE ASSESSMENT AND HENCE THE SUBSEQUENT PROCEEDINGS OF RE ASSESSMENT BASED ON SUCH ILLEGAL NOTICE WERE BAD IN LAW. THE SUBMISSIONS OF THE ASSESSEE AS INCORPORATED AT PAGE NOS. 2 TO 6 OF THE IMPUGNED ORDER ARE REPRODUC ED VERBATIM AS UNDER: - IN THIS CASE ORIGINAL RETURN OF INCOME WAS FILED DECLARING INCOME AT RS.2,39,200/ - AND THE ORIGINAL ASSESSMENT WAS PASSED U/S 143(3) BY THE LD. AO ON 31/8/2006 AT TOTAL INCOME OF RS.2,59,200/ - . THE ASSESSEE HAS SUBMITTED FULL AND TRUE DETAILS OF SHORT TERM C APITAL GAIN DERIVED BY HIM ON TRANSFER OF RIGHT TO CO NVEYANCE OF PLOT. IN FACT THERE WAS NO REGISTRY IN 4 FAVOUR OF ASSESSES AT THE TIME OF INVESTMENT FOR PURCHASE OF LAND AS WELL AS NO REGISTRY OF TRANSFER WAS EXECUTED BY THE ASSESSEE AT THE TIME OF SALE BY THE ORIGINAL OWNER TO THE ULTIMATE PURCHASER ALSO. ACCORDING TO THE ASSESSEE, THE ASSET IN HIS HANDS WAS RIGHT TO ACQUIRE PLOT WHICH WAS TRANSFERRED BY HIM ONLY AND HENCE THE PROVISIONS OF SEC 50C WERE NOT APPLICABLE ON SUCH TRANSACTION IN THE CASE OF A SSESSEE BECAUSE THE ASSET TRANSFER WAS NOT LAND OR BUILDING OR BOTH. THE ASSESSEE HAS EXPLAINED THIS FACT AT THE TIME OF REGULAR ASSESSMENT PROCEEDINGS AND AFTER CONSIDERING THE LD. AO HAS FRAMED ORDER U/S 143(3). THEREAFTER THE PRESENT LD. AO HAS OPINED THAT THERE WAS ESCAPEMENT OF TAX LIABILITY IN THE ORIGINAL ASSESSMENT IN THIS CASE. HE HAS ISSUED NOTICE UNDER SECTION 148 AND THE ASSESSEE HAS OBJECTED THE SAME LEGALLY. HOWEVER THE LD. AO HAS NOT ACCEPTED THE LEGAL OBJECTIONS AGAINST REASSESSMENT PROCEE DING AND HAS ALSO NOT ACCEPTED THE VARIOUS EXPLANATIONS FURNISHED BY THE ASSESSEE IN THIS RESPECT AND HAS REASSESSED BY MAKING ADDITION OF RS.5,96,257/ - BY INVOKING PROVISIONS OF SECTION 50C OF THE ACT, AGGRIEVED BY THE ORDER AND THE ADDITION THE ASSESSEE IS IN APPEAL BEFORE YOUR GOODSELF. THAT THE NOTICE U/S 148 HAS BEEN ISSUED IGNORING THE TRUE AND REAL FACTS OF THE CASE AND ALL MATERIAL FACTS WERE DISCLOSED IN THE ORIGINAL RETURN OF INCOME. THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF INCOME IN THE ORIGINAL RETURN AND HAS OFFERED SHORT TERM CAPITAL GAIN FOR TAX PURPOSES. THERE WAS NO NEW INFORMATION FROM WHICH IT APPEARS THAT PRIMA FACIE THERE WAS ESCAPEMENT OF TAX. THE REQUISITE CONDITIONS AND CORRECT I NFORMATION WAS NOT THERE IN THE RECORDS TO FORM A BELIEF THAT THERE WAS ESCAPEMENT OF TAX IN THE ORIGINAL ASSESSMENT. THE ONLY REASONS RECORDED BEFORE INITIATION OF PROCEEDINGS U/S 148 WAS THAT THE ASSESSEE HAS NOT COMPUTED CAPITAL GAIN AFTER APPLICATION O F PROVISION OF SECTION 50C AND FURTHER THERE WAS DIFFERENCE IN AREA OF PLOT SOLD. THE LEARNED ASSESSING OFFICER HAS NOT APPRECIATED THE CORRECT FACT IN THIS CASE THAT THERE WAS NO SALE OF PLOT BY THE ASSESSEE, SO THERE IS NO QUESTION OF DIFFERENCE OF AREA OF LAND ALSO. IN FACT, THE ASSESSEE HAD TRANSFERRED RIGHT TO PURCHASE THE PLOT WHICH WAS AN ASSETS AS PER LAW. HE HAS NOT PURCHASED 5 ANY PLOT BY REGISTERED SALE DEED. HE HAS MADE PAYMENT TO PURCHASE RIGHT TO CLAIM CONVENIENCE OF IMMOVABLE PROPERTY IN HIS F AVOUR, BUT BEFORE CONVEYANCE IN HIS NAME HE HAS RELINQUISH HIS RIGHT ACQUIRED BY WAY OF PAYMENT EARLIER. ACTUALLY THERE WAS TRANSFER OF CAPITAL ASSETS WHICH IS TECHNICALLY KNOWN AS RIGHT TO OBTAIN CONVEYANCE OF IMMOVABLE PROPERTY. SUCH RIGHT IS CAPITAL A SSETS AS PER LAW. THERE WAS NO TRANSFER OF LAND, BUILDING OR BOTH BY THE ASSESSEE. THE LEARNED ASSESSING OFFICER ERRED AT LAW IN NOT APPRECIATING THIS CORRECT FACT IN ITS TRUE SENSE. ON SUCH TYPE OF TRANSFER O F CAPITAL ASSETS THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. SIMILAR IS THE POSITION REGARDING AREA OF PLOT ON WHICH THE LEARNED ASSESSING OFFICER HAS DOUBTED BECAUSE NEITHER PURCHASE NOR SALE OF PLOT WAS THERE. ACCORDINGLY THE INITIATION OF REASSESSMENT PROCEEDINGS BY THE LEARNED ASSESSING OFFIC ER IN THIS CASE IS ILLEGAL, BAD IN LAW AND THE PROCEEDINGS ARE REQUIRED TO BE TREATED AS INVALID. HE HAS ERRED AT LAW IN INITIATING THE REASSESSMENT PROCEEDING JUST ON ASSUMPTIONS AND PRESUMPTIONS WHICH ARE CONTRARY TO THE CORRECT FACTS OF THE CASE. THERE WAS NO REGISTRY EXECUTED BY THE ASSESSEE IN FAVOUR OF ANY PERSON. THE REASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE UNDER SECTION 148 ON THE BASIS OF SUCH ASSUMPTION AND PRESUMPTIONS WITHOUT PROPER BASE OR PROPER REASONS TO BELIEVE JUST BASED ON WRONG FACTS ARE INVALID AND NOT ENFORCEABLE AGAINST THE ASSESSEE. MERELY A FRESH APPLICATION OF MIND TO THE SAME SET OF FACTS MEANS MERE CHANGE OF OPINION ONLY. CHANGE OF OPINION CANNOT BE MADE THE BASE FOR ISSUE OF NOTICE U/S. 148. SECOND THOUGHT ON SAME MATERIAL AN D OMISSION TO DRAW THE CORRECT LEGAL PRESUMPTION DURING ORIGINAL ASSESSMENT DO NOT WARRANT THE INITIATION OF A PROCEEDING U/S 147. IN THE PRESENT CASE, CORRECT LEGAL AS WELL AS FACTUAL POSITION HAS BEEN DISCUSSED AND CONSIDERED BY THE THEN AO DURING THE AS SESSMENT UNDER SECTION 143(3). THE ASSESSEE HAD CLEARLY STATED THAT HE HAS TRANSFERRED ONLY THE RIGHT TO CONVEYANCE AND NOT THE SALE OF PLOT. HENCE THE GAIN WAS TO BE CONSIDERED WITHOUT APPLICATION OF PROVISION SECTION 50C AND THE SURPLUS ONLY REQUIRED TO BE ASSESSED UNDER THE HEAD SHORT TERM CAPITAL GAIN. THIS PRIMARY FACT WAS TOTALLY IN THE KNOWLEDGE OF AO AT THE TIME O F ORIGINAL ASSESSMENT. FURTHER THE INVESTMENT AS WELL AS DEVELOPMENT EXPENSES HAVE BEEN APPEARING IN THE STATEMENT OF AFFAIRS PLACED ON RE CORDS AT THE TIME OF ORIGINAL ASSESSMENT. WE LIKE TO SUBMIT THAT AT THE TIME OF ORIGINAL ASS ESSM ENT THE FACT RELATED TO TRANSACTION HAVE BEEN DISCUSSED WITH THE ASSESSING OFFICER AND IT WAS CLEARLY EXPLAINED THAT THERE WAS NEITHER REGISTRY OF PURCHASE IN F AVOUR OF ASSESSEE NOR THE SALE WAS 6 REGISTERED BY THE ASSESSEE. COPY OF LETTER DATED 1/8/2004 FURNISHED AT THE TIME OF ASSESSMENT UNDER SECTION 143(3) IN WHICH IT WAS CLEARLY MENTIONED AT PARA 4 THAT THERE WAS NO SALE DEED IN FAVOUR OF ASSESSEE AT THE TIME O F PURCHASE AS WELL AS ANY DEED EXECUTED BY THE ASSESSEE AT THE TIME OF SALE. THE ULTIMATE SALE WAS MADE BY THE ORIGINAL OWNER AFTER TAKING PERMISSION OF ASSESSEE AND HIS BROTHER. THE OWNER HAS RECEIVED SALE CONSIDERATION FROM THE ULTIMATE PURCHASER. HOWEVER IN LIEU OF RELEASE OF RIGHT TO PURCHASE IN SUCH PLOT THE ASSESSEE HAS RECEIVED HIS SHARE WHICH WAS DECLARED AS SALES IN THE BOOKS/RETURN OF INCOME OF THE ASSESSEE. THE SHORT - TERM CAPITAL GAIN HAS BEEN DULLY DECLARED IN THE INCOME TAX RETURN OF RELEVANT YEAR BY BOTH THE BROTHERS TREATING THE TRANSFER OF CAPITAL ASSETS KNOWN AS RIGHT TO OBTAIN CONVEYANCE OF PLOT ONLY. THE LEARNED ASSESSING OFFICER AT THE TIME OF REASSESSMENT HAS NOT APPRECIATED THIS ISSUE IN TRUE PERSPECTIVE AND ERRED IN TREATING THE TRAN SACTION AS SALE OF PLOT IN REASSESSMENT PROCEEDINGS MERELY ON THE BASIS OF CHANGE OF OPINION ON SAME SET OF FACTS. THE REOPENING OF THE CASE IS TANTAMOUNT TO MERE CHANGE OF OPINION AND BASED ON WRONG FACTS, THE LAW DOES NOT PERMIT AUTHORITY FOR REASSESSMEN T ONLY ON THE BASIS OF CHANGE IN OPINION. HENCE THE ORDER UNDER SECTION 147 READ WITH SECTION 143(3) IS INVALID ON THIS GROUND ALSO. THE LEARNED ASSESSING OFFICER HAS NOT APPRECIATED THE POSITION OF LAW THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABL E ON TRANSFER OF ALL CAPITAL ASSETS, AS PER LAW, IT APPLIES ONLY ON TRANSFER OF A CAPITAL ASSETS BEING LAND OR BUILDING OR BOTH. THE ISSUE WAS FULLY DISCUSSED IN ORIGINAL ASSESSMENT THAT THERE WAS NO CONVEYANCE DEED EXECUTED BY THE ASSESSEE. THE INITIATI ON OF REASSESSMENT PROCEEDINGS ON WRONG INTERPRETATION OF FACTS AND POSITION OF LAW IS ALSO INVALID. THE LD. AO HAS BASED HIS CASE BY MISINTERPRETING THE PROVISIONS OF SECTION 50C. NO NOTICE U/S 148 CAN BE ISSUED BASED ON MISINTERPRETATION OF LAW, ASSUMPTI ONS, AND PRESUMPTIONS & WITHOUT RECORDING REASON TO BELIEVE THAT THERE WAS ACTUAL ESCAPEMENT OF TAX. ACCORDINGLY THE NOTICE ISSUED BY THE AO U/S 148 WAS NOT LEGAL AND HENCE THE ORDER PASSED ON THE BASIS OF SUCH ILLEGAL NOTICE IS REQUIRED TO BE QUASHED ON T HIS ACCOUNT. FROM THE RECORDS IT APPEARS THAT THERE WAS SOME MISUNDERSTANDING IN THE 7 APPRECIATION OF SALE DEED PLACED ON THE RECORD OF ASSESSING OFFICER BEFORE INITIATION OF REASSESSMENT PROCEEDINGS. HENCE, THE REQUISITE CONDITIONS AND CORRECT INFORMATION WAS NOT THERE IN THE RECORDS TO FORM A BELIEF THAT THERE WAS ESCAPEMENT OF TAX IN THE ORIGINAL ASSESSMENT. THE APPELLANT HAS ALREADY PLACED ON RECORDS THE CALCULATION OF PROFIT DERIVED ON TRANSFER OF RIGHT TO CONVEYANCE OF THE SUBJECTED PLOT AND DECLARED THE INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN. THE LEARNED ASSESSING OFFICER HAS NOT APPRECIATED IN THEIR TRUE PERSPECTIVE THE SUBMISSION OF THE ASSESSEE IN THE REASSESSMENT PROCEEDINGS WHICH CLARIFIES THAT THERE WAS NO ESCAPEMENT OF TAX. IN SUPPOR T OF THE ABOVE SUBMISSIONS, RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1) CIT VS. TRIMURTI BUILDERS (2012) 246 CTR (MP) 308 2) CIT VS. KELVINATOR OF INDIA LTD. (2010) 228 CTR (SC) 488 . 3) DELHI INDUSTRIES AND ENTERPRISES VS. ACIT (2012) 80 DTR (DEL) (TRIB.) 252 . 4) KUMAR STORES VS. CIT (2012) 70 DTR (PATNA) 144 5) GUJARAT POWER CORPORATION LTD. VS. DCIT (2012) 77 DTR (GUJ) 89 6) CIT VS. USHA INTERNATIONAL LTD. (2012) 77 DTR (DEL) (FB) 396 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE CASES RELIED BY THE ASSESSING OFFICER WERE DISTINGUISHABLE . THE LD. CIT(A) WAS OF THE VIEW THAT THE ASSESSING OFFICER RIGHTLY INITIATED THE PROCEEDINGS U/S. 147/148 O F THE ACT AS HE HAD REASON TO BELIE VE THAT INCOME HAD ESCAPED ASSESSMENT AND THERE WAS TAN GI BLE MATERIAL TO CAME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME . 8 ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER FOR REOPENING OF THE PROCEEDINGS WAS CONFIRMED. NOW THE ASSESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE NOTICE ISSUED U/S. 148 OF THE ACT WAS BARRED BY LIMITATION BECAUSE THE ASSESSMEN T WAS COMPLETED U/S. 143(3) OF THE ACT ON 31/08/2006 AND THE NOTICE SHALL NOT BE ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR. THE SAID PERIOD ENDED ON 31/03/2009 WHEREAS NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 29/03/2011 , THEREFORE, IT WAS ILLEGAL AND INVALID DUE TO BAR OF LIMITATION . IT WAS FURTHER STATED THAT IN THE ORIGINAL ASSESSMENT, THE ADDITION OF RS. 20,000/ - HAD BEEN MADE ON ACCOUNT OF LAND DEVELOPMENT EXPENSES ON THE LAND SOLD AND THE ASSESSING OFFICER NOTED I N THE COMPUTATION OF THE CAPITAL ACCOUNT THAT TH E ASSESSEE HAD CLAIMED DEDUCTION OF RS. 55,000/ - ON ACCOUNT OF DEVELOPMENT EXPENSES . IT WAS FURTHER STATED THAT THE SHORT TERM CAPITAL GAIN WAS WORKED OUT AT RS. 2,35,000/ - AND THUS THE ADDITION OF RS. 20,000/ - WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDER DATED 31/08/2006 WHICH CLEARLY ESTABLISHED THAT THE ASSESSING OFFICER APPLIED HIS MIND AND CHECKED THE ISSUE OF CAPITAL GAIN ON THE SUBJECTED LAND. THEREFORE, THE 9 REASSESSMENT FRA MED BY THE ASSESSING OFFICER DESERVES TO BE QUASHED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1) NATIONAL DAIRY DEVELOPMENT BOARD VS. DCIT 353 ITR 538 (GUJ.) 2) WINSOME TEXTILES INDUSTRIES LTD. VS. UOI & ORS . 278 ITR 470 (P&H). IT WAS FURTHER STATED THAT THE ASSESSING OFFICER HAD REOPENED THE CASE ONLY ON THE BASIS THAT THE VALUE ADOPTED BY THE SUB - REGISTRAR WAS AT RS. 7,67,200/ - ON THEIR OWN PURPOSE AS AGAINST ACTUAL SALE CONSIDERATION AT RS. 4,95,000 / - AND FOR INVOKING THE DEEMING PROVISIONS OF SECTION 50C OF THE ACT , THE ASSESSING OFFICER ISSUED THE NOTICE U/S. 147/148 OF THE ACT. IT WAS FURTHER STATED THAT IN THIS PROVISION NO ESCAP E MENT OF INCOME IS INVOLVED AND ALSO NO INCOME HAS BEEN ACCRUED OR AROSE, HENCE, THERE WAS NO ESCAPEMENT OF INCOME . IT WAS CONTENDED THAT THE BELIEF OF THE ASSESSING OFFICER SHOULD BE AS TO ESCAPEMENT OF INCOME AND THE BELIEF SHOULD NOT BE A PRODUCT OF IMAGINATION OR SPECULATION . RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1) SHEO NATH SIN GH VS. AAC (1971) 82 ITR 147 (SC) 2) IL & FS INVESTMENT MANAGERS LTD. VS. ITO & ORS 298 ITR 32 (BOM.) 10 IT WAS FURTHER STATED THAT THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT AND THE ISSUE RELATING TO THE CAPITAL GAIN HAD ALREADY BEEN DISCUSSED BY THE THEN ASSESSING OFFICER, WHO MADE THE ADDITION OF RS. 20,000/ - UNDER THIS HEAD ITSELF AND NOW THE ASSESSING OFFICER REOPENED THE CASE ON THE SAME FACTS AND MATERIAL. SO, THERE WAS A CHANGE OF OPINION WHICH WAS BASED ON THE BASIS OF VERIFICATION BY THE STAMP AUTHORITY AND NOT ON THE BASIS OF ASSESSING OFFICERS OWN OPINION. THEREFORE, THE REASSESSMENT WAS NOT VALID . RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1) CIT VS. FUJISTU OPTEL LTD. (2013) 359 ITR 97 (MP) 2) LEGATO SYSTEMS (INDIA) (P) LTD. VS. DCIT 34 DTR 154 (DEL.) 3) H.K. BUILDCON LTD. VS. ITO 40 DTR 277 (GUJ.) 4) DIRECT INFORMATIONS (P) LTD. VS. ITO 349 ITR 150 (BOM.) 7 . IN HIS RIVALS SUBMISSIONS, LEARNED D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT AND THE ISSUE RELATING TO THE VALUE ADOPTED BY THE SUB - REGI STRAR UNDER 50C OF THE ACT WAS NOT EXAMINED BY THE THEN ASSESSING OFFICER, THEREFORE, IT CANNOT BE SAID THAT THERE WAS CHANGE OF OPINION FOR REOPENING THE ASSESSMENT AND AS SUCH THE CONTENTION OF THE 11 LEARNED COUNSEL FOR THE ASSESSEE THAT THERE WAS CHANGE OF OPINION , DESERVES TO BE REJECTED. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ORIGINAL ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICE R U/S. 143(3) OF THE ACT ON 31/08/2006 . IN THE SAID ASSESSMENT, THE ASSESSING OFFICER SPECIFICALLY MENTIONED THAT THE ASSESSEE CLAIMED SHORT TERM CAPITAL GAIN OF RS. 2, 1 5,000 / - AND ALSO CLAIMED DEDUCTION OF RS. 55,000/ - ON ACCOUNT OF DEVELOPMENT EXPENSES IN THE COMPUTATION OF CAPITAL GAIN. THE ASSESSING OFFICER VIDE QUERY LETTER DATED 11/05/2006 AND ORDER SHEET ENTR IES DATED 17/05/2006 & 07/08/2006 ASKED THE ASSESSEE TO FILE DETAILS OF DEVELOPMENT EXPENSES CLAIMED WITH SUPPORTING DOCUMENTARY EVIDENCES. THE ASSESSING OFFICER ALSO MENTIONED THAT THE ASSESSEE VIDE LETTER DATED 31/08/2006 HAD SUBMITTED THAT SUCH TYPE OF EXPENSES WERE NECESSARY BEFORE SALE BECAUSE THE LAND IN QUESTION BECAME SALEABLE AFTER DEVELOPMENT WORK . THE ASSESSING OFFICER AFTER EXAMI NING THE ISSUE FROM THE VARIOUS ANGLES AS DISCUSSED AT PAGE NO. 2 OF THE ASSESSMENT ORDER DATED 31/08/2006 MADE AN ADDITION OF RS. 20,000/ - AND WORK OUT THE SHORT TERM CAPITAL GAIN AT RS. 2,35,000/ - INSTEAD OF RS. 2, 1 5,000/ - DECLARED BY THE ASSESSEE . SO, IT 12 CAN BE SAFELY HELD THAT THE THEN ASSESSING OFFICER APPLIED HIS MIND WHILE FRAMING THE ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT AND EXAMINED THE ISSUE RELATING TO THE SHORT TERM CAPITAL GAIN . SO IT WAS CLEARLY A CHANGE OF OPIN I ON AND REOPENING ON THE BASIS OF CHANGE OF OPINION IS NOT JUSTIFIED. FURTHERMORE, THE REOPENING BY ISSUING NOTICE U/S. 148 OF THE ACT WAS DONE AFTER EXPIRY OF FOUR YEARS AS MENTIONED IN THE FORMER PART OF THIS ORDER I.E. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 31/08/2006 AND THE PERIOD OF FOUR YEARS EXPIRED ON 31/03/2009 WHEREAS NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 29/03/2011. ON A SIMILAR ISSUE, THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL DAIRY DEVELOPMENT BOARD VS. DCIT 353 ITR 538 (SUPRA) HAS HELD AS UNDER: - THAT THE NOTICE UNDER SECTION 148 OF THE INCOME - TAX ACT, 1961, WHEREBY ASSESSMENT FOR THE ASSESSMENT YEAR 2003 - 04 WAS SOUGHT TO BE REOPENED HAD BEEN ISSUED AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESS MENT YEAR. A PERUSAL OF THE REASONS RECORDED INDICATED THAT THE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT ON TWO GROUNDS. FIRSTLY, ON THE GROUND THAT WHILE COMPUTING THE TAXABLE INCOME, FROM THE NET PROFIT AND INCOME AND EXPENDITURE ACCOUNT, THE ASSESS EE HAD DEDUCTED UNDER THE HEAD 'PROVISION WRITTEN BACK OF RS. 47,40,43,904 / - (AS PER AUDIT NOTE NO. 10 OF THE NOTES FORMING THE PART OF THE INCOME - TAX RETURN FOR THE ASSESSMENT YEAR 2003 - 04). ACCORDING TO THE ASSESSING OFFICER, THE WRITTEN BACK PROVISION O F RS. 47,40,43,904 / - WAS THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, WHICH HAD ESCAPED ASSESSMENT. THE SATISFACTION WAS BASED UPON VERIFICATION OF THE RETURN OF THE ASSESSEE. IN OTHER WORDS, THE GROUND OF REOPENING WAS BASED UPON MATERIAL DISCLOSED BY THE ASSESSEE. IN SO FAR AS THE SECOND GROUND WAS CONCERNED, WHICH RELATED TO THE CLAIM OF DEPRE CIATION OF RS. 33,75,40,636 / - THE GROUND WAS BASED ON THE FACT THAT IN VIEW OF THE INTRODUCTION OF EXPLANATION 6(B) TO SECTION 43 OF THE 13 ACT BY THE FINANCE ACT, 2008, WHICH HAD BEEN MADE RETROSPECTIVELY EFFECTIVE FROM APRIL 1, 2003, THE ASSESSEE'S CLAIM REQUIRED TO BE RESTRICTED TO RS. 12,42,38,986. THE ASSESS ING OFFICER WAS OF THE VIEW THAT IN THE LIGHT OF THE AMENDMENT BROUGHT IN BY THE FINANCE AC T, 2008, THE ASSESSEE HAD BEEN ALLOWED EXCESSIVE DEPRECIATION. THUS, IN SO FAR AS THE FIRST GROUND WAS CONCERNED, THE SATISFACTION OF THE ASSESSING OFFICER WAS BASED UPON THE MATERIAL PLACED ON RECORD BY THE ASSES SEE. THE SECOND GROUND WHICH WAS THE SUBJE CT - MATTER OF APPEAL WAS BASED UPON A SUBSEQUENT AMENDMENT BROUGHT IN BY THE LEGISLATURE. HOWEVER, IN EITHER CASE, THERE WAS NOTHING WHATSOEVER IN THE REASONS RECORDED TO INDICATE THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN SO FAR AS THE SECOND GROUND WAS CONCERNED THE SECOND PRO VISO TO SECTION 147 OF THE ACT EXPRESSLY PROVIDES THAT THE ASSESSING OFFICER MAY ASSESS OR REASSE SS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT - MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. THUS, BY VIRTUE OF THE SECOND PROVISO TO SECTION 147 OF THE ACT, INCOME INVOL VING MATTERS WHICH ARE SUBJECT - MATTERS OF ANY APPEAL, REFERENCE OR REVISION HAS EXPRESSLY BEEN TAKEN OUT OF THE PURVIEW OF THE SECTION. THIS HAD BEEN THE SUBJECT - MATTER OF APPEAL AND WOULD NOT FALL WITHIN THE AMBIT OF SECTION 147. IN THE CIRCUMSTANCES, TH E ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT, WAS NOT VALID AND AS SUCH, THE NOTICE UNDER SECTION 148 OF THE ACT COULD NOT BE SUSTAINED. 9 . IN THE PRESENT CASE ALSO REOPENING HAS BEEN DONE ON ACCOUNT OF SHORT TERM CAPITAL GAIN WHICH WAS DISCLOSED BY THE ASSESSEE AND THOROUGHLY EXAMINED BY THE THEN ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S. 143(3) OF THE ACT. THEREFORE, THE ASSUMPTION OF JURISDICTION U/S. 147 OF THE ACT AFTER EXPI RY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS NOT VALID. FURTHERMORE, THE THEN 14 ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S. 1 43 OF THE ACT APPLIED HIS MIND O N TH E ISSUE RELATING TO SHORT TERM CAPITAL GAIN AND ENHANCED THE SHORT TERM CAPITAL GAI N TO RS. 2, 35,000/ - FROM RS. 2, 1 5,000/ - SHOWN BY THE ASSESSEE. IN OTHER WORDS, THE THEN ASSESSING OFFICER APPLIED HIS MIND AND NOW THE REOPENING WAS DONE ONLY ON THIS BASIS THAT THE INCOME RELATING TO THE SHORT TERM CAPITAL GAIN (WHICH WAS WORKED OUT BY THE THEN ASSESSING OFFICER) ESCAPED THE ASSESSMENT . T HEREFORE, IT WAS A CHANGE OF OPINION AND NO REOPENING CAN BE DONE ON THE BASIS OF CHANGE OF OPINION AS HAS BEEN HELD BY THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. FUJISTU OPTEL LTD. (2 013) 359 ITR 97 (SUPRA) AS UNDER: - THAT THIS WAS A CASE IN WHICH AFTER FILING OF THE RETURN BY THE ASSESSEE THE MATTER WAS SCRUTINIZED AND ON THOROUGH EXAMINATION OF THE FACTS, THE INITIAL ASSESSMENT ORDER WAS PASSED. ON THE BASIS OF THE SAME SET OF FACTS , IF THE ASSESSING OFFICER WAS OF THE VIEW THAT IT WAS A CASE OF ESCAPED ASSESSMENT, THEN IT WAS A CASE OF CHANGE OF OPINION AND NOT A CASE OF REASSESSMENT. THERE WAS NO NEW MATERIAL BEFORE THE ASSESSING OFFICER TO RECORD A F I NDING THAT ON THE BASIS OF SOME NEW MATERIAL, HE HAD FORMED AN OPINION THAT IT WAS A CASE OF ESCAPED ASSESSMENT AND THE ASSESSEE HAD NOT DISCLOSED THE FACT TRULY AND RIGHTLY. THE NOTICES OF REASSESSMENT WERE NOT VALID. 10 . WE , THEREFORE, KEEPING IN VIEW THE TOTALITY OF THE FACTS AND THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED HEREINABOVE , ARE OF THE VIEW THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY ISSUING THE NOTICE U/S. 148 OF THE ACT WAS NOT VALID. ACCORDINGLY, THE 15 REASSESSMENT FRAMED ON THE BASIS OF INVALID NOTICE IS QUASHED. SINCE WE HAVE DECIDED THIS CASE ON LEGAL ISSUE , THEREFORE, WE DO NOT THINK IT NECESSARY TO DECIDE OTHER ISSUES RAISED BY THE ASSESSEE ON MERIT . 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON 25 TH SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH SEPTEMBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .