DCIT 7(3), MUMBAI V. NOSHIR D. TALATI, MUMBAI

ITA 5423/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4182 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: J D MISTRY SH RI B V ZHAVERI
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Audit objection; Fair market value; Difference of opinion; Valuation report; Assessment record; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 148

Judgement Text

NOSHIR D TALATI ITA 5423/ M /20 13 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUN TANT MEMBER ITA NO. : 5 423 /MUM/20 1 3 (ASSESSMENT YEAR: 20 1 0 - 11 ) THE DEPUTY COMMISSIONER OF INCOME TAX - 7(3), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 VS NOSHIR D TALATI , LEVEL 6 CEEJAY HOUSE, SHIVAGAR ESTATE, DR A B ROAD, WORLI, MUMBAI - 400 018 .: PAN: AA APT 6890 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVEEN GUPTA RESPONDENT BY : SHRI J D MISTRY SH RI B V ZHAVERI /DATE OF HEARING : 1 4 - 01 - 201 6 / DATE OF PRONOUNCEMENT : 06 - 04 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : T HE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGN ED O RDER DATED 28.05. 201 3 PASSED COMMISSIONER OF INCOME - TAX (APPEALS) CIT(A) - 13, MUMBAI , FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 2007 - 08. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL: (I) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE REASSESSMENT PROCEEDING IS BAD IN LAW, WITHOUT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER IN REASON RECORDED FOR REOPENING THE ASSESSMENT. (II) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN EXTENDING THE SCOPE OF CHANGE OF OPINION TO A CASE WHERE NO OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE PRESUMED DEEMED FORMATION OF OPINION. NOSHIR D TALATI ITA 5423/ M /20 13 2 (III) T HE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THIS IS A CASE WHERE NO OPINION WAS FORMED BY THE ASSESSING OFFICER AND THEREFORE REOPENING WAS OUTSIDE THE SCOPE OF CHANGE OF OPINION. (IV) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT PROPERLY INTERPRETING THE LAW ON THE SUBJECT AND HIS DECISION IS CONTRARY TO RATIO OF DELHI HIGH COURTS DECISION IN THE CASE OF M/S USHA ENGINEERING LTD. (V) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS .1,01,01,666/ - AS SHORT TERM CAPITAL GAINS AND RS.1,77,91,629/ - AS LONG TERM CAPITAL, WITHOUT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX OF THE CASE AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. (VI) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION ON ACCOUNT OF CAPITAL GAIN HOLDING THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISION OF SECTION 50C WITHOUT APPRECIATING THE FACT THAT THE JT. SUB - REGISTRAR, PUNE VALUED THE SAID LAND AT RS.18.75 CROR ES AS AGAINST RS. 50 LACS MENTIONED IN LEASE TRANSFER AGREEMENT AND THEREFORE THE SALE CONSIDERATION WAS CORRECTLY TAKEN AT RS.18.75 CRORES AS PER PROVISION OF SECTION 50C. 2. THE LD. CIT(A)S ORDER IS CONTRARY IN LAW AND ON FACTS AND DESERVES TO BE SET A SIDE. 2. BRIEF FACTS QUA THE ISSUE OF VALIDITY OF REOPENING UNDER SECTION 147 IS THAT, THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 14.02.2008 DECLARING TOTAL INCOME OF RS.13,44,37,680/ - , WHICH WAS LATER ON REVISED TO RS.13,66,92,168/ - ON 26.11.2008. T HE SAID RETURN WAS SELECTED FOR SCRUTINY AND AFTER CONSIDERING THE VARIOUS SUBMISSIONS AND MATERIAL FILED IN RESPONSE TO QUERY RAISED BY THE AO FROM TIME TO TIME, ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED VIDE ORDER DATED 24.04.2009 , WHEREBY, INCOME WA S ASSESSED ON THE REVISED RETURN OF INCOME , T HAT I S AT RS.13,66,92,165 / - . AFTER HAVING COMPLETED THE ASSESSMENT, IN THE AFORESAID M ANNER , THE AO SOUGHT TO REOPEN THE ASSESSMENT BY ISSUANCE OF NOTICE DATED 26.03.2012 , UNDER SECTION 14 8 AFTER RECORDING FOLLOWING REASONS : 'IN THIS CASE, ORDER UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 WAS PASSED ON 24.04.2009. THE ASSESSEE ALONG WITH HIS WIFE AND M/S. ZENRIBA ESTATES & INVEST. PVT. LTD. HAVE ENTERED INTO A LEASE AGREEMENT FOR L EASE OF 63 ACRES OF LAND AT PUNE FOR 999 YEARS ON A LEASE RENT OF RE. 1/ - PER YEAR AND LEASE PREMIUM OF RS.50 LACS VIDE AGREEMENT DATED 07.04.2005. THE VALUE OF THE SAID LAND WAS VALUED AT RS. 18,75,56,000,/ - BY THE SUB NOSHIR D TALATI ITA 5423/ M /20 13 3 REGISTRAR PUNE. THE SAID PROPERTY HA S BEEN TRANSFERRED BY THE ASSESSEE FOR A TOTAL CONSIDERATION, OF RS.50,00,999/ - . THEREFORE, THE CAPITAL GAINS FOR A.Y2006 - 07 SHOULD BE BROUGHT TO TAX. ALSO THERE IS A CLEAR CASE OF TRANSFER OF IMMOVABLE PROPERTY BY THE ASSESSEE, THE PROVISIONS OF SECTION 2 114 7 ARE ATTRACTED AND CAPITAL GAINS ARE ATTRACTED IN THIS CASE. ACCORDINGLY, THERE IS AN UNDER ASSESSMENT OF RS.18,75,56,000/ - LEADING TO SHORT LEVY OF TAX. THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN ON SALE OF SHARES. HOWEVER, BASED ON THE DATE OF A GREEMENT, THE SAME OUGHT TO HAVE TAXED AS SHORT TERM CAPITAL GAIN. THUS THERE IS SHORT LEVY OF TAX OF RS. 1,40,28,000/ - . IT IS CLEAR THAT THE ASSESSEE HAS UNDERSTATED THE INCOME. THUS, IT IS A CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH E ASSESSEE FAILED TO DISCLOSE JULY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR A. Y. 2007 - 08. I, THEREFORE, HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS. 1.40 CRORES HAS ESCAPED ASSESSMENT.' 3. IN RESPONSE TO THE AFORESAI D RATIO, THE ASSESSEE FILED HIS DETAILED OBJECTIONS BEF O RE THE AO , CHALLENGING THE VALIDITY OF REOPENING UNDER SECTION 147 ON LEGAL GROUNDS AS WELL AS ON MERITS OF THE GROUNDS RAISED IN THE REASONS RECORDED . THE ASSESSEES OBJECTIONS / SUBMISSIONS HAVE B EEN INCORPORATED BY THE AO FROM PAGES 2 TO 7 OF THE ASSESSMENT ORDER. SUM AND SUBSTANCE OF THE ASSESSEES MAIN CONTENTION WAS THAT, FIRSTLY , AT THE TIME OF REGISTERING THE LEASEHOLD LAND, THE STAMP D UTY A UTHORITIES HA VE ASSESSED THE FAIR MARKET V ALUE (FMV) IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50C AT RS.50 LAKHS AND ON THE BASIS OF THE SAID VALUATION OF FMV STAMP DUTY WAS PAID BY THE LESS O R. THUS, VALUATION ADOPTED BY THE STAMP DUTY AUTHORITY IS THE SAME AS STATED IN THE LEASE AGREEMENT; SECONDLY , IN FACT, THERE IS NO TRANSFER OF LAND AND TRANSACTION IS ONLY OF LEASE OF LAND FOR WHICH LE A S E PREMIUM OF RS.50 LAKHS WAS RECEIVED WHICH WAS IN ACCORDANCE WITH THE VALUE ADOPTED AS PER THE STAMP DUTY AUTHORITIES. NOSHIR D TALATI ITA 5423/ M /20 13 4 NOWHERE, THE AUTHORITY HAD ADOPTED OR ASSESSE D THE VALUE OF LAND AT RS.18,75,58,000/ - FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AS ALLEGED IN THE REASONS RECORDED, THEREFORE, THE SAID VALUATION IS COMPLETELY EXTRANEOUS AND HAS NO RELEVANCE TO THE IMPUGNED TRANSACTION. THEN I T WAS FURTHER SUBMITTED T HAT, ALL THESE INFORMATION AND MATERIAL WAS ALREADY AVAILABLE ON RECORD AT THE TIME OF ORIGINAL ASSESSMENT ALONG WITH THE COPY OF REGISTERED LEASE AGREEMENT WHICH WAS SPECIFICALLY FILED BEFORE THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS . I N THE COMPUTATION OF INCOME, THE ASSESSEE HAD ALSO DULY DISCLOSED THE AMOUNT OF HIS SHARE OF THE PREMIUM RECEIVED. THUS, THE AO HAS DULY APPLIED HIS MIND ON THE MATERIAL AND INFORMATION ON WHICH REOPENING IS BEING SOUGHT AND ACCORDINGLY SAME IS VITIATED ON ACCOUNT OF CHANGE OF OPINION . IN SUPPORT, FOLLOWING DECISIONS WERE RELIED UPON: - (A) GUJARAT POWER CORP. LTD, [2012] 26 TAXMAN.COM514; (B) KALVINATOR OF INDIA LTD., 320 ITR 561 (SC); (C) CIT VS FORMER FRANCE, 264 ITR 566; AND (D) ICICI HOME FINANCE CO. LTD. VS ACIT, BOMBAY HIGH COURT JUDGMENT AND ORDER DATED 7 TH AUGUST, 2012 . TH AT APART, THE ASSESSEE HAS ALSO CLARIFIED THE MATTER ON MERITS ALSO. 4. HOWEVER, THE AO AFTER DISCUSSING THE ENTIRE FACTS AND SUBMISSIONS MADE BY THE ASSESSEE REJECT ED THE ASSESSEES CONTENTION , A FTER RELYING UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS USHA INTERNATIONAL LTD, [2014] 368 ITR 309 ; [2010 ] 348 ITR 485 . THE AOS REASONING W AS THAT, THE VALUATION OF THE SAME VERY LAND AS SU BMITTED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE FOR COMPUTING THE VALUE OF SHARES OF M/S WAVRY CONSTRUCTIONS P LTD. WAS RS.18,75,56,000/ - , WHICH IN TURN, WAS BASED ON THE VALUE OF LAND COMPUTED BY JOINT SUB - REGISTRAR (VA L UATION) HOLDING REJECTION O N TH E LAND. THE VALUE OF THE SHARES WAS DETERMINED AT RS.1,87,000/ - PER SHARE BY TAKING THE VALUE OF LAND O F RS.18,75,56,000/ - . THIS INFORMATION WAS NOT THERE BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. NOSHIR D TALATI ITA 5423/ M /20 13 5 HENCE, NEW MATERIAL AND FACTS HAVE COME INTO RECORD. THUS , AFTER DETAILED DISCUSSION, HE REJECTED THE ASSESSEES OBJECTION QUA THE VALIDITY OF THE ASSESSMENT AND THEREAFTER ASSESSED THE VALUE OF LONG TERM CAPITAL GAIN BY ADOPTING THE VALUE OF RS.18,75,56,000/ - INSTEAD OF RS.50 LAKHS AS STATED I N THE AGREEMENT. 5 . BEFORE THE CIT(A), DETAILED SUBMISSIONS WERE MADE, WHICH HAVE BEEN DEALT FROM PAGES 15 TO 24 OF THE APPELLATE ORDER. AFTER CONSIDERING THE ENTIRE SUBMISSIONS OF THE ASSESSEE AS WELL AS REASONING GIVEN BY THE AO, THE LD. CIT(A) HIMSELF HAS DISCUSSED THE ENTIRE FACTS AND C A ME TO THE CONCLUSION THAT THE REOPENING IS BASED ON CHANGE OF OPINION WHICH IS NOT SUSTAINABLE UNDER LAW . A CCORDINGLY, HE QUASHED THE ENTIRE REASSESSMENT PROCEEDINGS. THE REASONING GIVEN BY THE CIT(A) IS DISCUSSED IN DETAIL FROM PAGES 24 TO 30 OF THE APPELLATE ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS MADE BY THE LD. DR AS WELL AS LD. SENIOR COUNSEL, SHRI J D MISTRY. HERE IN THIS CASE, AS STATED ABOVE, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) , VIDE ORDER DATE D 24.04.2009 AND SUCH AN ASSESSMENT HAS BEEN SOUGHT TO BE REOPENED AS PER THE REASONS RECORDED WHICH HAS BEEN INCORPORATED ABOVE. GENESIS OF THE CONTROVERSY ON THE BASIS OF WHICH THE COMPLETED ASSESSMENT HAS BEEN SOUGHT TO BE REOPENED IS THAT, THE ASSESS EE ALONG WITH HIS WIFE IN THEIR INDIVIDUAL CAPACITY AND ZENRIBA ESTATE & INVESTMENT ( P. ) LTD. OWNED A PIECE OF LAND OF SOME 63 ACRES. THIS LAND WAS GIVEN ON LEASE FOR 999 YEARS TO M/S WAVRY CONSTRUCTIONS P LTD. , WHEREIN, THE ASSESSEE HOLDS 65.7% OF THE SHARES. THE AGREEMENT F O R LEASE WAS ENTERED INTO ON 07.04.2005 AND WAS REGISTERED ON 05.12.2006 BEFORE THE STAMP DUTY REGISTRAR. THE CONSIDERATION RECEIVED ON ACCOUNT OF LEASE AGREEMENT WAS RS.50 LAKHS BY WAY OF PREMIUM AND ON ANNUAL LEASE RENT OF RE.1 . THE STAMP VALUATION AUTHORITIES FOR THE PURPOSE OF LEVY OF STAMP DUTY HAS ASSESSED THE VALUE OF THE LEASE LAND AT RS. 50 LAKHS, THAT IS, AT THE SAME VALUE WHICH WAS MENTIONED IN THE LEASE AGREEMENT. IN WAKE OF THE LEASE AGREEMENT, THE LESSEE NOSHIR D TALATI ITA 5423/ M /20 13 6 COMPANY WAS NOW ENTITLED TO HAVE APPROVAL IN ITS OWN NAME W I TH REGARD TO CONSTRUCTION OR ANY OTHER ACTIVITY TO BE CARR I ED BY IT ON THE SAID LAND AND THE LESSOR WAS BARRED TO TERMINATE THE LEASE AT ANY TIME DURING THE SPAN OF 999 YEARS. THE LESSEE WAS ALSO ENTITLED TO CREATE A SUB - LEASE IN FAVOUR OF ANY THIRD PARTY . LATER ON, THE ASSESSEE WHO HELD 651 SHARES IN M/S WAVRY CONSTRUCTIONS P LTD. , SOLD 334 SHARES ON 29.01.2007 @ RS.2,10,000/ - PER SHARE TO M/S ETA STORES PROPERTY DEVELOPMENT LTD. FROM THIS TRANSACTION OF SALE OF SHARES THE ASSESSEE RECEIVED A CONSIDERATION OF RS.701,40,000/ - , THE INCOME FROM THIS HAS BEEN SHOWN UNDER THE HEAD CAPITAL GAIN BY THE ASSESSEE. M/S WAVRY CONSTRUCTIONS P LTD. (LESSEE) DID NOT HAVE ANY ASSET OTHER THAN THE LEASED ASSET PROPERTY RECEIVED FROM THE ASSESSEE - COMPANY. IT HAS BEEN NOTED BY THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TH AT THE ASSESSEE WAS SPECIFICALLY REQUIRED TO FURNISH THE BASIS OF VALUATION OF SHARES OF M/S WAVRY CONSTRUCTIONS P LTD. THE CHARTERED ACCOUNT ANT OF THE ASSESSEE VIDE LETTER DATED 21.04.2009 HAD FURNISHED THE BASIS FOR VALUATION OF SHARES , WHEREIN THE VALUE OF THE IMPUGNED L AND WAS VALUED AT RS.18,75,56,000/ - . SINCE P AID - UP CAPITAL OF THE COMPANY WAS 1,000 EQUITY SHARES OF RS.100/ - EACH, T HEREFORE, THE VALUE OF PER EQUITY SHARE WAS COMPUTED AT RS.1,89,635/ - WHICH WAS NOTHING BUT THE VALUE OF THE LAND BEING DIVIDED BY 1 ,00,000. THE CHARTERED ACCOUNTANT IN TURN HAD VALUED THIS LAND ON THE BASIS OF VALUATION DONE BY THE JOINT SUB - REGISTRAR WHO WAS SPECIFICALLY REQUESTED TO PROVIDE MARKET PRICE OF THE PROPERTY BY THE LESSEE COMPANY VIDE LETTER DATED 15.04.2009. IT HAD BEEN FURTHER NOTED BY THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT, THE ASSESSEE VIDE LETTER DATED 30.08.2011 HAS INFO RMED HIS OFFICE ABOUT THE VALUE OF THE LAND FOR WHICH LEASE PREMIUM OF RS.50 LAKHS WERE SHOWN AND ALSO ABOUT THE VALUATION OF RS.18,75,56,000/ - WHICH IS SUBSTRATUM OR BASIS OF THE PRESENT REOPENING BY THE AO . NOWHERE IN THE REASONS RECORDED THERE IS ANY WHISPER OR MENTION AS TO UNDER WHICH ASSESSMENT PROCEEDINGS THESE INFORMATIONS HAVE BEEN GATHERED OR NOSHIR D TALATI ITA 5423/ M /20 13 7 FOUND. THE TRANSACTION S WHICH IS A SUBJECT MATTER OF DISPUTE HERE IS L EASE A GREEMENT WHEREBY THE LAND HAS BEEN GIVEN ON THE LONG - TERM LEASE FOR 999 YEAR S FOR SUM OF RS.50 LAKHS. THIS 50 LAKHS FOR THE PURPOSE OF STAMP VALUATION HAS BEEN FOUND TO BE THE FAIR MARKET VALUED AS PER THE STAMP DUTY AUTHORITIES. WE ARE UNABLE TO APPRECIATE AS TO HOW THE SUBSEQUENT VALUE OF SHARES CAN BE LINKED WITH THE TRANSACTIO N OF A LEASE AGREEMENT. FOR COMPUTING THE CAPITAL GAIN, THE VALUE OF SALE CONSIDERATION OF A TRANSFER OF ASSET HAS TO BE SE EN AS PER THE PROVISIONS OF SECTION 50C AND IF CONSIDERATION HAS BEEN SHOWN IN ACCORDANCE OF SECTION 50C , THEN SUCH A VALUE HAS TO BE ACCEPTED. HERE IN THIS CASE, EVEN IF IT IS HELD THAT THERE IS A TRANSFER OF A CAPITAL ASSET , THEN WHAT IS REQUIRED TO BE SEEN IS THE VALUE OF THE TRANSFER OF THE CAPITAL ASSET AS ASSESSED BY THE STAMP AUTHORITIES , SPECIFICALLY IN VIEW OF PROVISIONS CONTAI NED IN SECTION 50C APPLICABLE IN THE ASSESSMENT YEAR 2007 - 08 AND NOT THE ASSESSABLE VALUE WHICH TERM CAME LATER ON. THE ASSESSEE HAD DULY PLACED BEFORE THE AO IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ENTIRE FACTUM OF LEASE AGREEMEN T ON A CONSIDERATION OF LEASE PREMIUM OF RS.50 LAKHS WHICH WAS DULY SUPPORTED WITH THE VALUATION REPORT OF SUB - REGISTRAR DATED 28 TH APRIL, 2009 . NOT ONLY THIS THE VALUATION REPORT OF THE CHARTERED ACCOUNTANT VALUING OF THE EQUITY SHARES IN M/S WAVRY CONSTRUCTIONS P LTD , WAS ALSO THERE ON THE RECORD OF THE AO. THERE IS NO NEW INFORMATION COMING ON RECORD SHOWING ANY LIVE - LINK - NEXUS WITH INCOME ESCAPING ASSESSMENT. HENCE SUCH A REOPENING IS NOTHING BUT REVIEW OF ORIGINAL ASSESSMENT ORDER BASED ON CHANGE OF OPINION . THE AO IN THE CASE OF THE ASSESSEE IN THE ORIGINAL PROCEEDING HAD CALLED FOR THE DETAILS WITH REGARD TO LEASE PREMIUM RECEIVED BY THE ASSESSEE IN RESPONSE TO WHICH THE ASSESSEE HAD FURNISHED THE LEASE AGREEMENT AND OTHER DETAILS , BASED ON WHICH HE HAS ACCEPTED THE ENTIRE TRANSACTION AND NOW THERE CANNOT BE ANY REOPENING ON THE SAME MATERIAL. HERE IN THIS CASE, THE REOPENING HAS BEEN DONE ON THE BASIS OF AUDIT OBJECTIONS WHICH IS EVIDENT FROM THE CORRESPONDENCE S BETWEEN THE AO AS WELL NOSHIR D TALATI ITA 5423/ M /20 13 8 AS CIT(A) WHICH HAS BEEN DEALT BY CIT(A) AT PAGE 21 OF THE APPELLATE ORDER. THE LD. CIT(A) HAS NOTED DOWN THE SE FACTS, WHICH ARE EMERG ING FROM THE RECORDS OF THE ORIGINAL PROCEEDINGS THIS FINDING ARE QUITE RELEVANT AND HAVE FOR A VITAL BEARING ON THE ISSUE , THEREFORE SAME ARE REPRODUCED HEREUNDER: - I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE. 2.3(A) THE COMPANY M/S. ZENRIBA ESTATES WAS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF PLOTS. THE AO HAS NOT DISPUTED THIS FACT. B) THE COMPANY'S 75% SHARE S WERE HELD BY APPELLANT SHRI. NOSHIR TALATI, WHEREAS THE REMAINING SHARES WERE HELD BY HIS DAUGHTER RIA TALATI. THUS, THE COMPANY WAS A CLOSELY HELD BY THE APPELLANT AND HIS FAMILY MEMBERS. C) THERE WAS A PIECE OF LAND ADMEASURING 63 ACRES. THIS WAS A CO MBINED PIECE OF LAND. 68.57% OF THIS PIECE OF LAND WAS OWNED AND HELD BY COMPANY AS STOCK - IN - TRADE. THE AO HAS ALSO ADMITTED THAT THE COMPANY OWNED AND HELD 63.57% OF THIS PIECE OF LAND AS STOCK - IN - TRADE. THE REMAINING PORTION OF 63 ACRES OF LAND WAS EQUAL LY BY APPELLANT SHRI NOSHIR TALATI (COMPANY'S SHAREHOLDER) 15.71% AND HIS WIFE SMT. RASHNA N TALATI 15.71%. THE APPELLANT AND SMT. RASHNA TALATI WERE HOLDING THE LAND AS CAPITAL ASSET. D) THERE WAS ANOTHER COMPANY IN THE NAME OF M/S. WAVY CONSTRUCTION PVT LTD. THE 65.7% SHARES OF THIS COMPANY WERE HELD BY THE APPELLANT SHRI. NOSHIR TALATI. THE REMAINING 33.30% SHARES OF THIS COMPANY WERE HELD BY ONE SHRI PRAKASH C. KHUBCHANDANI AND 1% BY RIA N. TALATI DAUGHTER OF THE APPELLANT). THUS, MAJORITY OF SHARES AN D CONTROLLING INTEREST IN BOTH THE COMPANIES WERE HELD BY APPELLANT SHRI NOSHIR TALATI AND HIS FAMILY MEMBERS. E) THIS PIECE OF LAND ADMEASURING 63 ACRES WAS LEASED BY THE COMPANY M/ 5. ZENRIBA ESTATES & INVESTMENTS PVT LTD AND APPELLANT AND SMT. RASHNA T ALATI FOR A PERIOD OF 999 YEARS TO M/S. WAVY CONSTRUCTION PVT LTD. THE LEASE OF LAND WAS GIVEN FOR A LEASE PREMIUM /CONSIDERATION OF RS.50 LACS RENT OF RE. 1 PER YEAR. I) THIS LEASE DEED WAS DATED 07 - 04 - 2005. II) THE ABOVE LEASE AGREEMENT ENVISAGES THE AS SESSEE TO RECEIVE A CONSIDERATION OF RS.50 (FIFTY) LACS BY WAY OF LEASE PREMIUM AND YEARLY LEASE RENT OF RS. 1 (ONE) ONLY. M/S. WAVY CONSTRUCTIONS P. LTD, THE LESSEE COMPANY WAS ENTITLED TO HAVE APPROVALS IN ITS OWN NAME IN REGARD TO THE CONSTRUCTION OR AN Y ACTIVITY CARRIED OUT BY IT ON THE SAID LAND AND THE LESSOR WAS BARRED TO TERMINATE THE LEASE AT ANY TIME DURING THE AFORESAID TERM OF 999 YEARS IN RESPECT OF THE SAID LAND (PARA 4 & 6 OF THE AGREEMENT). BESIDES, THE LESSEE WAS ENTITLED TO CREATE SUBLEASE IN WHOLE OR IN PART OR CREATE MONTHLY NOSHIR D TALATI ITA 5423/ M /20 13 9 CONTRACTUAL TENANCIES OR ENTER LEAVE AND LICENCE OR ANY OTHER ARRANGEMENT IN FAVOUR OF ANY PARTY OR PERSONS ON SUCH TERMS AND CONDITIONS AS THE LESSEE MAY IN ITS ABSOLUTE DISCRETION DEEM PROPER. III) THIS LEASE DEED WAS PRESENTED BY M./S. WAVY CONSTRUCTION PVT LTD BEFORE COLLECTOR OF STAMPS AND JT. DISTRICT REGISTRAR, PUNE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. THE COLLECTOR OF STAMPS VIDE LETTER DATED 02 - 12 - 2006 INTIMATED TO M/S. WAVY CONSTRUCTION FOR PAYMENT OF S TAMP DUTY OF RS.1,50,015/ - . THE SAID STAMP DUTY WAS PAID ON 5TH DECEMBER, 2006. IV) THE REGISTRAR OF STAMPS ADJUDICATED THE LEASE DOCUMENTS ON 05 12 - 2006. IT IS IMPORTANT TO NOTE HERE THAT THE REGISTRAR OF STAMPS ACCEPTED THE VALUE OF LEASE OF LAND BEING LEASE PREMIUM/CONSIDERATION AT RS.50 LACS AS MENTIONED IN THE LEASE DEED CONVEYING THE LEASE OF LAND FOR 999 YEARS AND ABSOLUTE RIGHTS THEREIN. V) THE ABOVE SAID LEASE DEED WAS REGISTERED WITH THE REGISTRAR ON 12 - 01 - 2007. F) THE APPELLANT FILED RETURN OF INCOME FOR A.Y.2007 - 08. IN THE SAID RETURN OF INCOME, THE APPELLANT OFFERED LEASE PREMIUM OF RS.7,85,750/ - (BEING 15.759,16 OF RS.50 LACS) AS CAPITAL GAIN. THE APPELLANT'S RETURN OF INCOME WAS SELECTED FOR SCRUTINY. THE AO PASSED ORDER U/S.143(3) OF THE ACT DATED 24 - 04 - 2008. IN THE ASSESSMENT ORDER, THE AO DID NOT MAKE ANY DISALLOWANCE / ADDITION THEREBY ACCEPTING APPELLANT'S OFFER INTER - ALIA OF CAPITAL GAIN OF RS 7,85,750/ - BEING TEASE PREMIUM RECEIVED ON LEASING OF ABOVE PIECE OF LAND FOR 999 YEARS. G) I) SHRI NOSHIR TALATI WAS HOLDING 75% OF SHARES OF COMPANY M/S ZENRIBA ESTATES. II) SHRI NOSHIR TALATI WAS ALSO HOLDING 657 SHARES (65.7% SHARES) IN M/S WAVY CONSTRUCTION PVT LTD M/S WAVY CONSTRUCTION PVT LTD WAS HAVING NO ASSET OTHER THAN THE 63 AC RES OF LAND TAKEN ON LEASE FROM M/S ZENRIBA ESTATES AND OTHER TWO PERSONS. III) ON 29 - 01 - 2007, SHRI. NOSHIR TALATI SOLD 334 SHARES OF M/S. WAVY CONSTRUCTION PVT LTD @ 2,10,000/ - PER SHARES TO M11S. ETA STAR PROPERTIES DEVELOPMENT LTD FOR A TOTAL CONSIDER ATION OF RS.7,01,40,000/ - IV) SHRI NOSHIR TALATI FILED RETURN OF INCOME FOR A.Y.2007 - 08 DISCLOSING /OFFERING THEREIN CAPITAL GAIN OF RS 7,01,01,220/ - ARISING OUT OF SALE OF 334 SHARES OF M/S. WAVY CONSTRUCTION PVT LTD. V) FOR ASSESSMENT PURPOSES M/S. WAV Y CONSTRUCTION PVT LTD, VIDE THEIR APPLICATION DATED 15 - NOSHIR D TALATI ITA 5423/ M /20 13 10 04 - 2009, OBTAINED VALUATION OF SAID LAND (63 ACRES OF LEASED LAND) FROM JT. SUB REGISTRAR, PUNE THE JT. SUB REGISTRAR TUNE VIDE LETTER DATED 20 - 04 - 2009 ADDRESSED TO NI/S. WAVY CONSTRUCTION PVT LTD EST IMATED THE MARKET VALUE OF THE SAID LAND AT RS.18,75,56,000/ - AS IN THE YEAR 2006. ON THE BASIS OF THIS VALUATION REPORT, THE CHARTERED ACCOUNTANTS M/S. Y K BHAGWAGAR & CO. MADE VALUATION OF EQUITY SHARES OF M/S. WAVY CONSTRUCTION PVT LTD AS ON 01 - 0 - 2007 A T RS.1,87,635/ - PER SHARE. THE REPORT OF CHARTERED ACCOUNTANTS MIS. Y K BHAGWAGAR & CO WAS DATED 21 - 04 - 2009 WHICH WAS SUBMITTED BY APPELLANT VIDE LETTER DATED 21. 4 - 2009 TO THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS IN CASE OF APPELLANT SHRI. NOSHIR TAL ATI. VI) SHRI NOSHIR TALATI FILED RETURN OF INCOME ON 14 - 02 - 2008 DECLARING TOTAL INCOME OF RS.13,44,37,680/ - SUBSEQUENTLY REVISED TO RS. 13,66,92,168/' - . THE ASSESSMENT U/S.143(3) OF THE ACT WAS MADE BY THE AO VIDE ORDER DATED 22 - 04 - 2009 ASSESSING THE TOT AL INCOME AT RS. 13,66,92,170/ - . H) THE AO HAS REOPENED THE COMPLETED ASSESSMENT OF APPELLANT FOR THE REASON THAT THOUGH THE LAND WAS GIVEN ON LEASE FOR A LEASE PREMIUM OF RS.50 LACS BUT IN FACT IT WAS A CASE OF SALE OF LAND AS PER SEC.2(47) OF THE ACT FO R RS.18.75 CRORES. IN THE REASONS RECORDED, THE AO HAS BELIEVED THAT THERE LAS A ESCAPEMENT OF CAPITAL GAIN TAX. THE AO HAS FORMED HIS OPINION ON THE BASIS OF THE VALUATION REPORT OF THE CHARTERED ACCOUNTANT OF VALUATION OF SHARES OF M/S. WAVY CONSTRUCTION PVT. LTD. WHICH IN TURN WAS BASED ON VALUATION OF 63 ACRES PIECE OF LAND BY JT. SUB - REGISTRAR, PUNE. THE APPELLANT HAD CHALLENGED THE REOPENING OF ASSESSMENT ON VARIOUS COUNTS AS MENTIONED ABOVE . 7. BASED ON AFORESAID FACTS , THE LD. CIT(A ) C A ME TO THE CONCLUSION THAT , FIRSTLY , IT WAS A CASE OF A TRANSFER OF LAND ATTRACTING PROVISIONS OF SECTION 2(47) , WHICH WAS ASSESSABL E UNDER THE HEAD CAPITAL GAINS. THIS ASPECT HAS BEEN DULY CONSIDERED BY THE AO IN THE ORIGINAL ASSESSMENT AND ACCEPTED THE ASSESSEES CASE WHEREBY HE HAS SHOWN THE EARNING OF CAPITAL GAIN FROM SUCH TRANSFER. THUS, T HE AO HIMSELF HAS HELD THAT IT WAS A CASE OF A SALE / TRANSFER OF LAND. NOW ON THE SAME SET OF FACTS, THE AO HAS SOUGHT TO REOPEN THE ASSESSMENT BY FORMING A DIFFERENT OPIN ION , HENCE IT DEFINITELY FALLS IN THE REALM OF CHANGE OF OPINION . S ECONDLY , T HE INFORMATION REGARDING VALUATION DONE BY THE CHARTERED ACCOUNTANT WHICH IN TURN WAS BASED ON REPORT OF JOINT REGISTRAR, PUNE WHERE NOSHIR D TALATI ITA 5423/ M /20 13 11 THERE IN THE RECORD DURING THE ORIGINAL ASSE SSMENT P RO CEEDINGS WHICH WAS FILED IN RESPONSE TO THE QUERIES RAISED BY THE AO, FROM TIME TO TIME. T HUS, AT THE STAGE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAD ALL THE INFORMATION ON RECORD ABOUT THE VALUE OF SHARES WHICH IN TURN WAS MADE ON THE BASIS OF VALUATION OF LAND DONE, AS REPORTED BY THE JOINT SUB - REGISTRAR, PUNE. THIS ASPECT HAS BEEN NOTED BY THE CIT(A) AT PAGE 29 IN THE FOLLOWING MANNER: - AS EXP1AINED ABOVE, IN THE ORIGINAL ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT, THE AO ACCEPTED APPEL LANT'S CLAIM OF LEASE OF 63 ACRE PIECE OF LAND FOR LEASE PREMIUM OF RS.50 LACS. THE AO HAS REOPENED THE ASSESSMENT ON THE BASIS OF VALUATION REPORT OF CHARTERED ACCOUNTANT VALUING THE SHARES OF M/S. WAVY CONSTRUCTIONS PVT. LTD. AND SUCH VALUATION REPORT WA S BASED ON THE REPORT OF IT. SUB - REGISTRAR, PUNE WHO VALUED THE 63 ACRES OF LAND AT RS. 18.75 CRORE IN THE YEAR 2006. THE APPELLANT HAS SATISFACTORILY PROVED THAT THIS VALUATION REPORT OF CHARTERED ACCOUNTANT ALONG WITH REPORT OF JT. SUB REGISTRAR, PUNE WA S FILED VIDE LETTER DATED 21 - 04 - 2009 DURING ORIGINAL ASSESSMENT PROCEEDINGS BEFORE THE AO. THIS FACT HAS BEEN VERIFIED FROM THE ASSESSMENT RECORD. THUS, AT THE STAGE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAVING INFORMATION ON RECORD THAT THE MARKET VA LUE OF SUCH 63 ACRES PIECE OF LAND WAS RS.18.75 CRORES IN THE YEAR OF LEASE I.E.2006. THEREFORE, DURING ORIGINAL ASSESSMENT PROCEEDINGS ITSELF THE AG WAS HAVING INFORMATION / MATERIAL THAT MARKET VALUE OF LAND SUBJECT MATTER OF LEASE DEED DATED 07 - 04 - 2005 WAS AT RS. 18.75 CRORES. EVEN AFTER HAVING THIS INFORMATION ON RECORD, THE AO DID NOT MAKE ANY ADDITION IN THE CAPITAL GAIN OF THE APPELLANT. THUS, DURING ORIGINAL ASSESSMENT PROCEEDINGS ITSELF THE AO, AFTER CONSIDERING THE VALUATION REPORT OF CHARTERED AC COUNTANT AND VALUATION REPORT OF JT. SUB - REGISTRAR, PUNE, CONSIDERED THAT THE VALUE OF LAND SUBJECT MATTER OF LEASE DEED DATED 7 - 4 - 2005 WAS ONLY RS.50 LAKHS. THEREAFTER, NO NEW INFORMATION/MATERIAL HAD BEEN RECEIVED BY THE A.O. THEREAFTER, IN THE REASSESS MENT PROCEEDINGS U/S 147 OF THE OF ACT, ON THE SAME SET OF FACTS INFORMATION / MATERIAL, THE AO FORMED HIS OPINION THAT THE VALUE OF SUCH LAND SUBJECT MATTER OF LEASE DEED DATED 7 - 4 - 2005 SHOULD BE HAVE BEEN RS.18.75 CRORES. IN THE ORIGINAL ASSESSMENT PROCE EDINGS, THE AG ACCEPTED THAT APPELLANT'S SHARE OF CAPITAL GAIN WAS AT RS.7,85.750/ - ARISING OUT OF LEASE OF LAND VIDE LEASE DEED DATED 7 - 4 - 2005 AFTER CONSIDERING THE VALUATION REPORT OF CHARTERED ACCOUNTANT AND JT. SUB - REGISTRAR, RUNE WHEREAS ON THE SAME S ET OF FACTS, IN THE REASSESSMENT PROCEEDINGS THE AG FORMED HIS OPINION THAT APPELLANT'S NOSHIR D TALATI ITA 5423/ M /20 13 12 SHARE OF SHORT TERM CAPITAL GAIN SHOULD HAVE BEEN AT RS.1,01,01,666/ - AND LONG TERM CAPITAL GAIN RS.1,77,91,629/ - ON ACCOUNT OF LEASE OF SUCH LAND. THUS, IT WAS A CLEAR CASE OF CHANGE OF OPINION ON THE BASIS OF SAME SET OF FACTS/ INFORMATION/ MATERIAL ALREADY AVAILABLE ON RECORD AND CONSIDERED DURING ORIGINAL ASSESSMENT PROCEEDINGS. AS PER DECISIONS OF COURTS AND TRIBUNALS, THE REOPENING IS NOT PERMISSIBLE UNDER THE LAW ON THE BASIS OF CHANGE OF OPINION EVEN IF THE REOPENING IS MADE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THERE ARE NUMBER OF DECISIONS HOLDING THAT IF THE INFORMATION/DETAIL IS FILED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, IT IS PRESUMED THAT THE A 0 HAS DULY CONSIDERED THE SAME WHETHER OR NOT HE MAKE ANY DISALLOWANCE/ADDITION ON THE BASIS OF THOSE INFORMATION/DETAIL IN THE FINAL ASSESSMENT ORDER. FROM THE PERUSAL OF THE ABOVE FACTS AND FINDING RECORDED BY THE CIT(A) WHICH HAS N OT BEEN REBUTTED BEFORE US, WE FIND THAT IT IS A CLEAR - CUT KEY OF REAPPRAISAL OF THE SAME MATERIAL INFORMATION SO AS TO COME TO A DIFFERENT VIEW / OPINION ABOUT THE SAME SET OF TRANSACTION S . SUCH A CHANGE OF OPINION AMOUNTS TO REVIEW NOT PERMISSIBLE IN T HE LAW , WHICH HAS BEEN SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD, REPORTED IN [2010] 320 ITR 361, WHEREIN IT HAS BEEN HELD THAT, AO CANNOT REOPEN THE ASSESSMENT ON SOME CHANGE OF OPINION AND THIS CONCEPT IS A INB UILT TEST TO CHECK THE ABUSE OF POWER UNDER SECTION 147 . FURTHER, THE AO CAN REOPEN T H E ASSESSMENT ONLY WHEN THERE IS A T A N GI BLE MATERIAL COMING ON RECORD POST ASSESSMENT HAVING LIVE - LINK - NEXUS OF FORMATION OF BELIEF THAT ANY INCOME CHARGEABLE TO TAX HAS E SCAPED ASSESSMENT. THIS PRINCIPLE HAS BEEN REITERATED BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRASHANT S. DOSHI, 324 ITR 154 ; AND IN THE CASE OF ICICI HOME FINANCE CO. LTD VS ACIT, REPORTED IN 4 TAXMANN.COM 241 (BOM). THUS, FROM THE FACTS WHICH HAS BEEN ELABORATELY DISCUSSED BY LD. CIT(A) TO COME TO THE CONCLUSION THAT ALL THE INFORMATION AND MATERIAL AND INFORMATION WHICH HAS BEEN MADE GROUND FOR REOPENING THE ASSESSMENT UNDER SECTION 147 BY THE AO , ALREADY EXISTED AND WERE THERE BEFORE T HE AO DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS , AND ACCORDINGLY WE ALSO HOLD THAT NOSHIR D TALATI ITA 5423/ M /20 13 13 SUCH A REOPENING ON SAME SET OF FACTS IS BAD IN LAW AND WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH FINDING OF FACT ON THIS ISSUE . THUS , THE ORDER OF THE C IT(A) IS CONFIRMED AND GROUNDS RAISED BY THE REVENUE ARE TREATED AS DISMISSED. 8 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH APRIL, 2016. SD/ - SD/ - ( ) ( ) ( RAJESH KUMAR ) ( AMIT SHUKLA ) ACCOUNTANT M EMBER JUDICIAL MEMBER MUMBAI, DATE: 6 TH APRIL , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 6 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX - 2/ CONCERNED___ , MUMBAI . 5 ) , , / THE D.R. B BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS