SANG FASTNERS P. LTD, MUMBAI V. ACIT 5(3),

ITA 6871/MUM/2008

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3707 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-04-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 02-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Assessee Lawyers: VIPUL B JOSHI
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Business income; Period of limitation; Fair market value; Valuation report; Deemed dividend; Reassessment proceedings
• Section: 143(3); 50C; 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 6871/MUM/2008 ITA NO. 5639/MUM/2010 (ASSESSMENT YEAR: 2000-01) M/S. SANG FASTNERS PVT. LTD. VS. A C I T - 5 (3) 102, PARAG APRT, 27 PEDDAR ROAD AAYAKAR BHAVAN, M.K . ROAD MUMBAI 400026 MUMBAI 400020 PAN - AAACS5634H APPELLANT RESPONDENT APPELLANT BY: SHRI VIPUL B. JOSHI RESPONDENT BY: SMT. PARMINDER DATE OF HEARING: 16.04.2013 DATE OF PRONOUNCEMENT: 08.05.2013 O R D E R PER B. RAMAKOTAIAH, AM THESE TWO APPEALS ARE BY ASSESSEE AGAINST THE ORDER S OF THE CIT(A) DATED 09.09.2008 AND 13.05.2010 FOR A.Y. 2000-01 UN DER SECTIONS 143(3) R.W.S. 147 AND SECTION 154, RESPECTIVELY. 2. ASSESSEE HAS RAISED THREE GROUNDS IN ITA NO. 6871/ MUM/2008 ON THE ISSUE OF JURISDICTION AND ALSO ON MERITS AND IN THE COURSE OF APPELLATE PROCEEDINGS RAISED ADDITIONAL GROUND ON THE POWERS OF THE AO TO REFER THE MATTER FOR REVALUATION. IN ITA NO. 5639/MUM/2010 TH E ASSESSEE QUESTIONED THE JURISDICTION TO RECTIFY THE ORDER UNDER SECTION 154. 3. BRIEFLY STATED, THE ASSESSEE HAS FILED RETURN OF I NCOME ON 30.11.2000 DECLARING A LOSS OF ` 15,53,910/-. THIS RETURN WAS PROCESSED UNDER SECTIO N 143(1). SUBSEQUENTLY, ON THE REASON THAT ASSESSEE W AS PAYING INTEREST ON UNSECURED LOANS AND THE DIRECTOR WAS GIVEN A DEPOSI T OF ` 21 LAKHS FOR RESIDENTIAL PREMISES, FOR EXAMINING THE ISSUE UNDER SECTION 2(22)(E) OF THE ACT AND FOR DISALLOWANCE OF INTEREST, PROCEEDINGS U /S 147 WERE INITIATED AND A NOTICE UNDER SECTION 148 WAS ISSUED ON 18.03.2005 . IN THE REASSESSMENT ITA NO. 6871/MUM/2008 2 PROCEEDINGS, THE AO NOT ONLY EXAMINED THE ISSUE OF DEEMED DIVIDEND BUT ALSO WORKING OF CAPITAL GAINS ON SALE OF PROPERTY. THE SALE OF PROPERTY AND SUBSEQUENT CAPITAL GAINS WERE CONSIDERED AS THE ASS ESSEE WAS TENANT IN RESPECT OF PREMISES 719, PRASAD CHAMBERS, NEAR ROXY CINEMA, OPERA HOUSE, MUMBAI 400004. THE TENANCY WAS SURRENDERED V IDE AGREEMENT DATED 21.07.1984 FOR A CONSIDERATION OF ` 4,75,000/- AND ASSESSEE PURCHASED A NEW PREMISES AT SRI OM CHAMBERS, KEMPS CORNER, MUMBAI 400036 FOR ` 4,00,000/- AS PER AGREEMENT DATED 23.07.1984. THIS PREMISES WAS SOLD FOR A CONSIDERATION OF ` 40,00,000/- AS PER SALE DEED DATED 01.12.1999 IN THE IMPUGNED YEAR. IN THE BOOKS OF AC COUNT ASSESSEE REVALUED THE PREMISES AT ` 38,00,000/- AND THE DIFFERENCE BETWEEN THE SALE PRI CE AND THE REVALUED PRICE HAS BEEN CREDITED TO THE P & L A CCOUNT AND OFFERED AN AMOUNT OF ` 2,00,000/- IN THE COMPUTATION OF INCOME. IN THE ASS ESSMENT PROCEEDINGS CONSEQUENT TO INITIATION UNDER SECTION 147 (CALLED FIRST REASSESSMENT PROCEEDINGS), THE ASSESSEE OBJECTED TO EXAMINATION OF THIS ISSUE WHEN THE ASSESSMENT WAS REOPENED ON A DIFFERE NT ISSUE. THE AO, HOWEVER, REJECTED THE CONTENTION AND ARRIVED AT THE CAPITAL GAINS BY ALLOWING INDEXATION OF COST AND BRINGING TO TAX THE CAPITAL GAINS AT ` 27,78,947/-. WHILE DOING SO, HE ALSO LEFT A NOTE THAT THE VALUE OF SALE PRICE WOULD BE MODIFIED SUBSEQUENT TO DVOS VALUATION REPORT AS AN D WHEN THE SAME WAS RECEIVED, AS HE REFERRED THE ISSUE TO DVO. ASSESSEE CHALLENGED THE ORDER PASSED ON 24.05.2006 AND THE LEARNED CIT(A), VIDE H IS ORDER DATED 07.02.2007, QUASHED THE REASSESSMENT PROCEEDINGS ON THE REASON THAT THE REASONS FOR REOPENING WERE NOT VALID. THE REVENUE D ID NOT PREFER ANY SECOND APPEAL. HOWEVER, IMMEDIATELY THEREAFTER, THE SAME A O AGAIN RECORDED REASONS UNDER SECTION 147 VIDE ORDER SHEET DATED 13 .03.2007 FOR ISSUANCE OF FRESH NOTICE UNDER SECTION 148. IN THIS NOTE, THE A O CONSIDERED THE CAPITAL GAINS ON SALE OF PROPERTY ALONE AS THE REASON FOR R EOPENING AND, AFTER OBTAINING PERMISSION FROM CIT, ISSUED ANOTHER NOTIC E UNDER SECTION 148 DATED 26.03.2007. THIS NOTICE WAS ISSUED WITHIN SIX YEARS FROM THE END OF THE ASSESSMENT YEAR AND IS IN TIME FOR CONSIDERING THE PERIOD OF LIMITATION . THE ASSESSEE, HOWEVER, OBJECTED TO THE SECOND REOPE NING ON THE SAME ISSUE WHICH WAS CONSIDERED IN THE FIRST REOPENED ASSESSME NT. THE AO, VIDE A ITA NO. 6871/MUM/2008 3 SEPARATE ORDER DATED 06.07.2007, REJECTED ASSESSEE S CONTENTION. THE SAME REASONS ARE AGAIN RE-INCORPORATED IN THE ASSESSMENT ORDER DATED 26.12.2007 FROM PARA 2 TO PARA 5. THEREAFTER, THE AO RESTRICTE D HIMSELF TO THE ISSUE OF WORKING OF CAPITAL GAINS AND BROUGHT TO TAX THE SAM E AMOUNT OF ` 27,78, 947/- AGAIN WITH THE SAME NOTING THAT THE SALE CONS IDERATION OF ` 40,00,000/- IS TAKEN SUBJECT TO RECTIFICATION PENDI NG THE VALUATION REPORT. THIS WAS CHALLENGED BEFORE THE CIT(A) BY THE ASSESS EE AND THE CIT(A), VIDE ORDER DATED 09.09.2008, UPHELD THE REOPENING AS WEL L AS COMPUTATION OF CAPITAL GAINS. HIS REASONS FOR UPHOLDING THE PROVIS IONS UNDER SECTION 147 FOR THE SECOND TIME WAS THAT THE CIT(A) DID NOT ADJUDIC ATE ON MERITS IN THE FIRST REOPENING AS HE HAS NOT UPHELD THE REOPENING, THERE FORE THERE WAS NO OCCASION TO DISCUSS THE ADDITIONS MADE BY THE AO ON MERITS. FURTHER LD CIT(A) ALSO HELD THAT SINCE THERE IS NO ASSESSMENT MADE UNDER SECTION 143(3), THE ORIGINAL ASSESSMENT WAS ONLY FRAMED UND ER SECTION 143(1) AND PROVISO TO SECTION 147 IS NOT APPLICABLE IN THE PRE SENT CASE. HE ALSO CONFIRMED CAPITAL GAINS CALCULATION. HENCE, THE ASS ESSEE IS AGGRIEVED ON THIS ORDER AND PREFERRED THE FIRST APPEAL. 4. IN THE MEANTIME, THE AO RECEIVED THE VALUATION REPO RT UNDER SECTION 50C. CONSEQUENT TO THE NOTING IN THE ASSESSMENT ORD ER, THE AO MODIFIED THE CAPITAL GAINS WORKING BY INCORPORATING THE REVISED VALUE OF SALE PRICE AS GIVEN BY THE VALUATION OFFICER UNDER SECTION 154, W HILE AT THE SAME TIME GIVING BENEFIT OF SETTING OFF OF LOSSES, ETC. THIS ORDER WAS CONTESTED BEFORE THE CIT(A), WHO REJECTED ASSESSEES CONTENTIONS ON THE REASON THAT ASSESSEE DID NOT RAISE THE ISSUE WHEN THE AO NOTED THE SAME IN T HE ASSESSMENT ORDER AND HAVING ACCEPTED THE NOTE, HE CANNOT CHALLENGE T HE SAME AGAIN IN AN ORDER UNDER SECTION 154. THEREFORE, ASSESSEE HAS PR EFERRED THE SECOND APPEAL IN ITA NO. 5639/MUM/2010 CHALLENGING THE ORD ER OF THE CIT(A) DATED 13.05.2010 AND ALSO RAISED ADDITIONAL GROUNDS IN TH E MAIN APPEAL ON THE ISSUE OF POWER OF AO TO REFER TO THE VALUATION OFFI CER AS WELL AS CAPITAL GAIN VALUATION UNDER SECTION 50C WHICH WAS NOT APPLICABL E FOR THE IMPUGNED ASSESSMENT YEAR. ITA NO. 6871/MUM/2008 4 5. SINCE THESE TWO APPEALS ARE INTERLINKED, THESE ARE CONSIDERED TOGETHER AND DECIDED BY THIS COMMON ORDER. 6. THE LEARNED COUNSEL FOR THE ASSESSEE CHALLENGED TH E SECOND REOPENING AND REFERRED TO THE ORDERS PASSED BY THE AO AND THE CIT(A). HE ALSO SUBMITTED DETAILED NOTE ON WHY SECOND REASSESSMENT PROCEEDINGS AFTER THE FIRST REASSESSMENT PROCEEDING ARE BAD IN LAW AND TO BE CANCELLED. HE RELIED ON THE FOLLOWING DECISIONS:- I. CIT VS. RAO THAKUR NARAYAN SINGH 56 ITR 234 (SC) II. MANOO LAL KEDARNATH VS. UNION OF INDIA 114 ITR 884 (ALL) III. CIT VS. V.R. DURGAMBA 223 ITR 95 (MAD.) IV. CIT VS. AIR CRAFT RADIO CORPORATION 292 ITR 64 (P&H ) V. R.K. NAGPAL VS. CIT 103 TTJ (NAG) 554 VI. BABULAL LATH VS. ACIT 83 ITD 691 (MUM) VII. SMT. ANCHI DEVI VS. CIT 218 CTR (P&H) 11 7. HE ALSO MADE SUBMISSION ON CAPITAL GAINS AND ALSO O N POWERS OF THE AO TO REFER UNDER SECTION 50C AND ALSO DETERMINATIO N OF SALES CONSIDERATION UNDER SECTION 50C AND ALSO PRINCIPLES INVOLVED IN FULL VALUE OF CONSIDERATION AND FAIR MARKET VALUE REFERRED TO IN THE ACT. 8. THE LEARNED D.R. IN RESPONSE SUBMITTED THAT THE FIR ST REASSESSMENT PROCEEDINGS WERE INITIATED FOR BRINING TO TAX AN AM OUNT UNDER SECTION 2(22)(E) WHEREAS THE SECOND REASSESSMENT PROCEEDING S WERE INITIATED FOR BRINING TO TAX THE CAPITAL GAINS WHICH ESCAPED ASSE SSMENT. HE ALSO REFERRED TO THE FACT OF OFFERING ONLY TWO LAKHS AS BUSINESS INCOME AND ESCAPEMENT OF INCOME TO THE EXTENT OF ABOUT ` 25 LAKHS UNDER THE HEAD CAPITAL GAINS. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A) IN TH IS REGARD. 9. WE HAVE CONSIDERED THE ISSUE, RIVAL CONTENTIONS AND THE JUDICIAL PRINCIPLES ON THE ISSUE. THERE IS NO DISPUTE WITH R EGARD TO THE FACT THAT IN THE FIRST REASSESSMENT PROCEEDINGS THE AO INITIATED PROCEEDINGS FOR CONSIDERATION OF PROVISIONS OF SECTION 2(22)(E). HO WEVER, IN THE ASSESSMENT ORDER PASSED CONSEQUENTLY, VIDE ORDER DATED 24.03.2 006, THE AO NOT ONLY CONSIDERED THE ISSUE FOR WHICH IT WAS REOPENED BUT ALSO THE ISSUE OF BRINGING TO TAX THE CAPITAL GAINS ON SALE OF PROPERTY. IN FA CT, THE ASSESSEE OBJECTED TO ITA NO. 6871/MUM/2008 5 FOR CONSIDERING THIS HEAD OF INCOME IN THAT PROCEED INGS WHICH THE AO, VIDE DETAILED DISCUSSION REJECTED IN THAT ORDER. THEREFO RE, AS FAR AS THE ISSUE OF CAPITAL GAINS IS CONCERNED THIS ALSO WAS SUBJECT MA TTER OF ASSESSMENT VIDE ORDER DATED 24.03.2006. THERE IS ALSO NO DISPUTE TH AT THE AO REFERRED THE VALUE OF PROPERTY SOLD TO THE DVO AND LEFT A NOTE I N THE ORDER ITSELF THAT THE SALE CONSIDERATION WILL BE REVISED AFTER RECEIPT OF DVOS REPORT. THIS ORDER OF THE AO WAS, HOWEVER, QUASHED BY THE CIT(A) ON 07.02 .2007 ON THE REASON THAT THERE ARE NO VALID REASONS FOR REOPENING THE A SSESSMENT. THIS ORDER OF THE CIT(A) WAS NOT CHALLENGED AND WAS ACCEPTED BY T HE REVENUE. THEREFORE REOPENING THE ASSESSMENT AGAIN ON 13.03.2007 (WITHI N TWO MONTHS OR SO OF CIT(A) ORDER) AND ISSUANCE OF NOTICE DATED 26.03.20 07, JUST BEFORE THE LIMITATION OF TIME GETTING BARRED, IS ONLY TO OVERC OME THE FIRST PROCEEDINGS WHICH WERE NOT HELD TO BE VALID. 10. SIMILAR ISSUE WAS CONSIDERED IN THE CASE OF MANOO L AL KEDARNATH VS. UNION OF INDIA 114 ITR 884 (ALL) WHEREIN IT WAS HEL D AS UNDER: - HELD, THAT IT WAS THE COMMON CASE OF THE PARTIES TH AT THE GROUNDS FOR BELIEVING THAT THE SAID TWO ITEMS HAD ESCAPED ASSES SMENT WERE THE SAME AS IN THE PREVIOUS REASSESSMENT PROCEEDINGS. T HE SETTLED RULE OF LAW IS THAT A JUDICIAL DETERMINATION WHICH HAS BECO ME FINAL BETWEEN THE PARTIES IS BINDING PROVIDED IT IS MADE BY AN AU THORITY HAVING JURISDICTION. IT WILL HAVE LEGAL EFFICACY TILL SET ASIDE ON AN APPEAL OR BY ANY SUPERIOR AUTHORITY. IN THE PRESENT CASE, AS THE EARLIER REASSESSMENT PROCEEDINGS UNDER SECTION 147(1) WERE QUASHED BY TH E COMPETENT AUTHORITIES ON THE VIEW THAT THE MATERIAL ON THE BA SIS OF WHICH THE INCOME-TAX OFFICER INITIATED THOSE PROCEEDINGS DID NOT HAVE A RATIONAL CONNECTION WITH THE FORMATION OF THE BELIEF THAT TH E ASSESSEE HAD NOT MADE A TRUE DISCLOSURE AT THE TIME OF THE ORIGINAL ASSESSMENT, THE SAME POSITION WOULD STILL BE OBTAINED IN RESPECT OF THE SECOND REASSESSMENT NOTICE. THE INCOME-TAX OFFICER COULD NOT ON THE SAM E FACTS REOPEN THE PROCEEDINGS ON THE GROUND THAT HE HAD NEW INFORMATI ON. IF HE DID SO, IT WOULD BE A CLEAR ATTEMPT TO CIRCUMVENT THE SAID ORD ER WHICH HAD BECOME FINAL: CIT V. RAO THAKUR NARAYAN SINGH [1965 ] 56 ITR 234 (SC) RELIEF ON. AS REGARDS THE ITEMS OTHER THAN THE TWO ABOVE-MENTI ONED IN THE EARLIER NOTICE UNDER SECTION 148 DATED DECEMBER 2, 1971, EV EN THOSE OTHER ITEMS WERE CONSIDERED BY THE INCOME-TAX OFFICER IN HIS EARLIER REASSESSMENT ORDER WHICH WAS SET ASIDE ON APPEAL. A N INCOME-TAX OFFICER IS ENTITLED TO BRING TO TAX ITEMS OF INCOME OTHER THAN THOSE WHICH HAD BEEN INCLUDED IN THE NOTICE UNDER SECTION 148: V. JAGANMOHAN RAO V. CIT [1970] 75 ITR 373 (SC) RELIED ON. ITA NO. 6871/MUM/2008 6 BUT ONCE A PROCEEDING IN RESPECT OF AN ITEM OTHER T HAN THE ONE MENTIONED IN THE NOTICE UNDER SECTION 148 HAS BEEN TAKEN INTO CONSIDERATION AND THE SAME IS SUBSEQUENTLY NOT UPHE LD IN APPEAL, IT IS NOT POSSIBLE TO RESTART PROCEEDINGS IN RESPECT OF T HE SAME ITEMS AFRESH. THEREFORE, THE FIRST REASSESSMENT ORDER MADE BY THE INCOME-TAX OFFICER, IN RESPECT OF THE ITEMS MENTIONED IN THE SECOND NOT ICE UNDER SECTION 148 HAVING BEEN SET ASIDE, THE SECOND NOTICE ISSUED FOR REASSESSMENT WAS INVALID. HELD ALSO, THAT IN SPITE OF THE FIRST REASSESSMENT ORDER OF THE INCOME-TAX OFFICER HAVING BEEN SET ASIDE ON APPEALS, THE COMMI SSIONER GAVE SANCTION FOR STARTING FRESH REASSESSMENT PROCEEDING S IN RESPECT OF THOSE TWO ITEMS AS WELL. THIS CLEARLY SHOWED THE NO N-APPLICATION OF THE COMMISSIONER'S MIND TO THE CONTROVERSY WHETHER THE PRESENT CASE WAS A FIT CASE FOR ACCORDING SANCTION. IN FACT, THE INC OME-TAX OFFICER ALSO ACTED WITHOUT JURISDICTION IN SEEKING THE APPROVAL OF THE COMMISSIONER FOR STARTING THE SECOND REASSESSMENT PROCEEDINGS ON THE BASIS OF THE TWO ITEMS WHICH HAD BEEN THE SUBJECT-MATER OF DECIS ION IN THE EARLIER CASE. THE WRIT PETITION WAS FOR ALL THE ABOVE REASONS ALL OWED AND THE NOTICE UNDER SECTION 147 DATED AUGUST 29, 1973, WAS QUASHE D. 11. IN THE CASE OF CIT VS. V.R. DURGAMBA 223 ITR 96 (MA D) THE HON'BLE MADRAS HIGH COURT HELD AS UNDER: - ONCE A PROCEEDING IN RESPECT OF AN ITEM OTHER THAN THE ONE MENTIONED IN THE NOTICE UNDER SECTION 148 OF THE INCOME-TAX A CT, 1961, HAS BEEN TAKEN INTO CONSIDERATION AND THE SAME IS SUBSEQUENT LY NOT UPHELD IN APPEAL, IT IS NOT POSSIBLE TO RESTART THE PROCEEDIN GS IN RESPECT OF THE SAME ITEM AFRESH. HELD, THAT, IN THE INSTANT CASE, THE TRIBUNAL FOUND THAT THE INCOME-TAX OFFICER'S ACTION IN REOPENING THE ASSESSMENT UNDER SECTION 147(B) OF THE ACT EARLIER WAS TO WITHDRAW THE STANDARD DEDUCTION OF RS. 3,400 ALLOWED BY THE INCOME-TAX OFFICER IN THE ORIGINAL A SSESSMENT ON THE BASIS THAT THE REMUNERATION RECEIVED BY THE ASSESSE E FROM A COMPANY R WAS INCOME UNDER THE HEAD 'SALARY'. WHILE COMPLET ING THE REASSESSMENT ON THE BASIS OF SECTION 147(B) OF THE ACT, THE INCOME-TAX OFFICER ALSO INCLUDED INTEREST INCOME OF RS. 3,423 UNDER SECTION 214 AND THUS, IN THE REASSESSMENT UNDER SECTION 147(B) MADE BY THE INCOME-TAX OFFICER, THE SAID INCOME FORMED THE SUBJ ECT-MATTER OF ASSESSMENT. THE REASSESSMENT, HOWEVER, WAS CANCELLE D AS WITHOUT JURISDICTION. SUBSEQUENT TO THIS CANCELLATION, THE INCOME-TAX OFFICER ISSUED NOTICE UNDER SECTION 147(A) FOR THE PURPOSE OF INCLUDING IN THE ASSESSMENT THE SUM OF RS. 3,423. IT WAS ALSO FOUND THAT THE INCOME- TAX OFFICER IN THE REASSESSMENT UNDER SECTION 147(A ) CARRIED OUT ANOTHER MODIFICATION BY TREATING THE REMUNERATION R ECEIVED BY THE ASSESSEE FROM COMPANY R AND ANOTHER COMPANY I TOTAL LING RS. 24,000 AS THE INCOME OF THE ASSESSEE UNDER THE HEAD 'OTHER SOURCES', INSTEAD ITA NO. 6871/MUM/2008 7 OF UNDER THE HEAD 'SALARY' AS ORIGINALLY TREATED. T HE TRIBUNAL WAS JUSTIFIED IN CANCELLING THE REASSESSMENT 12. SIMILAR VIEW WAS ALSO HELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. ANCHI DEVI VS. CIT 218 CT R 11 WHEREIN IT WAS HELD AS UNDER: - IT MAY BE SEEN THAT THE AO HAD NO FRESH MATERIAL B EFORE HIM. A PERUSAL OF THE REASONS RECORDED BY HIM FOR REOPENIN G THE ASSESSMENT PROCEEDINGS VIDE NOTICE DT. 22 ND MARCH, 2004 SHOWS THAT THE SAME REASONS HAVE BEEN RECORDED WHICH WERE STATED IN THE EARLIER NOTICE SERVED UNDER S. 148 ON THE BASIS OF WHICH THE ASSES SMENT WAS MADE ON 14 TH FEB., 2003 AND WHICH WAS QUASHED BEING BARRED BY L IMITATION. THUS, FROM THE FACTS ITSELF, IT IS CRYSTAL CLEAR TH AT THOUGH THE PRESENT PROCEEDINGS WERE INITIATED BY THE AO WITHIN THE PRE SCRIBED PERIOD OF LIMITATION YET IT IS CLEAR THAT THE SAME WERE INITI ATED ONLY TO CIRCUMVENT THE EARLIER ORDER OF THE TRIBUNAL VIDE WHICH THE AS SESSMENT DT. 14 TH FEB., 2003 WAS HELD TO BE TIME-BARRED. THUS, THE AO CANNOT BE ALLOWED TO INITIATE FRESH PROCEEDINGS ON IDENTICAL FACTS AS THE FIRST ASSESSMENT PROCEEDINGS HAD FAILED TO RESULT IN A VALID ASSESSM ENT DUE TO LAPSE ON THE PART OF THE IT AUTHORITY. RESULTANTLY, THE APPE AL IS ALLOWED AND THE ORDER OF THE TRIBUNAL IS SET ASIDE. 13. THUS, AS SEEN FROM THE FACTS OF THE CASE THE PRINC IPLES LAID DOWN BY THE ABOVE JUDGMENTS ARE SQUARELY APPLICABLE. IT IS ONLY TO CIRCUMVENT THE ILLEGALITY COMMITTED BY THE AO IN THE FIST ASSESSME NT PROCEEDINGS HE HAS RECORDED THE REASONS FOR INITIATING SECOND TIME ON AN ISSUE WHICH WAS SUBJECT MATTER OF ASSESSMENT IN THE FIRST REASSESSM ENT PROCEEDINGS. ONCE A PROCEEDING IN RESPECT OF AN ITEM OTHER THAN THE ONE MENTIONED IN THE NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, HAS BEEN TAKEN INTO CONSIDERATION AND THE SAME IS SUBSEQUENTLY NOT UPHE LD IN APPEAL, IT IS NOT POSSIBLE TO RESTART THE PROCEEDINGS IN RESPECT OF T HE SAME ITEM AFRESH.THEREFORE, FOLLOWING THE PRINCIPLES LAID DOW N IN THE ABOVE JUDGEMENTS WE HAVE NO HESITATION IN SETTING ASIDE THE ORDER OF THE AO AND CIT(A) ON THE ISSUE OF JURISDICTION. 14. SINCE THE PROCEEDING INITIATED UNDER SECTION 147 AR E HELD TO BE BAD IN LAW ON THE SECOND ASSESSMENT PROCEEDINGS, THERE IS NOT NEED TO ADJUDICATE ON MERITS THE ISSUE OF CAPITAL GAINS AND ALSO THE I SSUE OF REFERENCE TO VALUATION OFFICER, WHICH HAVE BECOME ACADEMIC IN NA TURE. HOWEVER, THERE IS MERIT IN ASSESSEES CONTENTION THAT THE AO CANNOT R EFER THE MATTER TO ITA NO. 6871/MUM/2008 8 SUBSTITUTE FAIR MARKET VALUE FOR FULL VALUE OF C ONSIDERATION RECEIVED IN THE ASSESSMENT ORDER AS PROVISIONS OF SECTION 50C ARE N OT APPLICABLE. BE THAT AS IT MAY, SINCE THE ENTIRE PROCEEDINGS ARE CONSIDERED TO BE BAD IN LAW, THERE IS NO NEED TO ADJUDICATE THE GROUNDS ON MERITS AND THE ADDITIONAL GROUNDS RAISED. ACCORDINGLY, ITA NO. 6871/MUM/2008 IS CONSI DERED ALLOWED. 15. THE APPEAL IN ITA NO. 5639/MUM/2010 IS CONSEQUENTIA L IN NATURE AS THE AO RECTIFIED THE ORDER UNDER SECTION 154 TO SUB STITUTE VALUATION OFFICERS FAIR MARKET VALUE DETERMINED. SINCE THE SECOND REAS SESSMENT PROCEEDINGS ITSELF ARE HELD TO BE BAD IN LAW, THE CONSEQUENTIAL ORDER UNDER SECTION 154 ALSO BECOME BAD IN LAW. EVEN OTHERWISE, THERE IS NO MERIT IN THE ACTION OF THE AO IN REFERRING THE MATTER TO VALUATION OFFICER WHEN THE ACT DOES NOT EMPOWER AO TO MAKE ANY SUCH REFERENCE FOR THE IMPUG NED ASSESSMENT YEAR. ON THAT REASON ALSO THE ORDER HAS TO BE CANCELLED. 16. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2013. SD/- SD/- ( AMIT SHUKLA ) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 8 TH MAY, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) V, MUMBAI 4. THE CIT MC-V, MUMBAI CITY 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.