DCIT, Circle-2(2), New Delhi V. Anant Raj Ltd., New Delhi

ITA 5237/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2421 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Assessee Lawyers: RINK
• Keywords: Reopening of assessment; Capital asset; Invalid notice; Gift; Depreciation; Period of limitation; Difference of opinion; Assessment record; Capital receipt; Revised return; Change of opinion; Reassessment proceedings; Capital Gains
• Section: 143(3); 56(2); 139(5); 254(2); 43; 48; 72; 13; 119; 22; 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.AS. NO.4736/DEL/2017 ASSESSMENT YEARS: 2009-2010 M/S. ANANT RAJ LTD., E-2, ARA CENTRE, JHANDELWALAN EXTN., NEW DELHI. VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(2), NEW DELHI. TAN/PAN: AABCA3972B (APPELLANT) (RESPONDENT) ITAS NO.5237 & 5238/DEL/2017 ASSESSMENT YEARS 2009-10 & 2012-13 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2), NEW DELHI. VS. M/S. ANANT RAJ LTD., E-2, ARA CENTRE, JHANDELWALAN EXTN., NEW DELHI. TAN/PAN: AABCA3972B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SANJAY GOEL, CIT-DR RESPONDENT BY: SHRI VINOD KUMAR BINDAL, CA; MS. SWEETY KOTHARI CA; AND RINKY SHARMA ITP DATE OF HEARING: 28 10 2020 DATE OF PRONOUNCEMENT: 27 11 2020 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AS WELL AS BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 05.05.2017 FOR THE QUANTUM OF ASSESSMENT PASSED U/S.148/143(3) FOR THE ASSESSMENT YEAR 2009-10 AND; APPEAL FOR THE ASSESSMENT YEAR 2012-13 HAS BEEN FILED BY T HE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 2 REVENUE AGAINST IMPUGNED ORDER DATED 08.05.2017 FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3), PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, NEW DELHI. 2. WE WILL FIRST TAKE UP THE REVENUES APPEAL IN IT A NO.5237/DEL/2017 FOR THE ASSESSMENT YEAR 2009-10. IN THE FIRST GROUND, THE DEPARTMENT HAS CHALLENGED THE QUASHING OF THE ASSESSMENT ORDER PASSED BY THE AO U /S 147 /143(3) OF THE ACT WHERE THE CIT (A) HELD THAT THERE WAS A CHANGE OF OPINION AS ALL THE FACTS WERE ON RE CORD AND HAD BEEN EXAMINED BY THE AO WHILE PASSING THE ORIGINAL ASSESSMENT ORDER. IN THE SECOND GROUND, THE DEPARTMENT HAS CHALLENGED THE DELETION OF AN ADDITION OF RS. 98,60,63,613/- M ADE BY THE AO BY HOLDING THE CLAIMED LONG TERM CAPITAL GAIN ARISING ON SALE OF A PROPERTY BEING 2 CONTIGUOUS PL OTS OF LAND AND BUILDING THEREON AS SHORT TERM CAPITAL GAI N U/S 50 OF THE ACT. IN THE THIRD GROUND, THE DEPARTMENT HAS CHALLENGED THE DELETION OF DISALLOWANCE OF DEPRECIATION OF RS. 2,42,48,977/- MADE BY THE AO AS THE WDV OF THE RELEVANT BLOCK OF ASSETS WHICH IN HIS OPINION HAD B ECOME NIL IN TERMS OF THE PROVISION OF THE SECTION 50 OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS ORIGINAL RETURN OF INCOME FOR THE AY 2009-10 ON 29/09/2009. THE RETURN OF INCOME WAS SUBJECT TO SCRUTINY AND INCOME -TAX ASSESSMENT WAS COMPLETED U/S 143(3) ON 28/12/2011 A T THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 3 RETURNED INCOME. THEREAFTER, A NOTICE 148 OF THE AC T WAS ISSUED ON 30/03/2015 FOR REOPENING THE ASSESSMENT O N THE REASON THAT THE ASSESSEE HAD INCORRECTLY DECLARED L TCG INSTEAD OF STCG AND CLAIMED INCORRECT DEPRECIATION ON THE BLOCK OF BUILDING. AO HAS FRAMED HIS REASON TO BELI EVE ON THE BASIS OF THE DECLARATION OF THE SAID PROPERTY BY TH E ASSESSEE IN THE BLOCK OF ASSETS DURING THE RELEVANT PERIOD THOU GH IN THE EARLIER YEARS THE SAME HAD BEEN DECLARED SEPARATELY IN THE RETURNS OF INCOME WHERE NO DEPRECIATION AT ALL ON T HE SAID PROPERTY WAS CLAIMED. 4. THE ASSESSEE COMPANY HAD SOLD ONE BUILT UP PROPE RTY BUILT ON THE TWO CONTIGUOUS PLOTS OF LAND FALLING I N TWO ADJACENT VILLAGES TO M/S INTERNATIONAL INSTITUTE OF PLANNING AND MANAGEMENT (P) LTD. (IIPM) WHICH WAS LATER KNOWN AS CENTRE FOR VOCATIONAL AND ENTREPRENEURSHIP (COVS) VIDE TWO SALE DEEDS DATED 24/09/2008 . THE DETAILS OF PROPERTY WERE AS UNDER: - I. PLOT OF LAND WITH MOTEL BUILT THEREON IN KHASRA NOS . 2, 3, 4, 5, VILLAGE SHAHURPUR, TEHSIL MAIN CHHATARPUR ROAD, DISTRICT HAUZ KHAS, NEW DELHI SOLD FOR RS. 130 CRORES ; II. PLOT OF LAND IN KHASRA NO. 584/2, 585, VILLAGE SATB ARI, TEHSIL HAUZ KHAS, NEW DELHI SOLD FOR RS. 21 CRORES. 5. THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE IN THE F.Y. 2005-06. ADMITTEDLY, AS PER THE RECORDS THE AS SESSEE NEVER CLAIMED ANY DEPRECIATION ON THE SAID PROPERTY AS THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 4 SAME WAS NEVER USED FOR ITS BUSINESS BUT WAS LET OU T FROM THE DAY ONE TO THE PURCHASER IIPM ITSELF. ACCORDINGLY, THE ASSESSEE DECLARED LTCG OF RS. 143,85,67,404/- ON SALE OF THE SAID PROPERTY AFTER TAKING BENEFIT OF THE INDEXATION AS PER LAW IN ITS ORIGINAL RETURN OF INCOME. 6. IIPM PAID RS. 21 CRORES AGAINST THE SALE DEED F OR THE PROPERTY AT PLOT OF LAND IN KHASRA NO. 584/2, 585, VILLAGE SATBARI, TEHSIL HAUZ KHAS, NEW DELHI; AND PAID RS. 12 CRORES OUT OF RS. 130 CRORES AGAINST THE SALE DEED FOR THE PLOT OF LAND WITH MOTEL BUILT THEREON IN KHASRA NOS. 2, 3, 4, 5, VILLAGE SHAHURPUR, TEHSIL MAIN CHHATARPUR ROAD, DISTRICT HA UZ KHAS, NEW DELHI; AND THE BALANCE PAYMENT OF RS. 118 CRORES BY WAY OF POSTDATED CHEQUES. POSSESSION OF THE PRO PERTY WAS ALSO HANDED OVER TO THE BUYER IIPM ALONGWITH THE SA LE DEEDS ON 24/09/2008 AS SUCH, BECAUSE THE IIPM WAS ALREADY IN POSSESSION OF THE PROPERTY AS TENANT. IN ORDER TO S ECURE THE POSTDATED CHEQUES, A MORTGAGE DEED DATED 24/09/2008 WAS ALSO EXECUTED. HOWEVER, THE PURCHASER IIPM WAS UNAB LE TO MEET THE FINANCIAL OBLIGATION OF THOSE POSTDATED CH EQUES AND THEREFORE, A SUPPLEMENTARY MORTGAGE DEED DATED 28/0 8/2009 WAS EXECUTED AND THE DUE PAYMENT WAS RESCHEDULED. B UT AGAIN, IIPM FAILED TO HONOUR ITS OBLIGATIONS EVEN A S PER THE SUPPLEMENTARY MORTGAGE DEED. 7. DUE TO FAILURE OF IIPM TO MAKE THE PAYMENTS, THE ASSESSEE FILED A SUIT BEFORE THE HONBLE DELHI HIGH COURT, I.T.AS. NO.4736, 5237 & 5238/DEL/2017 5 WHICH WAS REFERRED FOR MEDIATION AND CONCILIATION B Y THE HONBLE HIGH COURT. AFTER DELIBERATIONS IN THE MEDI ATION PROCEEDINGS, A SETTLEMENT DEED DATED 30/05/2015 WAS EXECUTED BETWEEN THE ASSESSEE AND IIPM. IN VIEW OF THE SETTLEMENT DEED, THE HONBLE DELHI HIGH COURT PASSE D THE DECREE VIDES ITS ORDER DATED 05/06/2015 CANCELLING THE AFOREMENTIONED SALE DEEDS. CANCELLATION DEEDS GIVIN G EFFECT TO THE SAID CANCELLATION OF THOSE SALE WERE ALSO EXECU TED ON 06/06/2015 BETWEEN THE ASSESSEE AND IIPM. 8. THE AO RECORDED HIS REASONS FOR REOPENING THE ASSESSMENT WHICH HAVE BEEN INCORPORATED ON PAGE NOS . 1-3 OF THE ASSESSMENT ORDER. THE AO IN HIS REASONS HAS STA TED THAT, A PERUSAL OF THE RECORDS SHOWS THAT THE ASSET ON WH ICH THE ASSESSEE DECLARED LTCG DURING AY 2009-10 FORMED PAR T OF THE BLOCK OF ASSETS ON WHICH DEPRECIATION HAD BEEN CLAIMED. A PERUSAL OF THE RECORD OF AY 2009-10 SHOWS THAT TH E TREATMENT OF SALE OF ONE ASSET WAS NOT MADE AS PER THE PROVISION OF SECTION 50 OF INCOME-TAX ACT AS PER WH ICH EXCESS BETWEEN FULL VALUE OF CONSIDERATION AND WDV OF THE BLOCK OF ASSET SHALL BE DEEMED TO BE CAPITAL GAIN ARISING FR OM THE TRANSFER OF A SHORT-TERM CAPITAL ASSET. THE FULL VA LUE OF CONSIDERATION OF ASSET SOLD WAS RS. 151 CRORES, WHE REAS THE TOTAL VALUE OF THE BLOCK OF ASSETS AFTER ADJUSTMENT OF THE ADDITIONS AND DELETIONS WAS RS.46,29,29,064/- AND T HEREFORE, THE VALUE OF THE ENTIRE BLOCK OF BUILDING SHOWN SHA LL BE REDUCED TO NIL. THE AO ALSO STATED THAT IT IS SEE N FROM THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 6 ASSESSMENT RECORDS THAT THE ASSESSEE WAS CLAIMING DEPRECIATION ON THE BLOCK OF ASSET WHICH SHOULD HAV E BEEN REDUCED TO NIL AS PER THE PROVISIONS OF THE ACT. THUS, AS PER HIM THE ASSESSEE FAILED TO DISCLOSE THE MATERIAL FA CTS TRULY AND FULLY AS TO THE FACT THAT THE ASSET ON WHICH LONG T ERM CAPITAL GAIN WAS DECLARED IN AY 2009-10 WAS INCLUDED IN THE BLOCK OF ASSETS ON WHICH DEPRECIATION WAS CLAIMED AND THUS, THE CASE WAS REOPENED BY THE AO BY ISSUING NOTICE U/S 148 OF THE ACT BY RECORDING REASONS TO BELIEVE THAT INCOME HAS ESC APED ASSESSMENT AS SHORT TERM CAPITAL GAIN TAXABLE @ 30% WAS TAXED AS LONG TERM CAPITAL GAIN @ 20% AND EXCESS DEPRECIATION WAS CLAIMED. 9. THE ASSESSEE SUBMITTED A LETTER DATED 20/04/2015 TO TREAT THE ORIGINAL RETURN OF INCOME AS RETURN OF IN COME FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. 10. HOWEVER, DURING THE COURSE OF REASSESSMENT PROC EEDINGS WHEN THE SALE OF ABOVE PROPERTY THROUGH 2 SEPARATE SALE DEEDS AS ABOVE STOOD CANCELLED BY THE HONBLE DELHI HIGH COURTS ORDER DATED 05/06/2015, THE ASSESSEE REVISE D ITS RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/ S 148 OF THE ACT AND FILED WITH IT A LETTER DATED 29/02/2016. T HE ASSESSEE EXPLAINED THE SEQUENCE OF EVENTS AND SUBMITTED ALL THE DOCUMENTS TO EXPLAIN ITS CASE IN THE SAID LETTER WH ICH HAS BEEN PLACED AT PAGE NOS. 14-20 OF THE PB. THE ASSES SEE EXPLAINED THAT THERE AROSE NO CAPITAL GAIN AT ALL T O THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 7 ASSESSEE IN THE YEAR UNDER CONSIDERATION AS THE SAL E DEEDS HAVE BEEN CANCELLED BY A DECREE ORDER OF THE HONBL E DELHI HIGH COURT. SINCE THE ASSESSEE HAD ALREADY DECLARED LONG TERM CAPITAL GAIN ON THE SAID SALE IN ITS ORIGINAL RETURN OF INCOME, THE SAME WAS TO BE EXCLUDED AS IT WAS NOT A T ALL CHARGEABLE TO INCOME-TAX. 11. THE ASSESSING OFFICER HELD THE RETURN OF INCOME FILED WITH A LETTER DATED 29/02/2016 AS NULL AND VOID BY HOLDI NG THAT THE ASSESSEE IS NOT ENTITLED TO REVISE THE RETURN O F INCOME FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. 12. THE ASSESSING OFFICER HELD THAT THE DEPRECIATIO N WAS CHARGED ON THE PROPERTY SOLD. THE SAID ASSET WAS I NCLUDED IN THE BLOCK OF ASSETS ON WHICH DEPRECIATION WAS CHARG ED AND TREATMENT OF SALE OF THE SAID ASSET WAS NOT MADE AS PER PROVISION OF SECTION 50 OF THE ACT. SINCE DEPRECIAT ION WAS CHARGED ON THE ASSET SOLD AND THE SALE CONSIDERATIO N WAS MORE THAN THE WDV OF THE BLOCK OF ASSETS, THE EXCES S WAS HELD BY HIM AS A SHORT-TERM CAPITAL GAIN CHARGEABLE U/S 50 OF THE ACT. FURTHER, THE ASSESSING OFFICER HELD THAT S INCE THE SALE CONSIDERATION WAS MORE THAN THE WDV OF THE BLOCK OF ASSETS, THE WDV OF THE BLOCK WAS REDUCED TO NIL AND THERE FORE, NO DEPRECIATION WAS ALLOWABLE ON THE SAME, WHEREAS THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 2,42,48,997/- ON TH IS BLOCK OF ASSETS AND THEREFORE, THE AO DISALLOWED THE SAID DE PRECIATION ALSO. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 8 13. AS REGARDS THE REOPENING, THE CIT(A) HELD THAT ON GOING THROUGH THE COMPUTATION OF ASSESSABLE INCOME FOR TH E AY 2006-07 TO 2009-10 AND OTHER RECORD WITH THE AO, IT WAS SEEN THAT THE SAID PROPERTY CONSISTING OF PLOTS OF LAND AND BUILDING HAD BEEN GIVEN ON RENT TO IIPM AFTER ITS PURCHASE B Y THE ASSESSEE IN THE YEAR 2005. THE ASSESSEE HAD ALSO DE CLARED RENTAL INCOME FROM THE SAID PROPERTY AS UNDER: A.Y. RENTAL INCOME FROM THE SAID PROPERTY: 2006-07 RS. 1,65,00,000/- 2007-08 RS. 3,72,52,000/- 2008-09 RS. 2,92,50,000/- 2009-10 RS. 2,60,00,000/- 14. THE CIT(A) FURTHER STATED THAT IN THE DEPRECIAT ION CHART, THE VALUE OF SAID PROPERTY WAS SHOWN AT RS. 6,10,00 ,000/- WHICH WAS THE PURCHASE VALUE OF THE SAID PROPERTY A ND THE SAME WAS REFLECTED IN THE BALANCE SHEET. THIS SHOWS THAT NO DEPRECIATION AT ALL WAS CHARGED ON THE SAID PROPERT Y IN THE PERIODS RELEVANT TO THE AY 2006-07, 2007-08, 2008-0 9 AND 2009-10. 15. HE FURTHER OBSERVED THAT, ALL THE SAID INFORMAT ION WAS AVAILABLE AND VERIFIED BY THE ASSESSING OFFICER DUR ING THE ORIGINAL ASSESSMENT PROCEEDINGS FROM HIS RECORD. NO NEW I.T.AS. NO.4736, 5237 & 5238/DEL/2017 9 INFORMATION WAS RECEIVED BY THE DEPARTMENT FOR REOP ENING THE ASSESSMENT AND REOPENING WAS DONE MERELY ON THE BAS IS OF CHANGE OF OPINION OF THE AO ON SAME SET OF FACTS WH ICH IS NOT PERMISSIBLE IN THE LAW. THEREFORE, THE CIT(A) RELYI NG ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS KELVINATOR INDIA LTD. 320 ITR 560 HELD THAT REOPENING IS INVALID AND QUASHED THE SAME. 16. AS REGARDS THE REVISED RETURN, THE CIT(A) HELD THAT THE SECTION 147 HAS BEEN INCORPORATED IN THE ACT FOR TA XING THE INCOME WHICH HAS ESCAPED THE ASSESSMENT AND NOT FOR GIVING BENEFIT TO AN ASSESSEE. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE SALE OF THE SAID PROPERTY BE TREATED AS NU LL AND VOID AND NECESSARY INCOME-TAX PAID ON THE DECLARED CAPIT AL GAIN ON THE SAID PROPERTY AND SO ASSESSED SHOULD BE REFU NDED CANNOT BE ACCEPTED UNDER REOPENING PROCEEDINGS. BY RELYING UPON THE JUDGMENT OF THE APEX COURT IN SUN ENGINEERI NG WORKS (P) LTD. 198 ITR 297, THE CIT(A) HELD THAT TH E BENEFIT CLAIMED BY THE ASSESSEE THROUGH THE REVISED RETURN IS NOT MAINTAINABLE. 17. AS REGARDS THE DEPRECIATION, THE CIT(A) HELD TH AT THE PROPERTY BEING THE PLOTS OF LAND AND BUILDING WHICH WAS THE SUBJECT MATTER OF SALE AND TRANSFER WAS INCLUDED IN THE BLOCK OF ASSETS BUT IT WAS NEITHER USED FOR PURPOSE OF BU SINESS NOR ANY DEPRECIATION AT ALL WAS CLAIMED ON IT UNDER THE ACT. RENTAL INCOME RECEIVED FROM THE SAID PROPERTY HAD A LSO BEEN I.T.AS. NO.4736, 5237 & 5238/DEL/2017 10 OFFERED IN THE RETURNS OF INCOME FOR TAXATION. FURT HER, THE VALUE OF THE SAID PROPERTY REMAINED THE SAME AT RS. 6,10,00,000/- SINCE ITS PURCHASE AND THE SAME WAS R EFLECTED YEAR AFTER YEAR IN THE BALANCE SHEETS, LEDGER ACCOU NTS AND DEPRECIATION CHARTS. SINCE, NO DEPRECIATION HAD BE EN CLAIMED ON THE SAID PROPERTY, THERE IS NO QUESTION OF INVOK ING SECTION 50 OF THE ACT ON SALE OF THE SAID PROPERTY COMPRISI NG PLOTS OF LAND AND BUILDING BUILT THEREON. THUS, THE CIT(A) H ELD THAT THE ASSESSEE WAS JUSTIFIED IN TREATING THE CAPITAL G AIN ARISING ON SALE OF THE SAID PROPERTY AS LONG TERM CAPITAL G AIN BY RELYING ON THE DECISION IN THE CASE OF DIVINE CONSTRUCTION COMPANY VS ACIT (2011) 138 TTJ 72 (ITAT-MUM) WHERE THE ITAT HELD THAT IF DEPRECIATION IS NOT CLAIMED T HEN SALE OF SUCH ASSETS CANNOT BE COMPUTED AS PER THE PROVISION S OF SECTION 50 OF THE ACT. 18. THE LEARNED CIT DR VEHEMENTLY PRESENTED THE CAS E OF THE REVENUE AND SUBMITTED THAT THE ASSESSEE DID NOT DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FO R THAT ASSESSMENT AND THEREFORE, THE REOPENING ACTION WAS VALID. THE CIT DR PLACED RELIANCE ON THE FOLLOWING DECISIO NS: A) MULTISCREEN MEDIA (P.) LTD. VS. UNION OF INDIA, [20 10] 324 ITR 54 (BOMBAY) HIGH COURT OF BOMBAY B) NEW DELHI TELEVISION LTD. VS. DEPUTY COMMISSIONER O F INCOME-TAX, [2017] 84 TAXMANN.COM 136 (DELHI), HIGH COURT OF DELHI I.T.AS. NO.4736, 5237 & 5238/DEL/2017 11 C) CONSOLIDATED PHOTO & FINVEST LTD. VS. ASSISTANT COMMISSIONER OF INCOME-TAX, [2006] 151 TAXMAN 41 (DELHI), HIGH COURT OF DELHI D) JAYANT SECURITY & FINANCE LTD. VS ASSISTANT COMMISSIONER OF INCOME-TAX, [2018] 91 TAXMANN.COM 181 (GUJARAT), HIGH COURT OF GUJARAT E) MULTI COMMODITY EXCHANGE OF INDIA LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, [2018] 91 TAXMANN.COM 265 (BOMBAY), HIGH COURT OF BOMBAY F) ARADHNA ESTATE (P.) LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, [2018] 91 TAXMANN.COM 119 (GUJARAT), HIGH COURT OF GUJARAT G) NICKUNJ EXIMP ENTERPRISES (P.) LTD. VS. ASSISTANT COMMISSIONER OF INCOME-TAX, [2014] 49 TAXMANN.COM 10 (BOMBAY), HIGH COURT OF BOMBAY H) SIEMENS INFORMATION SYSTEMS LTD. VS. ASSISTANT COMMISSIONER OF INCOME-TAX, [2012] 20 TAXMANN.COM 666 (BOM.), HIGH COURT OF BOMBAY I) SUMERU SOFT (P.) LTD. VS. INCOME TAX OFFICER, [2017 ] 82 TAXMANN.COM 5 (CHENNAI - TRIB.), IN THE ITAT CHENNAI BENCH 'A' 19. THE CIT DR SUBMITTED THAT THE PRINCIPLE OF A ME RE CHANGE OF OPINION CANNOT BE BASIS FOR REOPENING COM PLETED ASSESSMENT, WOULD BE APPLICABLE ONLY TO THE SITUATI ON WHERE THE ASSESSING OFFICER HAD APPLIED HIS MIND AND HAD TAKEN A CONSCIOUS DECISION ON A PARTICULAR MATTER IN THE IS SUE. IT I.T.AS. NO.4736, 5237 & 5238/DEL/2017 12 WOULD HAVE NO APPLICATION WHERE THE ORDER OF THE AS SESSMENT DOES NOT ADDRESS ITSELF TO THE ASPECT WHICH WAS THE BASIS FOR REOPENING OF THE ASSESSMENT. 20. THE LD. AR ON BEHALF OF THE ASSESSEE, MR. BINDA L SUBMITTED THAT THE ASSESSMENT OF THE AY 2009-10 WAS COMPLETED U/S 143(3) VIDE ORDER DATED 29/12/2011. T HE ASSESSMENT WAS REOPENED ON 30/03/2015, I.E., BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. AS PER THE PROVISO TO SECTION 147 OF THE ACT, THE ASSESSMENT CAN BE REOPENED AFTER FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR IN CASE OF ASSESSMENT COMPLETED U/S 143(3) OF THE ACT ONLY IF THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT. 21. IN THIS CASE, THE ASSESSEE SOLD THE PROPERTY DU RING THE RELEVANT PREVIOUS YEAR AND WHICH UNDISPUTEDLY WAS H ELD BY THE ASSESSEE FOR MORE THAN THREE YEARS. THEREFORE, THE ASSESSEE DECLARED THE GAIN ARISING ON SALE OF THE S AID PROPERTY AS LONG TERM CAPITAL GAIN AFTER TAKING INDEXATION B ENEFIT AND DUE APPLICABLE INCOME-TAX THEREON WAS PAID. THE SAI D PROPERTY WAS LET OUT TO IIPM, SINCE THE DATE IT WAS ACQUIRED AND RENTAL INCOME WAS DULY RECORDED IN THE BOOKS OF ACCOUNT AS WELL AS OFFERED FOR TAXATION IN THE RETURNS OF I NCOME OF THE 4 ASSESSMENT YEARS. SINCE THE SAID PROPERTY WAS LET O UT, NO I.T.AS. NO.4736, 5237 & 5238/DEL/2017 13 DEPRECIATION WAS CLAIMED ON THE SAME UNDER THE INCO ME-TAX ACT SINCE THE DATE OF ITS ACQUISITION. THE VALUE OF THE SAID PROPERTY REMAINED THE SAME IN THE BOOKS AND THE DEPRECIATION CHART. DETAILS OF THE ASSETS AND DEPRE CIATION CLAIMED THEREON ARE MENTIONED IN THE RETURN OF INCO ME. THUS, ALL THE FACTS REGARDING RENTAL INCOME, NO DEP RECIATION THEREON AND THE LONG-TERM CAPITAL GAIN WERE PROPERL Y DECLARED IN THE RETURNS OF INCOME AND WERE MENTIONED IN THE COMPUTATION OF INCOME AND DEPRECIATION CHART ATTACH ED WITH THE TAX AUDIT REPORT. NO DISCREPANCY WAS POINTED OU T BY THE ASSESSING OFFICER IN THE INFORMATION FILED BY THE A SSESSEE IN ITS RETURN OF INCOME FOR ALL THE ASSESSMENT YEARS SINCE THE PROPERTY WAS ACQUIRED AND WHICH WERE PART OF THE AS SESSMENT RECORD OF THE REVENUE. 22. THE ASSESSEE SUBMITTED DETAILS OF RENTAL INCOME TO SHOW THAT THE RENT WAS RECEIVED ON THE SAID PROPERTY AND ALSO SUBMITTED THE DEPRECIATION CHART PREPARED AS PER TH E INCOME- TAX RULES AND THE RELEVANT PORTION OF THE RETURNS O F INCOME, SHOWING DETAILS OF DEPRECIATION TO SHOW THAT NO DEP RECIATION WAS CLAIMED OR ALLOWED ON THE SAID PROPERTY AND THE VALUE OF THE SAID PROPERTY REMAINED THE SAME AT RS. 6,10,00, 000/- IN THE DEPRECIATION CHART AS PER THE INCOME-TAX RULES. THESE DOCUMENTS CLEARLY SHOW THAT THE ASSESSEE HAD NEVER CLAIMED DEPRECIATION ON THE SAID PROPERTY TILL THE DATE OF ITS SALE AND THE PROPERTY WAS HELD FOR MORE THAN THREE YEARS WHI CH HAS NOT ALSO BEEN DISPUTED BY THE REVENUE. THUS, THE AS SESSEE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 14 HAD TRULY AND FULLY DISCLOSED THE PARTICULARS REGAR DING SALE OF THE SAID PROPERTY AND DEPRECIATION THEREON. EVEN TH E CIT(A) ALSO VERIFIED ALL THESE DOCUMENTS HIMSELF AND CAME TO THE CONCLUSION THAT NO DEPRECIATION WAS CLAIMED ON THE SAID PROPERTY. 23. THE AR ALSO FURTHER SUBMITTED THAT NO NEW INFOR MATION CAME ON THE RECORD OF THE ASSESSING OFFICER. HE RE FERRED TO THE REASONS RECORDED FOR REOPENING AND POINTED OUT THAT THE ASSESSING OFFICER HAS REFERRED TO THE RECORD AND CO MPUTATION OF THE AY 2009-10 FOR FORMING ITS OPINION REGARDING ESCAPEMENT OF INCOME. THE SAID RECORD AND COMPUTATI ON OF INCOME WAS ALREADY ON THE RECORD OF THE ASSESSING O FFICER WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) OF TH E ACT. THUS, IT WAS CLEARLY A CHANGE OF OPINION ON THE SAM E FACTS WHICH WERE ALREADY ON THE RECORD OF THE ASSESSING O FFICER EARLIER AND THEREFORE THE REOPENING OF ASSESSMENT W AS INVALID AS HAS BEEN HELD BY THE APEX COURT IN THE CASE OF CIT VS KELVINATOR INDIA LTD. 320 ITR 560 . 24. HE ALSO SUBMITTED THAT IT IS NOT NECESSARY THAT THE ASSESSING OFFICER SHOULD MENTION EACH AND EVERYTHIN G VERIFIED BY HIM IN THE ASSESSMENT ORDER. WHAT THE AO HAS VER IFIED HAS TO BE SEEN FROM THE ENTIRE ASSESSMENT RECORD. HE FU RTHER SUBMITTED THAT IN THE CASES RELIED UPON BY THE DR, SOME NEW INFORMATION OR FRESH MATERIAL HAD COME TO THE NOTIC E OF THE ASSESSING OFFICER OR THERE WAS NO FULL AND TRUE DIS CLOSURE BY I.T.AS. NO.4736, 5237 & 5238/DEL/2017 15 THE ASSESSEE. HOWEVER, IN THE CASE OF THE ASSESSEE THERE WAS FULL AND TRUE DISCLOSURE BY THE ASSESSEE AND NO NEW INFORMATION CAME ON THE RECORD OF THE ASSESSING OFF ICER AND THUS, THESE CASES ARE NOT APPLICABLE TO THE FACTS O F THE CASE. THUS, HE ARGUED THAT THE REOPENING OF THE ASSESSMEN T IS INVALID AND SHOULD BE QUASHED. 25. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAV E PERUSED THE PAPER BOOK, WRITTEN SUBMISSIONS AND SYN OPSIS PLACED ON RECORD. THE ASSESSEE FILED ITS ORIGINAL R ETURN OF INCOME ON 29/09/2009 FOR THE AY 2009-10 WHICH WAS S UBJECT TO ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATE D 29/12/2011. THE SAID ASSESSMENT WAS REOPENED BY IS SUING A NOTICE U/S 148 OF THE ACT ON 30/03/2015, I.E., BEYO ND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. OSTENSIBLY, AS PER PROVISO TO THE SECTION 147 OF THE ACT, THE ASSESSMENT CAN BE REOPENED AFTER FOUR YEARS IN CASE OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT WHEN THE RE WAS A FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TR ULY DISCLOSE THE PARTICULARS OF INCOME. 26. ON PERUSAL OF THE COMPUTATION OF ASSESSABLE INC OME FOR THE AY 2009-10 PLACED AT PAGE NOS. 1-4 OF THE PAPER BOOK, IT IS SEEN THAT THE ASSESSEE HAD DECLARED LONG TERM CA PITAL GAIN OF RS. 143,85,67,404/- ON SALE OF THE SAID PROPERTY . ON PERUSAL OF THE DETAILS OF RENTAL INCOME FROM AY 200 6-07 TO 2009-10 PLACED AT PAGE NOS. 242, 250, 258, 262 OF T HE PAPER I.T.AS. NO.4736, 5237 & 5238/DEL/2017 16 BOOK, IT IS OBSERVED THAT THE RENTAL INCOME FROM TH E SAID PROPERTY WAS RECEIVED BY THE ASSESSEE. ON PERUSAL O F THE RETURNS OF INCOME FILED WITH THE DEPARTMENT MENTION ING DETAILS OF THE DEPRECIATION CLAIMED AND DEPRECIATIO N CHART PREPARED UNDER RULE 5 OF THE INCOME-TAX RULES FOR T HE AYS 2006-07 TO 2009-10 PLACED AT PAGES 243-244, 246, 25 1-252, 254, 259-260, 261, 264-265 OF THE PB, IT WAS OBSERV ED THAT NO DEPRECIATION WAS CLAIMED ON THE SAID PROPERTY. 27. THUS, THE ASSESSEE HAS ALSO PLACED ON RECORD AL L THESE EVIDENCES TO SHOW THAT THE INFORMATION SUBMITTED BY IT WERE CORRECT, PROPERTY WAS HELD FOR A PERIOD OF MORE THA N THREE YEARS, RENT WAS RECEIVED ON THE SAID PROPERTY AND N O DEPRECIATION AT ALL WAS CLAIMED ON THE SAID PROPERT Y UNDER THE INCOME-TAX ACT AND THAT THE VALUE OF THE SAID PROPE RTY REMAINED THE SAME AT RS. 6,10,00,000/- IN THE ASSET CHART SUBMITTED AS PER THE INCOME-TAX RULES IN ALL THE RE TURNS OF INCOME. ALL THESE DOCUMENTS WERE PART OF THE RETURN S OF INCOME AND TAX AUDIT REPORT FILED BEFORE THE REVENU E. THUS, THESE EVIDENCES CLEARLY SHOW THAT THE ASSESSEE HAD MADE A TRUE AND FULL DISCLOSURE OF THE FACTS REGARDING THE SALE OF THE ASSET AND DEPRECIATION THEREON AND WHICH WERE VERY MUCH PART OF THE ASSESSMENT RECORDS AND HAD ALSO BEEN EX AMINED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 17 28. NEITHER THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NOR THE DR DURING THE HEARING POINTED OUT ANY DISCREPAN CY IN THE ABOVE MENTIONED INFORMATION SUBMITTED BY THE ASSESS EE TO THE REVENUE AUTHORITIES NOR THEY BROUGHT ANY EVIDEN CE ON RECORD TO SHOW THAT THE SAID INFORMATION WAS INCORR ECT OR TO SHOW THAT DEPRECIATION WAS ACTUALLY ALLOWED UNDER T HE INCOME-TAX ACT ON THE SAID PROPERTY BUT INCORRECTLY SHOWN BY THE ASSESSEE. 29. FURTHER, ON PERUSAL OF THE REASONS RECORDED, TH E CONTENTION OF THE ASSESSEE HAS BEEN FOUND CORRECT. THE ASSESSING OFFICER HAS REFERRED TO THE RECORD AND RE TURN OF INCOME FILED FOR THE AY 2009-10 FOR RECORDING HIS R EASONS WHICH WERE VERY MUCH AVAILABLE WITH THE ASSESSING O FFICER AT THE TIME OF FRAMING THE ASSESSMENT U/S 143(3) OF TH E ACT. THE AO HAS NOT REFERRED TO ANY FRESH MATERIAL OR NEW IN FORMATION IN THE ASSESSMENT ORDER. EVEN THE LEARNED CIT DR DI D NOT POINT OUT TO ANY NEW MATERIAL WHICH WAS THERE TO RE CORD THE REASONS FOR ESCAPEMENT OF INCOME. 30. IT IS A SETTLED LAW THAT THE ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF MERE CHANGE OF OPINION ON THE SAME SET OF FACTS ON RECORD. THE LD. DR RELIED ON VARIOU S CASE LAWS AS REFERRED ABOVE. ON PERUSAL OF THE SAME, IT IS SE EN THAT IN THOSE CASES EITHER NEW MATERIAL HAD COME TO THE NOT ICE OF THE ASSESSING OFFICER OR THERE WAS SOME INCORRECT DISCL OSURE BY THE ASSESSEE IN HIS RETURN OF INCOME. THUS, THE SA ID CASES ARE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 18 CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE ASSES SEE AND CANNOT BE APPLIED IN THIS CASE. 31. WE AGREE WITH THE CONTENTION OF THE ASSESSEE TH AT THE ASSESSMENT ORDER CANNOT CONTAIN EACH AND EVERY FACT VERIFIED BY THE ASSESSING OFFICER. WHAT HAS BEEN VERIFIED BY HIM FORMS PART OF THE ASSESSMENT RECORD. ALL THE INFORMATION REGARDING LONG TERM CAPITAL GAIN, DEPRECIATION, SALE OF ASSET WAS PART OF THE RETURN OF INCOME AS WELL AS THE ASSESSMENT RECO RD WHICH ONLY WAS LATER ON REFERRED TO BY THE ASSESSING OFFI CER TO RECORD REASONS OF ESCAPEMENT OF INCOME. THUS, THE SAID FAC TS WERE ON THE RECORD OF THE ASSESSING OFFICER AND VERIFIED BY HIM. FURTHER, THE CIT(A) ALSO VERIFIED THE SAID INFORMAT ION AS HAS BEEN MENTIONED IN ITS ORDER. EVEN, WE HAVE VERIFIE D THE SAID INFORMATION FROM THE DOCUMENTS PLACED IN THE PAPER BOOK AND HAVE COME TO A CONCLUSION THAT NO DEPRECIATION WAS EVER CLAIMED OR ALLOWED ON THE LAND OF BUILDING UNDER CONSIDERATION. UNDISPUTEDLY, THE SAID PROPERTY WAS HELD BY THE ASSESSEE FOR MORE THAN THREE YEARS AS IT WAS RE CEIVING THE RENT ON THE SAID PROPERTY W.E.F. 1/5/2005 AND NO DEPRECIATION, WAS CLAIMED THEREON. THUS, THERE WAS TRUE AND FULL DISCLOSURE OF THE FACTS AND NO NEW INFORMATION CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER. ON THESE FA CTS AND MATERIAL ALREADY ON RECORD, THE REOPENING OF THE AS SESSMENT WAS INVALID AND THE ASSESSMENT SO MADE ON THE BASIS OF AN INVALID NOTICE WAS CORRECTLY QUASHED BY THE CIT(A). THUS, GROUND NO. 1 OF THE DEPARTMENT IS HEREBY DISMISSED. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 19 32. SINCE THE REOPENING OF THE ASSESSMENT HAS BEEN HELD INVALID AND NO REASSESSMENT CAN BE MADE, GROUND NOS . 2 AND 3 BECOME INFRUCTUOUS. HOWEVER, ON MERITS, SECTION 5 0 IS APPLICABLE ONLY ON THE BLOCK OF ASSETS WHICH ARE US ED FOR BUSINESS AND ON WHICH DEPRECIATION HAS BEEN CLAIMED UNDER THE INCOME-TAX ACT / RULES. AS MENTIONED ABOVE, THE DOCUMENTARY EVIDENCE CLEARLY SHOWS THAT THE PROPERT Y IN QUESTION WAS LET OUT SINCE THE DATE OF ITS ACQUISIT ION AND WAS NEVER USED FOR THE PURPOSE OF BUSINESS BY THE ASSES SEE. ON PERUSAL OF THE RETURNS OF INCOME FILED FOR THE AY 2 006-07 TO 2009-10 AND THE DEPRECIATION CHARTS SUBMITTED UNDER RULE 5 OF THE INCOME-TAX RULES, IT IS CLEARLY EVIDENT THAT NO DEPRECIATION WAS EVER CLAIMED ON THE SAID PROPERTY SINCE THE DATE OF ITS ACQUISITION. SINCE NO DEPRECIATION WAS CLAIMED BY THE ASSESSEE AND ALLOWED BY THE DEPARTMENT ON THIS PROPERTY, THE PROVISIONS OF SECTION 50 CANNOT BE INVOKED IN T HIS CASE. HENCE, THERE WOULD NOT BE ANY CHANGE IN THE VALUE O F THE BLOCK OF ASSETS AS SHOWN BY THE ASSESSEE AS ON 31/0 3/2009. HENCE, THE ACTION OF THE ASSESSING OFFICER TO ASSES S THE SAID SURPLUS AS SHORT-TERM CAPITAL GAIN AGAINST THE LAW AND OTHERWISE IS NOT SUSTAINABLE AND THE ASSESSEE IS EN TITLED TO DEPRECIATION CLAIMED ON VALUE OF THE BLOCK OF ASSET S AS DECLARED AND THE DISALLOWANCE OF DEPRECIATION IS HE REBY DELETED BECAUSE THIS PROPERTY WAS NEVER PART OF THE SAID BLOCK OF ASSETS ELIGIBLE FOR DEPRECIATION. THUS, THE GROU ND NOS. 2 I.T.AS. NO.4736, 5237 & 5238/DEL/2017 20 AND 3 OF THE REVENUE ARE DISMISSED. ACCORDINGLY, TH E APPEAL OF THE REVENUE IS DISMISSED. APPEAL NO. 5237/D/2017 FOR THE AY 2009-10 33. THIS IS APPEAL IS CONSEQUENTIAL TO DISALLOW THE DEPRECIATION CLAIMED ON THE BLOCK OF ASSETS BY FOLL OWING THE ASSESSMENT ORDER FOR THE AY 2009-10. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE FOR THE SAID AS SESSMENT YEAR AS ABOVE, BY FOLLOWING THE ORDER IN THE SAID A PPEAL, THIS APPEAL OF THE REVENUE IS ALSO DISMISSED. ASSESSEES APPEAL NO. 4736/DEL/2017 34. NOW WE WILL TAKE UP ASSESSEES APPEAL. THE FIRS T FOUR GROUNDS OF APPEAL WERE TO CHALLENGE THE ACTION OF T HE ASSESSING OFFICER IN NOT CONSIDERING THE REVISED RE TURN OF INCOME FILED BY THE ASSESSEE ON 29/02/2016 EXCLUDIN G THE AMOUNT OF LONG TERM CAPITAL GAIN ON SALE OF THE PRO PERTY BEING THE PLOTS OF LAND AND BUILDING FOR WHICH THE SALE W AS CANCELLED BY AN ORDER DATED 05/06/2015 OF THE HONB LE DELHI HIGH COURT. 35. AS DISCUSSED ABOVE, THE ASSESSEE FILED A REVISE D RETURN OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS INITIATED BY THE AO U/S 148 OF THE ACT BUT WHICH WAS TREATED BY THE AO AS INVALID BY HOLDING THAT THE ASSESSEE IS NOT ENTI TLED TO REVISE THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTIC E ISSUED U/S 148 OF THE ACT. THE CIT(A) HELD THAT NOT ONLY THE S AID NOTICE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 21 ISSUED U/S 148 OF THE ACT WAS INVALID BUT ALSO HELD THAT THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE IS SUED U/S 148 OF THE ACT CANNOT BE REVISED BY RELYING UPON TH E CIT V. SUN ENGG. WORKS (P.) LTD. [1992] 198 ITR 297 (SC) WHERE IT WAS HELD THAT THE SECTION 147 OF THE ACT HAS BEEN INCORPORATED FOR THE BENEFIT OF THE REVENUE AND NOT OF THE ASSESSEE. 36. THE CIT DR PLACED RELIANCE ON THE FOLLOWING JUDG MENTS IN SUPPORT OF HIS CONTENTION THAT THE ASSESSEE CANN OT BE PERMITTED TO CONVERT THE REASSESSMENT PROCEEDINGS A S HIS APPEAL OR REVISION TO SEEK RELIEF IN RESPECT OF THE ITEMS EARLIER REJECTED OR CLAIM RELIEF IN RESPECT OF ITEMS NOT CL AIMED IN THE ORIGINAL ASSESSMENT PROCEEDINGS UNLESS RELATABLE TO THE ESCAPED INCOME AND THEREFORE CANNOT RE-AGITATE THE CONCLUDED MATTERS: A) SUN ENGINEERING WORKS 198 ITR 297 (SC) B) K.SUDHAKAR S. SHANBHAG VS ITO (2000) 241 ITR 865 (BOM) THAT T. C) METRO ISPAT (P) LTD. IN ITA NO. 2553/MUM/2010 - 37. WE HAVE CONSIDERED THE SUBMISSIONS AND ARGUMEN TS MADE BY THE ASSESSEE AND THE CIT DR. SINCE WE HAVE ALREADY HELD THAT THE REOPENING OF THE ASSESSMENT U/S 147 O F THE ACT FOR THIS ASSESSMENT YEAR AS INVALID AND HAVE CONFIR MED THE CANCELLATION OF THE REASSESSMENT ORDER, THE RETURN FILED CANNOT BE CONSIDERED AS REVISED RETURN AS THE ENTIR E I.T.AS. NO.4736, 5237 & 5238/DEL/2017 22 PROCEEDINGS ARE VOID-AB-INITIO AND THEREFORE, GROUNDS OF APPEAL RAISED ON THIS SCORE ARE DISMISSED. 38. GROUNDS NO. 5 AND 6 ARE GENERAL IN NATURE AND D O NOT CALL FOR ANY ADJUDICATION. 39. THE ASSESSEE RAISED TWO ALTERNATIVE ADDITIONAL GROUND BEING GROUND NO. 7 AND 8 VIDE LETTER DATED 19/03/20 20 WHICH READ AS UNDER: 7. ALTERNATIVELY, THE AUTHORITIES BELOW ERRED IN LAW A ND ON FACTS IN NOT CONSIDERING THAT THE CANCELLATION O F SALE DEED BY THE CONSENT DECREE DULY CONFIRMED BY THE HONBLE JURISDICTIONAL DELHI HIGH COURT, TANTAMOUNT TO A MISTAKE APPARENT ON RECORD WHICH MUST HAVE BEEN RECTIFIED U/S 154 OF THE ACT BY FOLLOWING THE JUDGM ENT AND FOR WHICH NECESSARY DIRECTIONS MUST BE ISSUED: A) M. K. VENKATACHALAM, ITO VS BOMBAY DYEING & MFG. CO. LTD [1958] 34 ITR 143 (SC). B) L.HRIDAYNARAIN VS ITO [1970] 78 ITR 26 (SC) C) CIT VS K. N. OIL INDUSTRIES [1983] 142 ITR 13 (MP) D) NAVNIRMAN(P) LTD VS CIT [1988] 174 ITR 574 (MP) E) KILKOTAGIRI TEA & COFFEE ESTATES CO LTD VS ITAT [1988] 174 ITR 579 (KER) F) CIT VS ARUNALUTHRA [2001] 252 ITR 76 (PUNJ. &HAR.) G) CIT VS RAM LAL BABU LAL [1998] 148 CTR (PUNJ. &HAR.) 643 I.T.AS. NO.4736, 5237 & 5238/DEL/2017 23 H) OMEGA SPORTS & RADIO WORKS VS CIT [1982] 134 ITR 28 (ALL.) I) GAMMON INDIA LTD VS CIT [1995] 214 ITR 50 (BOM) J) MAHARANA MILLS (P) LTD VS ITO [1959] 36 ITR 350 (SC ) K) ADDL. CIT VS KANTA BEHAN [1983] 140 ITR 187 (DELHI) L) RASTRIYA ISPAT NIGAM LTD VS ACIT [2016] 74 TAXMANN.COM 112 (AP) M) ACIT VS HUGHES SERVICES (FE) PTE LTD [2005] 93 ITD 77 (DELHI)(TM) 8. FURTHER, THE LEARNED ASSESSING OFFICER ALSO ERRE D IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE REVE NUE CAN ONLY CHARGE TAX AS PER LAW AS HAS BEEN HELD BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT V S SHELLY PRODUCTS (2003) 261 ITR 367 (SC) AND NTPC LT D VS CIT 229 ITR 383 (SC). ADMISSION OF ADDITIONAL GROUNDS 40. THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUNDS ARE LEGAL ISSUE WHICH GOES TO TH E VERY ROOT OF THE TAXABILITY OF LTCG IN WAKE OF DECREE PASSED BY THE HONBLE DELHI HIGH COURT AND SHOULD BE ADMITTED AND THESE GROUNDS DO NOT INVOLVE ANY FRESH INVESTIGATION INTO FACTS ARE ARISING OUT OF FACTS ALREADY ON RECORD. THE ASSESSE E ALSO SUBMITTED THAT GROUNDS OF APPEAL ON A MATTER OF LAW CAN BE RAISED ANY TIME AND EVEN FOR THE FIRST TIME BEFORE THE HONBLE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 24 ITAT. THE ASSESSEE PLACED RELIANCE ON NTPC VS CIT (1998) 229 ITR 383 (SC) AND VARIOUS OTHER JUDGMENTS. 41. THE CIT DR OBJECTED VEHEMENTLY AGAINST THE ADMI SSION OF ADDITIONAL GROUND. 42. WE HAVE PERUSED THE MATERIAL PLACED ON RECORD Q UA THE ADDITIONAL GROUNDS RAISED. SINCE THIS IS PURELY A L EGAL ISSUE WHICH GOES TO THE VERY ROOT OF TAXABILITY OF LTCG A ND WHETHER IN LIGHT OF THE JUDGMENT OF JURISDICTIONAL HIGH COUR T PASSED IN THE ASSESSEES OWN CASE TANTAMOUNT TO MISTAKE APPAR ENT FROM RECORD AND SHOULD BE RECTIFIED U/S 154 OF THE ACT O R OTHERWISE CAN BE ALLOWED, THEREFORE, WE ARE ADMITTING THE SAM E FOR ADJUDICATION. 43. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSES SEE VIDE LETTER DATED 20/04/2015 REQUESTED THAT THE ORIGINAL RETURN FILED BE TREATED AS FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. THE CANCELLATION DEEDS CANCELLING THE SALE OF PROPERTIES BY A CONSENT DECREE OF THE HONBLE DELHI HIGH COURT WERE EXECUTED ON 06/06/2015, I.E., TWO MONTHS AFTER FILING THE RETURN OF INCOME IN RESPONSE TO THE NOTI CE U/S 148 OF THE ACT. THUS, THE SALE TRANSACTION GOT CANCELLE D AND THE ASSESSEE INTIMATED THE SAID FACT FOR RECTIFICATION WITH A DETAILED NOTE SUPPORTED WITH THE RELEVANT EVIDENCE TO THE ASSESSING OFFICER BY WAY OF A REVISED RETURN OF INC OME ON 29/02/2016 IN VIEW OF THIS SUBSEQUENT EVENT AND I.T.AS. NO.4736, 5237 & 5238/DEL/2017 25 REPOSSESSION OF THE SAID PROPERTY ALREADY SOLD DURI NG THE RELEVANT PERIOD. 44. THE AR ALSO SUBMITTED THAT THE RETURN OF INCOME CAN BE REVISED U/S 139(5) OF THE ACT ONLY WHEN THE ASSESSE E DISCOVERS OMISSION/WRONG STATEMENT IN THE ORIGINAL RETURN. IN THIS CASE, NO OMISSION OR WRONG STATEMENT WAS DISCO VERED IN THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTIC E ISSUED U/S 148 OF THE ACT. THUS, THE SAID REVISED RETURN WAS NOT FILED U/S 139(5) OF THE ACT BUT IT WAS FILED ON THE BASIS OF EVENTS HAPPENED BEYOND THE PRESCRIBED TIME LIMIT U/S 139(5 ) OF THE ACT AND ALSO BEYOND CONTROL OF THE ASSESSEE DUE TO A DECREE ORDER PASSED BY THE HONBLE JURISDICTIONAL DELHI HI GH COURT. 45. THE ASSESSEE SUBMITTED THAT THIS REVISED RETURN FILED ON THE BASIS OF EQUITY, JUSTICE AND THE WELL SETTLED LA W THAT ONLY TAX DUE CAN BE COLLECTED AS INGRAINED BY THE CONSTI TUTION. THE ASSESSEE PLACED ITS RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN DALMIA POWER LTD [2019] 112 TAXMANN.COM 252 (SC)/[2020] 420 ITR 339 (SC) WHEREIN IT WAS HELD THAT THE REVISED RETURNS FILED AFTER THE D UE DATE DUE TO DELAY IN SANCTION OF SCHEME BY THE NCLT HAS TO B E ACCEPTED BY THE DEPARTMENT AND ASSESSMENTS HAVE TO BE COMPLETED THEREON. IN DALMIA POWER (SUPRA), THE NCL T ORDER WAS THE OCCASION TO REVISE RETURN BUT IN THE PRESEN T CASE, THE CONSENT DECREE OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT WAS THE REASON TO REVISE THE RETURN OF INCOME. FURT HER, IT WAS I.T.AS. NO.4736, 5237 & 5238/DEL/2017 26 IMPROBABLE FOR THE ASSESSEE IN BOTH THE CIRCUMSTANC ES TO FILE THE REVISED RETURN IN TIME AS EVENT OCCASIONED THE SAID REVISION HAPPENED LATER AND BEYOND PRESCRIBED LIMIT ATION PERIOD. THE HONBLE APEX COURT DECIDED THE MATTER O N THE BASIS OF DEMAND OF JUSTICE. LD. AR ALSO RELIED ON TH E JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD V CIT (1998) 229 ITR 383 (SC) HOLDING THAT IF AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON- TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVE NTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE F IRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM. 46. IT IS WELL ESTABLISHED LAW THAT WHEN A TRANSFER OF PROPERTY BECOMES NULL AND VOID FOR REASONS OF SUBSEQUENT EVE NTS, NO CAPITAL GAINS CAN ACCRUE THEREON. IN SUPPORT, RELIA NCE WAS PLACED ON VITHALBHAI P. PATEL 236 ITR 1001 (GUJ) AND ANANT CHUNILAL KATE V. ITO [2004] 267 ITR 482 (BOM) FOLLOWED BY NARANG OVERSEAS (P.) LTD 111 ITD 1 (MUM BAI) (SB). ACCORDINGLY, HE SUBMITTED WHEN NO CAPITAL GAIN ACCR UES, THEN NO TAX IS PAYABLE THEREON. 47. THE LD. AR FURTHER SUBMITTED THAT IT IS THE DUT Y AND POWER OF THIS COURT TO TAKE INTO CONSIDERATION ALL THE SUBSEQUENT EVENTS IN THE INTEREST OF JUSTICE AND PL ACED RELIANCE ON UNDERNOTED AUTHORITIES: I.T.AS. NO.4736, 5237 & 5238/DEL/2017 27 (A) MOUMITAPODDAR V. INDIAN OIL CORPORATION LTD. (2 010) 9 SCC 291 (B) KEDARNATH (2004) 8 SCC 76 (C) JUDGMENT OF THE HONBLE SUPREME COURT IN SHIPPI NG CORPORATION OF INDIA LTD VS MACHADO BROTHERS &ORS O N 25 MARCH, 2004 IN CASE NO.: APPEAL (CIVIL) 1855-1856 O F 2004 D) PASUPULETI VENKATESWARLU VS. THE MOTOR & GENERAL TRADERS (1975 1 SCC 770 AT PARA 4) E) J. M. BISWAS VS. N. K. BHATTACHARJEE & ORS. (2002 ) (4) SCC 68. 48. EVEN, THE ACT ITSELF PROVIDES FOR RECTIFICAT ION WHEN THERE OCCUR CHANGES IN THE QUANTUM OF CAPITAL GAINS IN SUB- SECTIONS 7B, 10A, 11,15&16 OF THE SECTION 155 IN TH IS REGARD. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE JUDGMENT OF SHAH VRAJLALMADHAVJI [1974] 95 ITR 614 (KER.) HOLDING THAT THE QUANTUM OF CAPITAL GAIN CAN BE ALTERED BY WAY OF RECTIFICATION ON SUBSEQUENT CHANG E IN SALE CONSIDERATION BY HIGH COURT. THUS, HE SUBMITTED THA T, THIS REVISED RETURN, IN ESSENCE, AMOUNTED TO AN APPLICAT ION U/S 154 OF THE ACT TO CORRECT THE MISTAKE APPARENT ON R ECORD DUE TO THE LATER JUDGMENT OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF THE ASSESSEE CANCELLING THE SA LE DEED EXECUTED EARLIER. IN CASE OF THE ASSESSEE, NON-ACCE PTANCE OF THE REVISED RETURN IN ANY MANNER EVEN AS AN APPLICA TION U/S 154 OF THE ACT WOULD TANTAMOUNT TO TAXING AN INCOME WHICH I.T.AS. NO.4736, 5237 & 5238/DEL/2017 28 NEVER ACCRUED/ RECEIVED. THOUGH THE ACT HAS MULTIPL E PROVISIONS TO MITIGATE HARDSHIP AND UNLAWFUL TAXATI ON AGAINST AN ASSESSEE, BUT THE LEGISLATURE CANNOT PROVIDE FOR ALL POSSIBLE AND PECULIAR SITUATIONS AND IT IS MANDATOR Y UPON THE AUTHORITIES TO CONSIDER SUCH SITUATIONS KEEPING OTH ER PROVISIONS, EQUITY AND JUSTICE IN CONSIDERATION. 49. THE LD. AR SUBMITTED THAT THE ORIGINAL ASSESSME NT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 28/12/2011. SEC TION 154(7) OF THE ACT PROVIDES FOR A RECTIFICATION WITH IN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORD ER U/S 143(3) OF THE ACT WAS PASSED WHICH IN THIS CASE WAS BY 31/03/2016. THE ASSESSEE FILED THE LETTER REVISING THE COMPUTATION OF INCOME ON 29/02/2016 WITH WHICH, THE CANCELLATION OF THE SALE DEED AND CONSEQUENTLY, NON -ACCRUAL OF THE CAPITAL GAINS WAS ALSO VERY WELL BROUGHT TO THE NOTICE OF THE AO WITHIN THE TIME PRESCRIBED BY THE LAW. THE S AID LETTER HAS TO BE CONSIDERED AS AN APPLICATION U/S 154 OF T HE ACT TO GIVE EFFECT TO THE CANCELLATION OF SALE DEEDS OF TH E PROPERTY RESULTING INTO THE ASSESSED LTCG AS THERE IS NO PRE SCRIBED FORM OF SUCH APPLICATION. 50. THE ASSESSEE FURTHER SUBMITTED THAT ONCE COPIES OF THE CANCELLATION DEEDS OF THE SALE OF THE PROPERTY ALON G WITH THE CONSENT DECREE OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT WAS BROUGHT ON RECORD WHICH ESTABLISHED THAT THE SA LE TRANSACTIONS WERE CANCELLED AND CAPITAL GAINS ON SA LE OF THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 29 SAID PROPERTY WHICH HAD ALREADY BEEN DECLARED IN TH E RETURN OF INCOME BY THE ASSESSEE WAS NOT TAXABLE AT ALL, T HE MISTAKE IN THE ASSESSMENT ORDER BECAME APPARENT AND GLARING . THE AO WAS BOUND TO RECTIFY THE SAID MISTAKE BY EXCLUDI NG THE AMOUNT OF CAPITAL GAIN FROM THE TAXABLE INCOME AND SHOULD HAVE ALLOWED THE RELIEF ON ITS OWN AS IT IS HIS PAR AMOUNT DUTY TO CHARGE TAX PER LEGAL PROVISIONS. IT IS TRITE LAW THAT RELIEF TO ASSESSEE IS NOT DEPENDENT UPON CLAIM MADE BY THE AS SESSEE BUT THE AUTHORITIES ARE JUDICIALLY BOUND TO RENDER JU STICE AT THEIR OWN AS HAS BEEN HELD BY THE APEX COURT IN ANCHOR PRESSINGS (P.) LTD. [1986] 161 ITR 159 (SC). THE HONBLE ITAT, RELYING ON THE JUDGMENT OF ANCHOR PRESSINGS ( SUPRA) HAS HELD IN THE CASE OF CONTAINER CORPORATION OF INDIA LTD. VS DCIT (2005) 92 ITD (DELHI) THAT IF AN ASSESSEE IS ENTITLED TO RELIEF ON THE BASIS OF MATERIAL ON RECORD, IT WO ULD CONSTITUTE MISTAKE APPARENT FROM RECORD AND CONSEQUENTLY, SUCH RELIEF CANNOT BE DENIED MERELY BECAUSE THE ASSESSEE HAS OM ITTED TO CLAIM THE SAME. 51. THE ASSESSEE ALSO PLACED ITS RELIANCE ON THE JU DGMENT OF MADRAS HIGH COURT IN DR. RAJAH SIR M.A. MUTHIAH CHETTIAR 238 ITR 505 WHEREIN A SUPREME COURT DECISION WAS THE CAUSE FOR RECTIFICATION. IT WAS HELD THAT IF ALLOWING AN APPLICATION FOR RECTIFICATION WOULD BE IN ACCORDANC E WITH THE SUBSTANTIVE CHARGING PROVISIONS OF THE ACT THEN SUCH EXERCISE IS A PERMISSIBLE EXERCISE OF POWER TO RECT IFY THE MISTAKE U/S 254(2) OF THE ACT. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 30 52. THE AR ALSO SUBMITTED THAT THE ARTICLE 265 OF T HE CONSTITUTION MANDATES THAT NO TAX CAN BE LEVIED OR COLLECTED EXCEPT BY AN EXPRESS AUTHORITY OF LAW, WHICH MEANS THAT TAX COLLECTED CONTRARY TO LAW HAS TO BE REFUNDED. THE P URPOSE OF ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE I N ACCORDANCE WITH LAW. THE RIGHT OF THE REVENUE TO RECEIVE AND C OLLECT TAX UNDER THE SAID ACT IS LIMITED TO WHAT IS PROPERLY D UE AND PAYABLE AS TAX. THE AMOUNTS COLLECTED IN EXCESS THE REOF ARE NOT TO BE TREATED AS TAX AND RETAINED BY THE STATE. THAT AMOUNT IS REQUIRED TO BE REFUNDED TO THE PERSON FRO M WHOM OR ON WHOSE BEHALF IT HAD BEEN COLLECTED. RELIANCE WAS PLACED ON THE UNDERNOTED AUTHORITIES: A) THE CONSTITUTIONAL BENCH DECISION OF 9 JUDGES OF HONBLE SUPREME COURT IN MAFATLAL INDUSTRIES VERSUS UNION OF INDIA, (1997) 5 SCC 536 / (2002-TIOL-54-SC - CX) B) CIT VS SHELLY PRODUCTS [2003] 261 ITR 367 (SC) C) R. SESHAMMAL VS ITO 237 ITR 185 (MADRAS) D) SUDHIR SAREEN V CIT 239 ITR 440 DELHI E) DCIT VS LAB INDIA INSTRUMENTS (P) LTD., 93 ITD 120ITAT-PUNE F) LUSTRE TILES LTD. VS ACIT 2007-TIOL-132-ITAT-JAI PUR G) SMT. SNEH LATA JAIN V CIT [2004] 140 TAXMAN 156 J&K HIGH COURT I.T.AS. NO.4736, 5237 & 5238/DEL/2017 31 H) SUNFLAG IRON & STEEL CO. LTD. LTD 2016-TIOL-2729 -HC- MUM-IT I) TIAM HOUSE SERVICE LTD. 242 ITR 539(MAD) K) CIT VS VALI BROTHERS 282 ITR 149(ALL) L) SMT. JIBY MATHEW VS DCIT KOTTAYAM IN ITAT NO. 523/COCH/2019 VIDE ORDER DATED 09/03/2020 53. THE AR ALSO SUBMITTED THAT THE PROCEDURE SHOUL D NOT BE THE HANDMAID AND NOT THE MISTRESS OF LEGAL JUSTICE A ND CAUSE OF JUSTICE SHOULD NOT BE SUBSERVIENT TO THE RULES OF PROCEDURE AND PLACED RELIANCE ON THE FOLLOWING JUDGMENTS: A) KAILASH V. NANKHU [2005] 4 SCC 480; STATE OF PUN JAB V. SHAMLALMURARI [1976] 1 SCC 719 B) SUSHIL KUMAR SEN V. STATE OF BIHAR, (1975) 1 SCC 774 ARE PERTINENT: (SCC P. 777, PARAS 5-6 C) STATE OF PUNJAB V. SHAMLALMURARI, (1976) 1 SCC 719 D) GHANSHYAMDASS V. DOMINION OF INDIA, (1984) 3 SC C 46, E) SARDARAMARJIT SINGH KALRA V. PRAMOD GUPTA, [2003 ] 3 SCC 272. 54. THE AR FURTHER SUBMITTED THAT IF THIS MATTER IS DECIDED ON MERE TECHNICALITIES, THE ASSESSEE WOULD BE LEFT WIT H PAYMENT OF HUGE TAXES ON ALLEGED CAPITAL GAINS WHICH NEVER ACCRUED AS THE IMPUGNED TRANSFER OF THE CAPITAL ASSET FAILED A ND THE SAID PROPERTY IS STILL UNDER POSSESSION OF THE ASSESSEE. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED I.T.AS. NO.4736, 5237 & 5238/DEL/2017 32 AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED. INJUSTICES CANNOT BE LEGALIZED ON TECHNICAL GROUNDS WHEN THE TRIBUNAL IS CAPABLE OF REMOVING IN JUSTICE AND TO DO JUSTICE. THE AR FURTHER SUBMITTED WHEN TH E SUBSTANTIVE LAW CONFERS A BENEFIT ON THE ASSESSEE U NDER A STATUTE, IT CANNOT BE TAKEN AWAY BY THE ADJUDICATORY AUTHORITY ON MERE TECHNICALITIES. THE AR ALSO SUBMITTED THAT TOO HYPER- TECHNICAL OR LEGALISTIC APPROACH SHOULD BE AVOIDED IN LOOKING AT A PROVISION WHICH MUST BE EQUITABLY INTERPRETED AND JUSTLY ADMINISTERED. FURTHER, RELIANCE IS PLACED ON THE UN DERNOTED AUTHORITIES: A) COLLECTOR, LAND ACQUISITION V. MST. KATIJI AND ORS. (167 ITR 471) 2002-TIOL-444-SC-LMT. B) SAROJ AGGARWAL V CIT 156 ITR 497 SC C) S.R. KOSHTI V. CIT [2005] 146 TAXMAN 335/276 ITR 165 D) CIT VS BEHARILALL-RAMCHANDRA 5 ITR 417 OUDH E) CIT VS RELCOM [2015] 62 TAXMANN.COM 190 (DELHI) F) CIT VS VALI BROTHERS 282 ITR 149(ALL) G) CIT VS LATA MANGESHKAR MEDICAL FOUNDATION [2019] 410 ITR 347 (BOMBAY) 55. THE ASSESSEE FURTHER SUBMITTED THAT EVEN IN REASSESSMENT PROCEEDINGS, INCOME HAS TO BE COMPUTED AS PER THE PROVISIONS OF ACT . RELIANCE WAS PLACED ON THE FOLLOWING AUTHORITIES: I.T.AS. NO.4736, 5237 & 5238/DEL/2017 33 A) UNITED EDUCATIONAL SOCIETY [2019] 107 TAXMANN.C OM 127 (DELHI - TRIB. B) PADINJAREKARA AGENCIES (P.) LTD. [2014] 52 TAXMANN.COM 441 (COCHIN - TRIB.) 56. IT IS WELL ACCEPTED LAW THAT THE COURTS HAVE IN HERENT POWERS TO FURTHER THE CAUSE OF SUBSTANTIVE JUSTICE AND MAKE SUCH ORDERS AS MAY BE NECESSARY TO MEET THE END OF JUSTICE OR TO PREVENT THE ABUSE OF THE PROCESS OF THE COURT. T HE TRIBUNALS ARE ALSO VESTED WITH THESE INHERENT POWER S AS HAS BEEN HELD IN THE UNDERNOTED AUTHORITIES: A) AJAY GANDHI VS B. SINGH [2004] 134 TAXMAN 537 (SC)[DOD: 05/01/2004] B) CIT VS WALCHAND & CO 65 ITR 381(SC) C) MAFATLAL SECURITIES LTD. [2009] 119 ITD 444 (MUM .) D) ROJER MATHEW VS SOUTH INDIAN BANK LTD AND ORS CH IEF ... ON 13 NOVEMBER, 2019 CIVIL APPEAL NO. 8588 OF 2 019 [ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.1 5804 OF 2017] 57. THE ASSESSEE FURTHER SUBMITTED THAT THE IT HAS BEEN HELD BY THE HONBLE BOMBAY HIGH COURT IN CIT VS LATA MANGESHKAR MEDICAL FOUNDATION [2019] 410 ITR 347 (B OM) THAT THE PERIOD OF LIMITATION SHOULD NOT COME AS AN HINDRANCE TO DO SUBSTANTIAL JUSTICE BETWEEN THE PARTIES. 58. THE ASSESSEE FURTHER PLACED RELIANCE ON A RECEN T DECISION OF THE ITAT IN FUTURA POLYSTER LTD. V ITO [2020]118 TAXMANN.COM 243 (MUMBAI - TRIB.) (DATED 16/07/2020) I.T.AS. NO.4736, 5237 & 5238/DEL/2017 34 AND SUBMITTED THAT THE SITUATION IN THE SAID CASE W AS AKIN TO THE PRESENT CASE. IN FUTURA (SUPRA), THE ASSESSEE E NTERED INTO AN AGREEMENT TO SELL A PIECE OF LAND AND THE ASSESS EE FILED ITS RETURN DECLARING CERTAIN AMOUNT AS LONG TERM CAPITA L GAIN FROM SALE OF LAND. IN THE APPELLATE PROCEEDINGS, TH E ASSESSEE RAISED A NEW PLEA THAT THE AGREEMENT TO SELL WAS SU BSEQUENTLY CANCELLED AND, THUS, IN ABSENCE OF ANY VALID TRANSA CTION RELATING TO SALE OF LAND IN EXISTENCE, NOTHING COUL D BE BROUGHT TO TAX AS LONG-TERM CAPITAL GAIN. IT WAS HELD THAT TAX CANNOT BE LEVIED ON A HYPOTHETICAL INCOME. 59. THE ASSESSEE SUBMITTED THAT THERE IS NO ESTOPPE L AGAINST THE STATUTORY PROVISIONS. WHEN, THE AO BECAME AWAR E THAT THE TRANSFER / SALE OF PROPERTY HAD ALREADY BEEN CA NCELLED AS PER THE CONSENT DECREE OF THE HONBLE DELHI HIGH CO URT, HE HAD NO OTHER OPTION BUT TO HOLD THAT NO CAPITAL GAI N ACCRUED ON THE IMPUGNED SALE DURING THE RELEVANT PERIOD. WH EN NO CAPITAL GAIN HAD ARISEN IN ABSENCE OF A TRANSFER OF THE PROPERTY WHICH EVEN TODAY THE ASSESSEE HOLDS, NON-T AXABLE INCOME SHOULD NOT BE JUST TAXED ON TECHNICALITIES. THE ORIGINAL ASSESSED INCOME MUST BE RECTIFIED AS A MISTAKE U/S 154 OF THE ACT DUE TO SUBSEQUENT ORDER OF THE JURISDICTIONA L HIGH COURT. 60. THE ASSESSEE FURTHER SUBMITTED THAT THE POWER O F THE ITO TO AMEND THE ASSESSMENT ORDER IN CONSEQUENCE TO A DECISION IN AN APPEAL OR AN ORDER OF THE JURISDICTI ONAL HIGH COURT OR SUPREME COURT IS INHERENT AND TRACEABLE TO THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 35 SECTION 143(3) ITSELF AND THE LIMITATION CONTAINED IN SECTION 154(7) OF THE ACT WOULD NOT APPLY. RELIANCE WAS PL ACED ON THE FOLLOWING AUTHORITIES: A) PENINSULA LAND LTD. VS CIT (2008) 175 TAXMAN 58 (BOMBAY) B) L ALAGUSUNDARAM CHETTIAR VS CIT (1994) 210 ITR 614 (MAD) 61. THE EXERCISE OF POWER TO RECTIFY AN ERROR APPAR ENT FROM RECORD IS NOT DISCRETIONARY AND IF THE CONDITIONS F OR ITS EXERCISE ARE SHOWN TO EXIST, ITO CANNOT DECLINE TO EXERCISE THE SAID POWER AS HAS BEEN HELD IN THE CASE OF L. HIRDA Y NARAIN VS ITO (1970) 78 ITR 26 (SC). ARGUMENTS OF THE CIT DR 62. THE LEARNED CIT DR SUBMITTED THAT U/S 154, ONLY ARITHMETICAL MISTAKES CAN BE RECTIFIED, WHEREAS IT IS A MATTER OF WRITING OFF OF LONG-TERM CAPITAL GAIN ON ACCOUNT OF ORDER OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT. THE AS SESSEE HAS SUBMITTED THAT THE HONBLE DELHI HIGH COURT APPROVE D THE SCHEME OF CANCELLATION OF EARLIER SALE DEEDS AND TH EREFORE, THE LTCG ADMITTED EARLIER SHOULD BE WRITTEN OFF WHEREAS THESE CANCELLATION DEEDS WERE MUTUALLY AGREED DEEDS BETWE EN THE ASSESSEE AND THE PURCHASER WITH NO ROLE PLAYED BY T HE HONBLE DELHI HIGH COURT IN APPROVING THESE CANCELL ATION DEEDS. THE CIT DR SUBMITTED THAT THE HONBLE DELHI HIGH COURT HAS MERELY APPROVED AN OUT OF COURT SETTLEMEN T WHICH I.T.AS. NO.4736, 5237 & 5238/DEL/2017 36 WAS ARRIVED AT BETWEEN THE PARTIES WITHOUT ANY INTE RVENTION OF THE HIGH COURT. THUS, THESE CANCELLATION DEEDS CANN OT BE MADE THE BASIS FOR RECTIFYING THE ASSESSMENT ORDER PASSED EARLIER U/S143(3) OF THE ACT BY INVOKING PROVISIONS OF THE SECTION 154 OF THE ACT. 63. FURTHER, THERE IS NO WHISPER IN THE SETTLEMENT AGREEMENT AS TO WHAT HAPPENED TO THE PREVIOUS PART PAYMENTS R ECEIVED BY THE ASSESSEE AND HOW THE SAME WAS TO BE TREATED. THUS, THE ASSESSEE HAS ENRICHED ITSELF BY THOSE PAYMENTS AND THE TAX TREATMENT OF ALL THOSE PAYMENTS RECEIVED BY THE ASSESSEE HAS TO BE SEEN. 64. THIS TRANSACTION INVOLVES COMPLEX FACTUAL ISSUE S OF DETERMINING THE EXACT QUANTUM OF INCOME TO BE TAXED WITHIN THE MEANING OF SECTION 154 OF THE ACT WHICH TAKES I T OUTSIDE THE PURVIEW OF SECTION 154 OF THE ACT. 65. THE CIT DR ALSO SUBMITTED THAT EVEN IF IT IS PR ESUMED THAT THE MATTER COULD BE RECTIFIED U/S 154 OF THE A CT, THEN THIS BENEFIT COULD BE ALLOWED AS PER THE PROCEDURE LAID OUT IN THE STATUTE WHICH INVOLVES TIME LIMIT. THE ASSESSEE SOU GHT TO RECTIFY THE ORDER DATED 28.12.2011 PASSED U/S 143(3 ) OF THE ACT AND THUS, THE RECTIFICATION APPLICATION COULD B E FILED WITHIN FOUR YEARS FROM THE END OF FY 2011-12 I.E. B Y 31/03/2016. HOWEVER, THERE IS NO SUCH CLAIM FOR RE CTIFICATION FILED BY THE ASSESSEE TILL 31/03/2016 AND THUS, THE TIME LIMIT I.T.AS. NO.4736, 5237 & 5238/DEL/2017 37 HAS ALREADY EXPIRED. THE REVISED RETURN FILED BY TH E ASSESSEE COULD NOT BE CONSIDERED AS RECTIFICATION APPLICATIO N IN ANY MANNER BECAUSE IF THE ASSESSEE WANTED TO FILE A REC TIFICATION APPLICATION U/S 154, IT SHOULD HAVE CLEARLY MENTION ED THEREIN AS A RECTIFICATION APPLICATION. 66. IN THE REJOINDER, THE AR OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD ALREADY OFFERED AN INTEREST INCOME OF MORE THAN RS 95.70 CRORES ON THE OUTSTANDING PRINCIPAL S ALE CONSIDERATION AMOUNT IN DIFFERENT YEARS ON THE AMOU NTS REMAINING RECEIVABLE FROM THE BUYER AND ALSO PAID I NCOME-TAX THEREON AND NO REVERSAL OF THE SAME HAS BEEN CLAIME D BY THE ASSESSEE EVEN AFTER CANCELLATION OF THE SALE DEEDS. IT WAS STATED THAT A SUM OF RS 56 CRORES ONLY WAS RECEIVED OUT OF SALE CONSIDERATION OF RS 151 CRORES. FURTHER, A SUM OF RS 20 CRORES WAS ALSO REFUNDED BY THE ASSESSEE TO THE BUY ER AT THE TIME OF REGISTRATION OF THE CANCELLATION DEED OUT O F RS 56 CRORES LEAVING JUST RS 36 CRORES WITH ASSESSEE. THIS FACT WAS VERY MUCH MENTIONED IN THE SETTLEMENT DEED DULY DEC REED BY THE HONBLE JURISDICTIONAL DELHI HIGH COURT VIDE IT S ORDER DATED 05/06/2015 AND PLACED ON RECORD BEFORE THE AS SESSING OFFICER AND THE CIT(A) AND HAS ALSO FILED BEFORE US IN THE PAPER BOOK. 67. THE AMOUNT OF RS 36 CRORES AS ABOVE REMAINED WI TH ASSESSEE IN PURSUANCE TO THE CANCELLED SALE DEEDS W AS IN THE NATURE OF MESNE PROFIT FOR ADVERSELY AFFECTING THE TITLE ON THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 38 PROPERTY OF THE ASSESSEE FOR ALMOST 7 YEARS BEING C APITAL IN NATURE, I.E., SINCE SEPTEMBER, 2008 WHEN THE SALE D EEDS WAS REGISTERED AND THE POSSESSION OF THE PROPERTY WAS H ANDED OVER TO THE BUYER TILL CANCELLATION OF THE SALE DEE DS ON 05/06/2015 BY THE HONBLE DELHI HIGH COURT FOR WHIC H NO COMPENSATION IN ANY MANNER WAS RECEIVED BY THE ASSE SSEE FROM THE BUYER. THE ASSESSEE DID NOT HAVE THE PROPE RTY INCLUDING ITS TITLE FOR ALMOST SEVEN YEARS AND NO B ENEFIT AROSE TO IT FOR THE SAME. THE ASSESSEE RELIED ON THE SPEC IAL BENCH DECISION OF THE HONBLE TRIBUNAL IN THE CASE OF NARANG OVERSEAS (P) LTD VS ACIT [2008] 111 ITD 1 (MUMBAI) (SB) [DOD: 20/02/2008] WHERE THE HONBLE TRIBUNAL HELD THAT MESNE PROFITS ARE CAPITAL RECEIPTS WHERE IT HAS ALS O BEEN HELD THAT A CONSENT DECREE ORDER OF THE HIGH COURT HOLDS THE SAME FORCE AS ANY OTHER ORDER OF THE HIGH COURT AND THE CONTRARY CONTENTION OF THE REVENUE HAS NO STRENGTH. 68. THE AR FURTHER SUBMITTED THAT THE SECTION 56(2) (IX) OF THE ACT INTRODUCED W.E.F. AY 2015-16 IS OTHERWISE NOT A PPLICABLE TO THE FACTS OF THE CASE AS ANY AMOUNT THEREIN CAN BE TAXED ONLY WHEN THE TWIN CONDITIONS MENTIONED THEREIN ARE APPLICABLE. THE SAID SECTION READS AS BELOW: (IX) ANY SUM OF MONEY RECEIVED AS AN ADVANCE OR OTHERWISE IN THE COURSE OF NEGOTIATIONS FOR TRANSFER OF A CAPITAL ASSET, IF, - (A) SUCH SUM IS FORFEITED; AND I.T.AS. NO.4736, 5237 & 5238/DEL/2017 39 (B) THE NEGOTIATIONS DO NOT RESULT IN TRANSFER OF SUCH CAPITAL ASSET; 69. THE AR SUBMITTED THAT IN THIS CASE NO MONEY WAS RECEIVED AS AN ADVANCE OR OTHERWISE IN THE COURSE O F NEGOTIATION FOR TRANSFER OF CAPITAL ASSET WHERE THE NEGOTIATIONS DID NOT RESULT IN TRANSFER OF SUCH CAP ITAL ASSET BECAUSE IN THIS CASE, THE ASSESSEE HAD ALREADY TRANSFERRED THE CAPITAL ASSET IN SEPT 2008 BY REGIS TERED CONVEYANCE DEEDS AND ALSO HANDED OVER THE POSSESSIO N OF THE PROPERTY TO THE BUYER . THUS, IN THIS CASE THE MONEY REMAINED WITH THE ASSESSEE WAS NOT ON ACCOUNT OF TH E CONDITIONS STIPULATED IN THE SAID SECTION BECAUSE, FIRSTLY, THE MONEY WAS NOT RECEIVED AS AN ADVANCE BUT IT WAS THE SALE CONSIDERATION OF A DULY COMPLETED TRANSACTION BY VI RTUE OF THE REGISTERED CONVEYANCE DEEDS; AND SECONDLY, THE SAME WAS ALSO NOT RECEIVED IN THE COURSE OF NEGOTIATION WHERE THE NEGOTIATIONS DID NOT RESULT IN TRANSFER OF SUCH CAP ITAL ASSET AS THE SAME HAD ALREADY BEEN TRANSFERRED. 70. THE AR FURTHER SUBMITTED THAT THE CLAUSES (A) A ND (B) OF THE SECTION 56(2)(IX) OF THE ACT ARE NOT MUTUALLY E XCLUSIVE SINCE THE WORD AND HAS BEEN USED IN BETWEEN. THUS, TO ATTRACT THE SAID PROVISION BOTH THE CLAUSES (A) AND (B) SHOULD BE SATISFIED TOGETHER. FURTHER, NO AMOUNT AT ALL WA S FORFEITED AS IS REQUIRED IN THE CLAUSE (A) ABOVE. THE AMOUNT REMAINED WITH THE ASSESSEE WAS ON ACCOUNT OF A SETTLEMENT DU LY I.T.AS. NO.4736, 5237 & 5238/DEL/2017 40 DECREED BY THE HONBLE JURISDICTIONAL DELHI HIGH CO URT AND NOT FOR FORFEITURE WHICH IS UNILATERAL ACT OF THE R ECIPIENT WHERE CONSENT OF THE PAYER IS NOT TAKEN BEFORE FORFEITING . MOREOVER, THIS AMOUNT WAS LEFT WITH THE ASSESSEE AS MESNE PRO FIT BY THE BUYER TO COMPENSATE THE ASSESSEE FOR DEPRIVATION OF USE OF THE PROPERTY FOR ALMOST 7 YEARS WHICH HAD ALREADY BEEN TRANSFERRED TO THE BUYER IN THE YEAR 2008 THROUGH R EGISTERED CONVEYANCE DEEDS AND WHO USED IT FOR THE SAID PERIO D. SECOND CLAUSE (B) IS ALSO NOT APPLICABLE AT ALL ON FACTS A S THE SALE WITH POSSESSION HAD ALREADY BEEN COMPLETED. 71. HE ALSO STATED THAT THIS IS A PECULIAR SITUATIO N AND HAPPENS RARELY AND THEREFORE, THE LEGISLATURE HAS N OT MADE ANY PROVISION FOR THE SAME AS IT COULD NOT COMPREHE ND THE SAME OR ALL SUCH PROBABILITIES. IT WAS NEVER A FORF EITED AMOUNT NOR WAS RECEIVED IN THE COURSE OF NEGOTIATION FOR T RANSFER OF A PROPERTY WHICH WAS NEVER TRANSFERRED BUT A COMPENSA TION IN THE NATURE OF MESNE PROFIT AND A CAPITAL RECEIPT. 72. IT WAS FURTHER SUBMITTED THAT THE HONBLE ITAT IS SEIZED WITH THE APPEAL FOR THE AY 2009-10 AND THE SETTLEME NT WAS ARRIVED AT IN THE PERIOD RELEVANT TO THE AY 2016-17 WHICH IS NOT UNDER CONSIDERATION AND NO DIRECTION CAN BE GIV EN BY THE HONBLE ITAT IN RESPECT OF ANY OTHER ASSESSMENT YEA R. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 41 DECISION 73. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE. 74. THE ONLY ISSUE REMAINS FOR CONSIDERATION HERE I S, WHETHER THE LONG-TERM CAPITAL GAIN ON SALE OF TWO P ROPERTIES DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME HA S TO BE EXCLUDED FROM TAXABLE INCOME OF THE ASSESSEE FOR TH IS ASSESSMENT YEAR IN VIEW OF THE CANCELLATION OF SALE DEEDS OF THE SAID PROPERTY IN PURSUANCE OF THE DECREE ORDER PASSED BY THE HONBLE DELHI HIGH COURT. 75. THE ASSESSEE HAD FILED A LETTER DATED 29/02/201 6 BEFORE THE ASSESSING OFFICER DURING THE REASSESSMENT PROCE EDINGS (PLACED AT PAGES 14-20 OF THE PB) WHEREIN THE ASSESSEE FILED A REVISED RETURN AS WELL AS COMPUTATION OF INCOME A ND REASONS FOR REVISING THE RETURN. THE ASSESSEE PLACE D ALL THE DOCUMENTARY EVIDENCES BEING THE SALE DEEDS, MORTGAG E DEEDS, SUIT FILED BY THE ASSESSEE AGAINST BUYERS, SETTLEME NT DEEDS, DECREE ISSUED BY DELHI HIGH COURT, AND CANCELLATION DEEDS OF THE PROPERTIES EXECUTED IN PURSUANCE OF THE SETTLEM ENT AGREEMENT AND DELHI HIGH COURT ORDER ON RECORD TO E STABLISH THAT THE SALE OF THE PROPERTY UNDER CONSIDERATION H AD BEEN CANCELLED AND THEREFORE, NO CAPITAL GAIN ACCRUED ON THE SALE OF THE SAID PROPERTY TO THE ASSESSEE. THEREFORE, THE A SSESSEE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 42 EXCLUDED THE AMOUNT OF LONG-TERM CAPITAL GAIN DECLA RED ON THE SALE OF THE SAID PROPERTY IN ITS REVISED COMPUTATIO N OF INCOME. 76. HOWEVER, THE LOWER AUTHORITIES REJECTED THIS RE LIEF TO THE ASSESSEE ON THE GROUND THAT A REVISED RETURN CANNOT BE FILED DURING THE REASSESSMENT PROCEEDINGS AND THUS, IGNOR ED ALL THE EVIDENCES PLACED ON RECORD AND THEREFORE, THE A SSESSEE IS BEFORE US CLAIMING THAT NOT EXCLUDING THE LONG TERM CAPITAL GAIN ON SALE OF THE SAID PROPERTY FROM THE TAXABLE INCOME IS HIGHLY UNJUST AND THE SAME SHOULD BE RECTIFIED. 77. ADMITTEDLY, ALL THESE DOCUMENTARY EVIDENCES ESTABLISHING THE CANCELLATION OF SALE DEEDS OF THE SAID PROPERTY WERE BROUGHT ON THE RECORD OF THE ASSESSING OFFICER DURING THE COURSE OF REASSESSMENT PROCEEDINGS. EVEN THE ASSESS ING OFFICER HAS REFERRED TO THIS LETTER IN THE IMPUGNED ASSESSMENT ORDER. ON PERUSAL OF THE SETTLEMENT AGREEMENT DATED 30/05/2015, WE OBSERVE THAT THE SAID AGREEMENT WAS ENTERED INTO BETWEEN THE ASSESSEE AND PURCHASER BEFORE THE HONBLE JURISDICTIONAL DELHI HIGH COURT MEDIATION AND CONCIL IATION CENTRE OF THE HONBLE JURISDICTIONAL DELHI HIGH COUR T ON THE DIRECTIONS OF THE HONBLE DELHI HIGH COURT ONLY. TH EN, THE HONBLE JURISDICTIONAL DELHI HIGH COURT PASSED THE DECREE IN TERMS OF THE SETTLEMENT MADE BETWEEN THE PARTIES. T HE CANCELLATION DEEDS DATED 06/06/2015 WERE REGISTERED IN PURSUANCE OF THIS HIGH COURT DECREE DATED 05/06/201 5. ONCE A DECREE IS PASSED BY THE HIGH COURT UNDER ITS I.T.AS. NO.4736, 5237 & 5238/DEL/2017 43 SIGNATURE, THE SETTLEMENT GETS APPROVED BY THE HIGH COURT AND HAS TO BE RECKONED AS AN ORDER PASSED BY THE HO NBLE HIGH COURT FOR ALL PURPOSES. HONBLE BOMBAY HIGH CO URT IN THE CASE OF ANANT CHUNILAL KATE V. ITO [2004] 267 ITR 482 (BOM) HAS HELD AS UNDER: THE TRIBUNAL DID NOT AT ALL TREAT THE COMPROMISE D ECREE AS A LAWFUL DECREE. THE TRIBUNAL WAS UNDER THE IMPRESS ION THAT THE RIGHTS AND LIABILITIES OF THE PARTIES WERE NOT DETERMINED AFTER APPLYING THE MIND TO THE CONTENTS OF THE CONTRACT AND AFTER APPRECIATION OF EVIDENCE. THE TR IBUNAL HAD MADE A DISTINCTION BETWEEN THE DECREE PASSED AF TER CONSIDERING VARIOUS CONTENTIONS RAISED AND CASE LAW REFERRED TO BY THE PARTIES AND A DECREE PASSED IN ACCORDANCE WITH COMPROMISE REACHED BY THE PARITIES OUTSIDE THE COURT. THE TRIBUNALS DECISION IN THAT REGARD WAS CONTRARY TO THE WELL- SETTLED LEGAL POSITION. A DECREE IN TERMS OF SETTLEMENT ARRIVED AT BY THE PARTIES BEFORE THE COURT HAS THE SAME BINDING FORCE AS ANY OTHER DECREE. 78. THUS, IT IS ESTABLISHED BEYOND DOUBT THAT THE CANCELLATION DEEDS WERE EXECUTED AS PER THE DECREE OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT AND UNDER IT S APPROVAL RESULTING INTO CANCELLING THE SALE OF THE SAID PROPERTY. EVEN, THE AO OR THE CIT DR DID NOT CHALL ENGE THE AUTHENTICITY OF THESE DOCUMENTS NOR CAN IT BE CHALL ENGED. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 44 ONCE THE SALE TRANSACTION IS REVERSED AND THE ASSET IS OWNED AND HELD BY THE ASSESSEE BEING THE SELLER, OSTENSIB LY NO CAPITAL GAIN CAN BE SAID TO HAVE ACCRUED TO THE ASS ESSEE AT ALL. THE HONBLE GUJARAT HIGH COURT HAS OBSERVED IN THE C ASE OF CIT VS. VITHALBHAI P. PATEL (1999) 102 TAXMAN 36 (G UJ) AS UNDER: ADMITTEDLY, THE PURPORTED SALE WAS NULL AND VOID U NDER THE PROVISIONS OF SECTION 4 OF THE GUJARAT VACANT L ANDS IN URBAN AREAS (PROHIBITION OF ALIENATION) ACT, 1972. UNDER SECTION 4 IT WAS PROVIDED THAT NO WHO OWNED ANY VAC ANT LAND, SHALL, ON OR AFTER THE APPOINTED DAY, ALIENAT E SUCH LAND BY WAY OF SALE, GIFT, EXCHANGE, MORTGAGE OTHER THAN SIMPLE MORTGAGE LEASE OR OTHERWISE OR EFFECT A PART ITION OR CREATE A TRUST OF SUCH LAND AND ANY ALIENATION MAD E OR PARTITION EFFECTED OR TRUST CREATED IN CONTRAVENTIO N OF THE SAID PROVISION SHALL BE NULL OR VOID. THEREFORE, TH E TRANSACTION IN QUESTION WAS NULL AND VOID AB INITIO AND IT WAS SO DECLARED BY AN ORDER OF THE COLLECTOR. FURTH ER, THE SAME WAD NOT CHALLENGED. THUS, SINCE THERE WAS NO SALE TRANSACTION IN THE EY E OF LAW, THERE COULD BE NO CAPITAL GAIN ARISING OUT OF NULL AND VOID TRANSFER OF SUCH LAND. HENCE, THE TRIBUNAL WAS RIGHT IN COMING TO THE CONCLUSION THAT NO CAPITAL GAIN HAD A CCRUED TO THE ASSESSEE. 79. IN THE PRESENT CASE, THE SALE DEEDS OF THE PROP ERTY WERE EXECUTED AND LTCG WAS DECLARED IN THE RETURN O F INCOME I.T.AS. NO.4736, 5237 & 5238/DEL/2017 45 AND TAXES WERE PAID THEREON. THE SALE OF THE PROPER TY WAS CANCELLED ON 06/06/2015 AND THEREFORE, THE VERY BAS IS TO EXCLUDE THE LTCG FROM TAXABLE INCOME WAS NOT AVAILA BLE AT THE TIME OF FILING THE RETURN OF INCOME AND IN FACT , IT BECAME AVAILABLE ON ACCOUNT OF THE CHANGE IN CIRCUMSTANCES DURING THE COURSE OF HEARING IN THE REASSESSMENT PROCEEDIN GS ITSELF. IT IS ALSO A TRITE LAW THAT IT IS THE DUTY AND POWE R OF THE COURT TO TAKE INTO CONSIDERATION THE SUBSEQUENT EVENTS IN THE INTEREST OF JUSTICE AS HAS BEEN HELD IN THE CASE OF MOUMITA PODDAR V. INDIAN OIL CORPORATION LTD. (2010) 9 SCC 291, KEDAR NATH (2004) 8 SCC 76 AND SHIPPING CORPORATION OF INDIA LTD VS MACHADO BROTHERS &ORS IN APPEAL (CIVIL ) 1855-1856 OF 2004 . 8. A SIMILAR ISSUE CAME UP IN THE CASE OF FUTURA POLYSTER LTD. VS ITO (2020) 118 TAXMAN.COM 243 (MUM - TRIB.) , WHERE THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL DATED 19/12/2012 FOR TRANSFER OF A PROPERTY AND DE CLARED LONG TERM CAPITAL GAIN ON THAT BASIS IN ITS RETURN OF INCOME. HOWEVER, LATER ON THE AGREEMENT TO SELL WAS CANCELL ED VIDE CANCELLATION DEED DATED 28/09/2017 WHEN THE APPEAL WAS GOING ON BEFORE THE CIT(A). THE ASSESSEE RAISED THI S ISSUE BEFORE THE CIT(A) WHO REMANDED THE MATTER BACK TO T HE AO. THE AO HAVING REJECTED THE PLEA OF THE ASSESSEE BROU GHT LONG TERM CAPITAL GAIN TO TAX. IN VIEW OF THESE FACTS, T HE HONBLE MUMBAI ITAT BENCH OBSERVED AS UNDER: I.T.AS. NO.4736, 5237 & 5238/DEL/2017 46 AS A MATTER OF FACT, THE LOWER AUTHORITIES HAD FAI LED TO PLACE ON RECORD ANY MATERIAL WHICH WOULD REBUT THE AFORESAID CLAIM OF THE ASSESSEE. IN FACT, IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE DEED OF CANCELLATION, DATED 28-9-2017 IS A SHAM OR A FABRICATED DOCUMENT. IN FA CT, THE SUBSEQUENT SALE OF PART OF THE LAND BY THE ASSE SSEE IN THE PERIOD RELEVANT TO A.Y 2018-19 AND A.Y 2019-20, FURTHER FORTIFIES THE VERACITY OF THE AFORESAID CLA IM OF THE ASSESSEE. AT THIS STAGE, WE MAY HEREIN OBSERVE THAT THE REVENUE BY ASSESSING THE LTCG IN THE HANDS OF THE ASSESSEE HAD SOUGHT TO TAX A HYPOTHETICAL INCOME, WHICH FINDS ITS ROOTS IN A TRANSACTION WHIC H HAD NEVER FRUCTIFIED INTO A SALE TRANSACTION. AS OBSERVED BY THE HON'BLE APEX COURT IN THE CASE OF CIT V. SHOORJI VALLABHDAS AND CO., [1962] 46 ITR 144 (SC), INCOME-TAX IS A LEVY ON INCOME. NO DOUBT, THE INCOME-TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VI Z., THE ACCRUAL OF THE INCOME OR ITS RECEIPT, BUT THE SUBSTANCE OF THE MATTER IS THE INCOME. IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN THOUGH IN BOOK-KEEPING, AN ENTRY IS MADE ABOUT A HYPOTHETICAL INCOME', WHICH DOES NOT MATERIALIZE. AS OBSERVED BY THE HON'BLE HIGH COURT, WHERE THE INCOME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THE RE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT, IN CERTA IN I.T.AS. NO.4736, 5237 & 5238/DEL/2017 47 CIRCUMSTANCES, HAVE BEEN MADE IN THE 'BOOKS OF ACCOUNT'. ON THE BASIS OF OUR AFORESAID OBSERVATION S, WE ARE UNABLE TO PERSUADE OURSELVES TO CONCUR WITH THE VIEW TAKEN BY THE LOWER AUTHORITIES , AND THEREIN VACATE THE ADDITION TOWARDS LTCG MADE BY THEM, ON T HE BASIS OF THE MOU, DATED 19-12-2012. 81. IN FUTURA POLYSTER (SUPRA) AS WELL AS IN THE PR ESENT CASE, THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN ON SALE OF PROPERTIES IN THEIR RETURNS OF INCOME. IN BOTH THE SE CASES, THE SALE OF PROPERTIES GOT CANCELLED MUCH LATER. IN BOT H THESE CASES, THE GROUND RAISED BY THE ASSESSEE TO EXCLUDE THE LONG- TERM CAPITAL GAIN FROM THE TAXABLE INCOME WAS NOT A VAILABLE AT THE TIME OF FILING THE ORIGINAL RETURN OF INCOME. B OTH THE ASSESSEES RAISED THEIR ISSUES BEFORE THE DEPARTMENT AL AUTHORITIES DURING THE PROCEEDINGS GOING ON AT THE RELEVANT TIME, I.E., BEFORE THE CIT(A) IN CASE OF FUTURA AND BEFORE THE AO IN THE REASSESSMENT PROCEEDINGS IN CASE OF THE A SSESSEE. HOWEVER, THE DEPARTMENTAL AUTHORITIES DID NOT ACCEP T THE CLAIM OF THE ASSESSEE IGNORING ALL THE EVIDENCES PL ACED ON RECORD. CONSIDERING ALL THE FACTS, THE HONBLE ITAT ALLOWED RELIEF AND DIRECTED TO EXCLUDE THE LONG-TERM CAPITA L GAIN FROM TAXABLE INCOME FOR THE PROPERTY WHOSE SALE HAD BEEN CANCELLED. IN OUR OPINION, THE DECISION OF FUTURA P OLYSTER (SUPRA) SQUARELY APPLIES TO THE FACTS OF THE CASE A ND THE LONG- TERM CAPITAL GAIN DECLARED ON THE SALE OF TWO PROPE RTIES UNDER I.T.AS. NO.4736, 5237 & 5238/DEL/2017 48 CONSIDERATION CANNOT BE TAXED IN THE HANDS OF THE A SSESSEE AT ALL. 82. THE AO AS WELL AS THE LD. CIT(A) DID NOT GRANT THE CLAIMED RELIEF OF EXCLUDING THE IMPUGNED LTCG FROM TAXABLE INCOME FOR THE A.Y. 2009-10 TO THE ASSESSEE MERELY ON A TECHNICAL ISSUE THAT THE ASSESSEE FILED THE CLAIM I N FORM OF REVISED RETURN WHICH IS NOT PERMISSIBLE IN REASSESS MENT PROCEEDINGS. WHEN THE ASSESSEE CONTENDED THAT THE S AID LETTER SHOULD BE CONSIDERED AS A RECTIFICATION APPLICATION U/S 154 OF THE ACT WHICH HAS BEEN FILED IN TIME, I.E., WITHIN 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ASSESSME NT ORDER U/S 143(3) WAS PASSED. THE LD. CIT DR CONTENDED THA T THIS LETTER DOES NOT MENTION TO BE AN APPLICATION U/S 15 4 OF THE ACT AND THEREFORE, CANNOT BE CONSIDERED AS AN APPLI CATION U/S 154 OF THE ACT. THE LD. CIT DR FURTHER CONTENDED TH AT EVEN IF IT IS PRESUMED THAT THIS CAN BE RECTIFIED U/S 154 O F THE ACT, THEN NO APPLICATION U/S 154 WAS FILED BY THE ASSESS EE WITHIN THE PRESCRIBED TIME. THUS, THE ISSUE ARISES AS TO W HETHER THE RELIEF CAN BE ALLOWED TO THE ASSESSEE IN THE ABOVE MENTIONED CIRCUMSTANCES. 83. A LOT OF EMPHASIS HAS BEEN PLACED BY THE LD. CI T DR ON THE TECHNICAL ISSUE THAT THE LETTER FILED ON 29/02/ 2016 CANNOT BE CONSIDERED AS A REVISED RETURN OR AN APPLICATION U/S 154 OF THE ACT. IT IS A TRITE LAW THAT WHEN SUBSTANTIAL JU STICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER, THE I.T.AS. NO.4736, 5237 & 5238/DEL/2017 49 CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRE D. WHEN THE SUBSTANTIVE LAW CONFERS A BENEFIT ON THE ASSESS EE UNDER A STATUTE, IT CANNOT BE TAKEN AWAY BY THE ADJUDICATORY AUTHORITY ON MERE TECHNICALITIES. IN HOLDING SO, WE DRAW STR ENGTH FROM THE JUDGMENT OF THE APEX COURT IN THE CASE OF COLLE CTOR, LAND ACQUISITION V. MST. KATIJI AND ORS. (167 ITR 471) 20 02-TIOL- 444-SC-LMT AND SAROJ AGGARWAL V CIT 156 ITR 497 SC, WHEREIN IT HAS BEEN OBSERVED BY THE APEX COURT THAT TOO HYPER-TECHNICAL OR LEGALISTIC APPROACH SHOULD BE AV OIDED IN LOOKING AT A PROVISION WHICH MUST BE EQUITABLY INTE RPRETED AND JUSTLY ADMINISTERED. 84. SECTION 154 OF THE ACT PROVIDES FOR RECTIFICATI ON OF A MISTAKE APPARENT FROM RECORD. ANY MISTAKE APPARENT FROM THE RECORD COVERS ALL MISTAKES DISCOVERABLE FROM A PERUSAL OF THE WHOLE EVIDENCE IN THE CASE, OR FROM AN OMISSION TO APPLY CERTAIN PROVISIONS OF THE ACT TO THE FACTS OF THE C ASE, OR A MISTAKE DUE TO AN OVERLOOKING OF CERTAIN ASPECTS OF THE CASE, OR A MISTAKE ARISING ON ACCOUNT OF A WRONG CONSTRUC TION OF ANY PROVISIONS OF THE ACT. THE ERROR MAY BE EITHER OF FACT OR ERROR OF LAW. THUS, WE DONT AGREE WITH THE CONTENT ION OF THE CIT DR THAT THE SECTION 154 OF THE ACT CAN BE UNDER TAKEN ONLY TO RECTIFY ARITHMETICAL ERRORS. FURTHER, THERE IS NO FORMAT PRESCRIBED UNDER THE LAW FOR FILING A RECTIFICATION APPLICATION U/S 154. WHAT IS RELEVANT THAT A MISTAKE IS BROUGHT TO THE KNOWLEDGE OF THE AO AND HERE IN THIS CASE ASSESSEE HAS FILED A VERY DETAIL LETTER ALONGWITH ALL THE RELEVANT DOCUM ENTS TO I.T.AS. NO.4736, 5237 & 5238/DEL/2017 50 PROVE THAT SALE STANDS FINALLY CANCELLED AND AS LTC G ON SALE OF SUCH ASSET IS NOT TAXABLE AND ASSET REMAINS WITH THE ASSESSEE AND THERE IS NO TRANSFER. SUCH A LETTER HA S TO BE RECKONED AS RECTIFICATION OF ORIGINAL ASSESSMENT OR DER PASSED U/S 143(3), WHICH IS WITHIN THE PERIOD OF 4 YEARS F ROM THE END OF THE FINANCIAL YEAR WHEN THE ORDER WAS PASSED. EV EN OTHERWISE ALSO AO IS EMPOWERED TO RECTIFY SUO-MOTTO WHEN MISTAKE IS BROUGHT IN HIS KNOWLEDGE OR IS DISCOVERE D BY HIM FROM THE RECORDS. 85. WE FIND THAT WHAT IS MATERIAL U/S 154 OF THE AC T IS THAT THERE IS A MISTAKE, A MISTAKE WHICH IS CLEAR, GLARING AND WHICH IS INCAPABLE OF TWO VIEWS BEING TAKEN. THE EX PRESSION RECORD HAS TO BE CONSTRUED AND UNDERSTOOD IN WHIC H IT APPEARS AND IN CONTEXT OF EXPRESSION APPARENT FROM THE RECORD IN SECTION 154; RECORD WOULD MEAN THE REC ORD OF THE ENTIRE PROCEEDINGS OF THE CASE INCLUDING THE DOCUME NTS AND MATERIAL PRODUCED BY THE ASSESSEE AND TAKEN ON RECO RD BY THE AUTHORITIES, WHICH WERE AVAILABLE AT THE TIME OF PA SSING OF THE ORDER. ALL DOCUMENTS ESTABLISHING THE CANCELLATION OF SALE DEEDS WERE PLACED ON THE RECORD OF THE ASSESSING OF FICER WHO IGNORED THE JURISDICTIONAL DELHI HIGH COURT ORDER A ND CANCELLATION DEEDS PASSED IN PURSUANCE OF THE SAID DELHI HIGH COURT ORDER AND DID NOT EXCLUDE THE LONG-TERM CAPIT AL GAIN WHILE COMPUTING THE ASSESSED INCOME. THUS, THE ASSE SSING OFFICER DELIBERATELY OMITTED TO TAKE INTO CONSIDERA TION THE DELHI HIGH COURTS ORDER AS WELL AS OTHER EVIDENCES REGARDING I.T.AS. NO.4736, 5237 & 5238/DEL/2017 51 THE CANCELLATION OF SALE DEEDS AND REVERSION OF THE POSSESSION OF THE PROPERTY TO THE ASSESSEE. 86. IT IS A WELL ESTABLISH LAW THAT, IF ON THE BASI S OF MATERIAL ON RECORD, THE ASSESSEE IS ENTITLED TO A R ELIEF, THEN IT WOULD CONSTITUTE A MISTAKE APPARENT FROM RECORD WHI CH CAN BE RECTIFIED U/S 154 OF THE ACT AND SUCH RELIEF CAN NOT BE DENIED EVEN IF THE ASSESSEE OMITTED TO CLAIM THE SA ME BY MISTAKE. THE HONBLE SUPREME COURT IN THE CASE OF ANCHOR PRESSINGS (P) LTD. VS CIT (1986) 161 ITR 159 (SC) HELD THAT THE JURISDICTION U/S 154 TO RECTIFY THE MISTAKE IS M UCH WIDER THAN PROVIDED IN ORDER XLVII, RULE 1 OF THE CPC, 19 08, AND THEREFORE, RELIEF COULD BE ALLOWED IN THE RECTIFICA TION PROCEEDINGS IF ALL THE FACTUAL MATERIAL NECESSARY F OR ALLOWING THE RELIEF WERE AVAILABLE ON RECORD AND SUCH RELIEF COULD NOT BE DENIED MERELY BECAUSE THE ASSESSEE OMITTED TO CLAIM THE SAME. THIS VIEW HAS BEEN UPHELD IN THE CASE OF LUSTRE TILES LTD. VS. ADDL. CIT (2007) 108 ITD 35 WHERE RELIANCE HAS BEEN PLACED ON CONTAINER CORPORATION OF INDIA LTD. VS DCIT (2005) 92 ITD 333 (DELHI) WHEREIN THE ITAT, DELHI BENCH, AFTER DISCUSSING SEVERAL DECISIONS OF THE CO URT INCLUDING THAT OF ANCHOR PRESSINGS (P) LTD. VS CIT (1986) 161 ITR 159 (SC) HELD THAT THE JURISDICTION U/S 154 CAN BE ASSUMED IF THERE IS A MISTAKE APPARENT FROM RECORD. IF ON THE BASIS OF MATERIAL ON RECORD, THE ASSESSEE IS ENTITL ED TO A RELIEF WHICH HAS REMAINED TO BE ALLOWED, THEN IT WOULD CON STITUTE A MISTAKE APPARENT FROM RECORD AND CONSEQUENTLY, SUCH RELIEF I.T.AS. NO.4736, 5237 & 5238/DEL/2017 52 CANNOT BE DENIED MERELY BECAUSE THE ASSESSEE OMITTE D TO CLAIM THE SAME BY MISTAKE. 87. ALL THE DOCUMENTS TO ESTABLISH THAT THE SALE OF THE SAID PROPERTY HAD BEEN CANCELLED WERE ON THE RECORD OF T HE ASSESSING OFFICER. THE LONG-TERM CAPITAL GAIN ON TH E SAID PROPERTY WAS NOT AT ALL TAXABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF CANCELLED SALE TRANSACTION. THUS, IN VIEW O F THE SETTLED POSITION OF LAW, THE ASSESSING OFFICER WAS DUTY BOU ND TO ALLOW RELIEF TO THE ASSESSEE EVEN IF THE ASSESSEE DID NOT CLAIM SO. EVEN IF THE LETTER DATED 29/02/2016 IS NOT CONSIDER ED AS REVISED RETURN BUT CERTAINLY IT IS AN APPLICATION T O THE AO TO CLAIM THE RELIEF, AND IN THAT CASE, THE AO HIMSELF WAS LEGALLY OBLIGED TO EXCLUDE THE AMOUNT OF LONG-TERM CAPITAL GAIN ON SALE OF THE SAID PROPERTY ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 88. THE ARTICLE 265 OF THE CONSTITUTION OF INDIA LA YS DOWN THAT NO TAX SHALL BE LEVIED EXCEPT BY AUTHORITY OF LAW. HENCE, ONLY LEGITIMATE TAX CAN BE RECOVERED AND EVEN A CON CESSION OR ACQUIESCENCE BY AN ASSESSEE DOES NOT GIVE AUTHORITY TO THE TAX COLLECTOR TO RECOVER MORE THAN WHAT IS DUE FROM HIM UNDER THE LAW. FOR THIS PROPOSITION, WE RELY ON JUDICIAL PREC EDENT FROM THE JUDGMENT OF THE CONSTITUTIONAL BENCH OF 9 JUDGE S OF HONBLE SUPREME COURT IN MAFATLAL INDUSTRIES VERSUS UNION OF INDIA, (1997) 5 SCC 536 / (2002-TIOL-54-SC-CX), AND FROM CIT VS SHELLY PRODUCTS [2003] 261 ITR 367 (SC), R. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 53 SESHAMMAL VS ITO 237 ITR 185 (MADRAS), CIT VS VALI BROTHERS 282 ITR 149(ALL), TIAMHOUSE SERVICE LTD. 2 42 ITR 539(MAD). THE HONBLE DELHI IN SUDHIR SAREEN V CIT 239 ITR 440 DELHI HAS OBSERVED AS UNDER: AN INCOME WHICH IS LIABLE TO BE TAXED SHOULD NOT E SCAPE. AN INCOME NOT TAXABLE, ERRONEOUSLY OR UNWITTINGLY C AUGHT IN THE NET OF TAXABILITY, SHOULD BE ALLOWED TO ESCA PE. THE TAX COLLECTOR SHOULD NOT HESITATE IN EXTENDING A HE LPING HAND TO ANYONE WHO GENUINELY INTENDS TO PAY THE TAX . 89. THUS, AN INCOME LIABLE TO BE TAXED HAS TO BE WO RKED OUT IN ACCORDANCE WITH THE LAW IN FORCE. IN THIS PROCES S, IT IS NOT OPEN TO THE REVENUE AUTHORITIES TO TAKE ADVANTAGE O F THE IGNORANCE OF THE ASSESSEE AND TAX CANNOT BE LEVIED ON AN ASSESSEE AT A HIGHER AMOUNT MERELY BECAUSE THE ASSE SSEE DID NOT CLAIM THE RELIEF DUE TO SOME ERROR OR IGNORANCE . IT CAN ONLY BE LEVIED WHEN IT IS AUTHORIZED BY LAW AS IS THE MA NDATE OF THE ARTICLE 265 OF THE CONSTITUTION OF INDIA. A SENSE O F FAIR PLAY BY THE FIELD OFFICERS TOWARDS THE TAX PAYERS IS NOT AN ACT OF BENEVOLENCE BY THE FILED OFFICERS BUT IT IS CALL OF DUTY IN A SOCIALLY ACCOUNTABLE GOVERNANCE. IN VIEW OF THE AB OVE SETTLED POSITION OF LAW, WE ARE OF THE OPINION THAT IF A LE GITIMATE AND BONA FIDE CLAIM IS AVAILABLE TO THE TAX PAYER THEN IT CANNOT BE IGNORED OR BE TAXED IN THE ABSENCE OF ANY AUTHORITY . 90. IN THIS REGARD AN OLD CIRCULAR NO. 14(XL35) DATED 11 TH APRIL 1955 ISSUED BY THE CBDT IN THE CONTEXT OF REFUNDS AND I.T.AS. NO.4736, 5237 & 5238/DEL/2017 54 RELIEFS DUE TO THE ASSESSEE CAN BE REFERRED TO WHER EIN CBDT HAS INSTRUCTED THAT, ..OFFICERS OF THE DEPARTMEN T SHOULD NOT TAKE ADVANTAGE OF THE IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSIST TAXPAYE R IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIM ING AND SECURING ANY RELIEF AND IN THIS REGARD THE OFFICERS SHOULD TAKE INITIATIVE IN GUIDING THE TAX PAYER WHERE PROCEEDIN GS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND O R RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD IN THE LONG RUN BEN EFIT THE DEPARTMENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM T HAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM GOVERNMEN T 91. SUCH A GUIDANCE TO THE FIELD OFFICERS BY THE CB DT IS TO EARN TAXPAYERS CONFIDENCE AND TRUST. AN ACTION OR INACTION WHICH ERODES ANY TAXPAYERS FAITH IN INDIAN TAX AND JUDICIAL SYSTEM DOES NOT DO ANY OF US ANY GOOD. THE WELL- ME ANING ADVICE GIVEN BY THE CBDT MUST BE IMPLEMENTED TO THE FULLEST EXTENT. AS TO THE BINDING NATURE OF THIS ADVICE, WE MAY ONLY REFER TO SECTION 119 OF THE ACT AND HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF UCO BANK VS CIT (1999) 237 I TR 889(SC). HONBLE SUPREME COURT HAS TIME AND AGAIN H ELD THAT THE CIRCULARS OF CBDT ARE LEGALLY BINDING ON THE RE VENUE. THE ADVICE CONTAINED IN THE CIRCULAR IS ALSO LEGALLY BI NDING ON ALL THE FIELD OFFICERS. 92. IT IS EQUALLY WELL-ACCEPTED LAW THAT THE TRI BUNAL HAS INHERENT POWERS TO FURTHER THE CAUSE OF SUBSTANTIVE JUSTICE AND MAKE SUCH ORDERS AS MAY BE NECESSARY TO MEET TH E END OF JUSTICE AS HAS BEEN HELD IN THE CASE OF AJAY GANDHI VS B. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 55 SINGH [2004] 134 TAXMAN 537 (SC)[DOD: 05/01/2004] A ND CIT VS WALCHAND & CO 65 ITR 381(SC). IF IN THE COURSE OF HEARING ANY LEGAL CLAIM BASED ON FACTS AND LAW IS BROUGHT T O THE NOTICE OF THE TRIBUNAL ALONGWITH SUPPORTING EVIDENC E/ RECORDS, THEN TRIBUNAL IN LIGHT OF VARIOUS JUDGEMENT S AS CITED ABOVE HAS THE POWER TO ENTERTAIN AND DECIDE SUCH CL AIM WHICH OTHERWISE IS PERMISSIBLE IN LAW. 93. IN VIEW OF OVERALL FACTS AND LEGAL POSITION, WE ARE OF THE OPINION THAT SUBSTANTIVE JUSTICE MUST BE RENDERED TO THE ASSESSEE TO MEET BOTH THE ENDS OF LAW AND JUSTICE. T HUS, WE HEREBY HOLD THAT THE AO HAS MADE A GRAVE ERROR APPA RENT FROM RECORD BY IGNORING THE DOCUMENTARY EVIDENCES I NCLUDING THE HONBLE JURISDICTIONAL DELHI HIGH COURTS ORDER PLACED ON HIS RECORD FOR CANCELLATION OF THE SALE EVEN THOUGH THE SAME WAS BROUGHT TO HIS NOTICE BY THE ASSESSEE AND THERE BY INCLUDING THE LONG TERM CAPITAL GAIN ON SALE OF THE PROPERTY IN THE TAXABLE INCOME OF THE ASSESSEE. THE LETTER DATE D 29.02.2016 FILED BEFORE THE AO IS TO BE TREATED AN APPLICATION U/S 154 TO RECTIFY THE ASSESSMENT ORDER PASSED U/S 143(3) ON 28.12.2011 AS THE APPLICATION HAS TO BE CONSIDERED IN RESPECT OF LTCG ASSESSED THEREIN, BECAUSE THE SAID APPLICAT ION WAS WITHIN 4 YEARS AS HELD ABOVE. WE HOLD THAT THE LONG - TERM CAPITAL GAIN OF RS. 143,85,67,404/- ON SALE OF THE SAID PROPERTY IS NOT AT ALL TAXABLE IN THE HANDS OF THE ASSESSEE AS THE SALE DEEDS WERE CANCELLED. WE HEREBY DIRECT TH E ASSESSING OFFICER TO EXCLUDE THE LONG TERM CAPITAL GAIN ON SA LE OF THE SAID PROPERTY FROM THE COMPUTATION OF TAXABLE INCOME FOR THE A.Y. I.T.AS. NO.4736, 5237 & 5238/DEL/2017 56 2009-10 BY PASSING AN ORDER U/S 154 OF THE ACT WITH IN A PERIOD OF THREE MONTHS FROM THE RECEIPT OF THIS ORD ER TO AVOID UNDUE HARASSMENT TO THE ASSESSEE AND TO REFUND THE INCOME- TAX PAID THEREON AS PER LAW. THUS, THE ISSUE RAISED IN THESE GROUNDS IS DECIDED IN FAVOUR OF THE ASSESSEE. 94. FURTHER, AS REGARDS THE TAXABILITY OF THE AMOU NT OF RS.36 CRORES REMAINED WITH ASSESSEE AFTER CANCELLATION OF THE SAID SALE IN TERMS OF THE DECREE ORDER OF THE HONBLE JUR ISDICTIONAL DELHI HIGH COURT, WE AGREE THAT THE SAME WAS IN THE NATURE OF MESNE PROFIT AND BEYOND THE PROVISIONS OF SECTION 5 6(2)(IX) OF THE ACT. MOREOVER, AS EXPLAINED BY THE LD. AR, THE SAID SECTION IS ALSO NOT APPLICABLE AS THE TWIN CONDITIO NS MENTIONED THEREIN HAVE NOT BEEN MET ON THE FACTS, B ECAUSE AS PER THE CONTENTION OF THE AR THE SAID AMOUNT WAS IN THE NATURE OF LIQUIDATED DAMAGES FOR AFFECTING THE TITL E OF THE ASSESSEE ON THE PROPERTY FOR NEARLY 7 YEARS. 95. THE APPEAL IS ALLOWED PARTLY AS INDICATED ABOVE . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2020 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 27/11/2020 PKK: