Shri Prakash Shankarrao Mate, Pune V. Asst. CIT, Circle-4, Pune

ITA 742/PUN/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1062 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH DAMOR P SINGH
• Keywords: Sale consideration of property below Jantri Value; Rectification of order; Charitable institution; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 234B; 147; 148

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO.742/PN/2013 !# $ %$ / ASSESSMENT YEAR : 2004-05 SHRI PRAKASH SHANKARRAO MATE, 121, MATE HOUSE, SINDH HOUSING SOCIETY BANER ROAD, PUNE 411 007 PAN NO. ADEPM9380L . / APPELLANT V/S ACIT, CIRCLE-4, PUNE . / RESPONDENT / APPELLANT BY : SHRI M.K.KULKARNI / DEPARTMENT BY : SHRI RAJESH DAMOR P. SINGH & / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 23-11-2012 OF THE CIT(A)-II, PUNE RELATING TO ASSE SSMENT YEAR 2004-05. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 30-10-2004 DECLARING TOTA L INCOME OF RS.65,04,740/- AND AGRICULTURAL INCOME OF RS.18,84,875/-. TH E ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 07-08- 2006 / DATE OF HEARING : 24.06.2015 / DATE OF PRONOUNCEMENT: 22.07.2015 2 ITA NO.742/PN/2013 DETERMINING THE TOTAL INCOME AT RS.87,04,740/- AND AGRICULT URAL INCOME OF RS.18,84,875/-. SUBSEQUENTLY, THE AO ISSUED NOTIC E U/S.148 OF THE I.T. ACT ON 30-03-2011 AFTER RECORDING TH E FOLLOWING REASONS : 'THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR A. Y. 20 04-05 DECLARING TOTAL INCOME AT RS. 65,04,740/- ON 30-10-2004. ASSESSMEN T U/S 143(3) WAS COMPLETED ON 07-08-2006 COMPUTING TOTAL INCOME A T RS. 87,04,740/- 2. FROM THE SCRUTINY OF THE BOOKS OF ACCOUNTS IT IS EV IDENT THAT THE ASSESSEE SOLD NA PLOT AT SURVEY NO. 410, IB, 410/1C TO MA LPANI JAIN BUILDERS. THE ASSESSEE DECLARED SALE PRICE OF RS.21,00,000 /- FOR COMPUTATION OF LTCG, WHERE AS THE MARKET VALUE FOR ST AMP DUTY WAS ADOPTED AT RS. 53,44,500/- BY THE GOVERNMENT AUTHORI TY. IN VIEW OF THE PROVISIONS OF S. 5OC OF THE INCOME-TAX ACT, 1961 RS.53 ,44,500/- HAD TO BE TAKEN AS CONSIDERATION OF RS. 21,00,000/- OMISSION TO SO HAS RESULTED IN UNDER ASSESSMENT OF INCOME TO THE TUNE OF RS. 32,44,500/ - WITH CONSEQUENT SHORT LEVY OF TAX OF RS. 8,90,610/-. 3. I HAVE THEREFORE, REASON TO BELIEVE THAT THE INC OME TO THE TUNE OF RS.32,44,500/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING O F SECTION 147 (A) OF THE I. T. ACT, 1961. THEREFORE, NOTICE U /S 148 OF THE I.T. ACT IS REQUIRED TO BE ISSUED AND FRESH ASSESSMENT IS TO MADE U/S 1 43(3) R. W.S. 147 OF THE I. T. ACT.' 3. IN RESPONSE TO THE NOTICE U/S.148 OF THE ACT THE AS SESSEE FILED THE RETURN OF INCOME ON 23-09-2011. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE PLOT TRANSFERRED TO MALPANI JAIN BUILDERS SHOULD N OT BE ADOPTED AT RS.53,44,500/- BEING THE STAMP DUTY VALUE AS AGAINST RS.21 LAKHS DECLARED BY THE ASSESSEE IN VIEW OF THE PROV ISIONS OF SECTION 50C OF THE I.T. ACT. 4. THE ASSESSEE VIDE HIS SUBMISSION DATED 23-09-2011 S UBMITTED THAT AN AMOUNT OF RS.21 LAKHS WAS RECEIVED DURING THE F.Y . 1999- 2000 AND THE CONSIDERATION IN THE FORM OF CONSTRUCTION W AS RECEIVED IN THE F.Y. 2003-04. THE CAPITAL GAIN ARISING ON ACCOUNT O F THE DEVELOPMENT AGREEMENT EXECUTED ON 25-11-1999 AND THE CASH CONSIDERATION RECEIVED OF RS.21 LAKHS IN PERFORMING OF THE C ONTRACT 3 ITA NO.742/PN/2013 GIVE RISE TO THE CAPITAL GAIN AS PER SECTION 2(47). REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATU RBUJ DWARKADAS KAPADIA VS. CIT REPORTED IN 260 ITR 491 IT WA S ARGUED THAT THE DATE OF CONTRACT IS THE DATE OF TRANSFER IN VIEW OF PROVISIONS OF SECTION 2(47)(V). IT WAS ACCORDINGLY ARGUED THAT CAPITAL GAIN SHOULD HAVE BEEN TAXED IN THE A.Y. 2000-01 AND THEREFORE THE Q UESTION OF REASSESSMENT U/S.147 DOES NOT ARISE. IT WAS FURTHER AR GUED THAT RECTIFICATION PROCEEDINGS U/S.154 IS STILL PENDING. WHEN THE RECTIFICATION ORDER IS PENDING AND THERE IS NO NEW MATERIA L ON RECORD, THEN THE AO CANNOT REOPEN THE ASSESSMENT BY ISSUING N OTICE U/S.148 FOR THE SAME ASSESSMENT YEAR. THE DECISION OF THE BOMBA Y BENCH OF THE TRIBUNAL IN THE CASE OF MAHINDER FREIGHT CARRIER VS. DC IT REPORTED IN 139 TTJ 422 WAS BROUGHT TO THE NOTICE OF T HE AO WHEREIN IT HAS BEEN HELD THAT WHERE THE ISSUE IN CONTROVERSY IS THE SUBJECT MATTER OF PROCEEDINGS U/S.154 THE SAME CANNOT BE SUBJE CT MATTER OR PROCEEDING U/S.147. IT WAS ACCORDINGLY SUBMITTED THAT T HE NOTICE ISSUED U/S.148 AND PROCEEDINGS U/S.147 ARE VOID AB-INITIO. 5. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. SO FAR AS THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF CHATURBURJ DWARKADAS KAPADIA (SUPR A) IS CONCERNED, HE OBSERVED THAT THE SAME IS DISTINGUISHABLE A ND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE INSTA NT CASE THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH MALP ANI JAIN BUILDERS DURING F.Y. 1999-2000. AS PER THE SAID AGREEMENT THE ASSESSEE IS DUE TO RECEIVE CONSIDERATION IN CASH AND IN K IND BY WAY OF BUILT UP AREA. THE ASSESSEE HAS NOT RELINQUISHED HIS RIGH TS OVER THE PROPERTY AS THE DEVELOPMENT AGREEMENT IS NOT A CONCLUS IVE TRANSACTION WHICH ENVISAGES TRANSFER OF PROPERTY. THE AS SESSEE 4 ITA NO.742/PN/2013 HIMSELF HAS DECLARED THE CAPITAL GAIN DURING A.Y. 2004-05 AND HE CANNOT GO BACK ON THE TERMS OF RETURNED INCOME BY AN ARGUMENT DURING THE REASSESSMENT PROCEEDINGS. FURTHER THE ASSE SSEE HAS RECEIVED PART CONSIDERATION IN KIND FROM THE DEVELOPMENT A GREEMENT EXECUTED WITH MALPANI JAIN BUILDERS DURING F.Y. 2003-04, THE REFORE, FOR ALL PRACTICAL PURPOSES TRANSFER HAS HAPPENED DURING F .Y. RELEVANT TO A.Y. 2004-05 BECAUSE THE ASSESSEE HAS EXTINGUISHED H IS RIGHTS OVER THE LAND TOTALLY UPON RECEIVING THE CONSIDERATION AS PER THE TERMS OF AGREEMENT, THEREFORE, THE CAPITAL GAIN UPON TRAN SFER OF LAND IS TO BE TAXED IN THE A.Y. 2004-05. 6. THE AO ALSO REJECTED THE ALTERNATE ARGUMENT OF THE ASSESSEE THAT WHEN THE RECTIFICATION PETITION IS PENDING AND WHEN T HERE IS NO NEW MATERIAL ON RECORD THEN THE AO CANNOT REOPEN THE ASSESSMENT BY ISSUING THE NOTICE U/S.148 OF THE ACT. ACCORDING TO THE A O THE LAST EFFECTIVE ORDER IN THE INSTANT CASE WAS PASSED ON 07-08- 2006. AS PER THE PROVISIONS OF THE I.T. ACT U/S.154(7), NO RECTIFICATION OR DER CAN BE MADE AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE FINA NCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. THE REFORE, THE ORDER U/S.154 OF THE ACT COULD BE PASSED IN THE INSTANT CASE ON OR BEFORE 31-03-2011. IN THE PRESENT SITUATION THE ORDER U/S.154 OF THE ACT CANNOT BE IMPLEMENTED AND THEREFORE THE PROCEEDINGS U/S.154 OF THE ACT DO NOT HAVE ANY VALIDITY. SINCE THE CASE WAS RE OPENED AFTER RECORDING THE REASONS FOR ESCAPEMENT OF INCOME AND THE PROCEEDINGS WERE VALIDLY INITIATED THE AO REJECTED THE ALTERNATE ARGU MENT OF THE ASSESSEE CHALLENGING THE VALIDITY OF THE REASSESSMENT PROCEEDINGS . 7. SINCE IN THE INSTANT CASE THE ASSESSEE WAS TO RECEIV E CONSIDERATION BOTH IN CASH AND IN KIND AS PER THE DEVELO PMENT 5 ITA NO.742/PN/2013 AGREEMENT AND SINCE THE ASSESSEE HAS DECLARED SALE CON SIDERATION OF RS.21 LAKHS RECEIVED IN CASH FOR THE TRANSFER OF THE LAND B EARING SY.NO.410/1B, 410/1C WHEREAS THE VALUE DETERMINED BY TH E STAMP VALUATION AUTHORITY IS RS.53,44,500/-, THEREFORE, THE AO APP LYING THE PROVISIONS OF SECTION 50C OF THE ACT BROUGHT TO TAX THE DIFFERENCE OF RS.32,44,500/-. 8. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDITY OF THE REASSESSMENT PROCEEDINGS ON THE GROUND THAT THE SAME IS BARRED BY LIMITATION. IT WAS SUBMITTED THAT SINCE THE ORIGINAL ASSESSM ENT ORDER WAS PASSED U/S.143(3) AND ASSESSMENT YEAR INVOLVED IS A.Y. 2 004-05, THEREFORE, THE PERIOD OF 4 YEARS ENDED IN A.Y. 2008-09. TH EREFORE, IN VIEW OF THE PROVISO TO SECTION 147 ACTION U/S.147 TAKEN B Y THE AO BY ISSUING NOTICE U/S.148 DATED 24-11-2011 IS VOID AB-INITIO. F URTHER, THE ASSESSEE ALSO ARGUED THAT THE NOTICE U/S.148 FOR RE ASSESSMENT IS NOTHING BUT CHANGE OF OPINION. 9. THE ASSESSEE ALSO SUBMITTED THAT SINCE THE RECTIFICATIO N PROCEEDINGS U/S.154 WAS PENDING THE AO SHOULD HAVE PASS ED THE ORDER U/S.154 CONSIDERING THE REPLY OF THE ASSESSEE EV EN AFTER EXPIRY OF 4 YEARS IN VIEW OF THE CBDT CIRCULAR. IT WAS SUBMITTED THAT THE AO HAD COMMITTED A MISTAKE BY FINALIZING THE ASSESSMENT U/S.14 3(3) R.W.S. 147 WHEN THE RECTIFICATION APPLICATION FOR THE YEAR UN DER CONSIDERATION WAS STILL PENDING. FINALLY, REFERRING TO PROVIS IONS OF SECTION 2(47), IT WAS ARGUED THAT THE LONG TERM CAPITAL G AIN, IF ANY, AROSE IN THE A.Y. 2000-01 SINCE THE DEVELOPMENT AGREEMEN T WAS EXECUTED ON 25-11-1999 RECEIVING THE ENTIRE CASH CONSID ERATION ON THE SAME DATE AND ONLY A PART CONSIDERATION IN THE FORM OF CONSTRUCTED AREA WAS RECEIVED IN A.Y. 2004-05. THE DEC ISION OF 6 ITA NO.742/PN/2013 HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBUJ DWA RKADAS KAPADIA (SUPRA) WAS AGAIN RELIED UPON. 10. HOWEVER, THE CIT(A) WAS ALSO NOT SATISFIED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE. HE OBSERVED THAT IN THE OR IGINAL ASSESSMENT ORDER PASSED U/S.143(3) THE APPLICATION OF THE MIND OF THE AO WAS WITH RESPECT TO SALE OF LAND AT SY.NO.315 AND THE AO HAS NOT APPLIED HIS MIND WITH RESPECT TO THE OTHER ASSET, I.E . PLOT AT SY.NO.410/1B AND 410/1C. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT THERE IS CHANGE OF OPINION IS INCORRECT SINCE THERE WA S NO OPINION FORMED BY THE AO WHILE PASSING THE ASSESSMENT ORDER. 11. AS REGARDS THE ARGUMENT OF THE ASSESSEE THAT AO SHOULD HAVE PASSED THE ORDER U/S.154 BEFORE ISSUE OF NOTICE U/S.147 HE HELD THAT THE AO HAS RIGHTLY NOT TAKEN ACTION U/S.154 AND TOOK R ECOURSE TO SECTION 147 AFTER ITS EXPIRY. ACCORDING TO HIM, IT IS OPEN T O THE AO EITHER TO RECTIFY THE ASSESSMENT IF THERE IS A MISTAKE FALLING U/S.154 OR TO MAKE REASSESSMENT U/S.147. BOTH THESE PROVISIONS AR E SELF CONTAINED PROVISIONS. FURTHER, WHEN NOTICE WAS ISSUED U/S .148 THE AO OBVIOUSLY MADE IT CLEAR THAT PROCEEDINGS U/S.154 HAVE BEEN DROPPED AND THE REASSESSMENT U/S.147 WAS ACCORDINGLY HELD VALID BY THE LD.CIT(A). 12. AS REGARDS THE ARGUMENT OF THE ASSESSEE THAT ACT ION U/S.147 IS BARRED BY LIMITATION IN VIEW OF THE PROVISO TO SECTION 147, T HE LD.CIT(A) HELD THAT THE AO HAS REOPENED THE COMPLETED AS SESSMENT U/S.143(3) AFTER DULY RECORDING THE SATISFACTION THAT INCOME HAS ESCAPED ASSESSMENT. ACCORDING TO HIM, THE STIPULATED TIM E FRAME OF 4 YEARS ENDS ON 31-03-2011 SINCE THE ASSESSMENT FOR A .Y. 2004-05 WAS COMPLETED U/S.143(3) ON 07-08-2006, I.E. F.Y. 2006-07 AND THE 7 ITA NO.742/PN/2013 PERIOD OF 4 YEARS FALLS UPTO 31-03-2011, THEREFORE, THIS ARG UMENT OF THE ASSESSEE WAS ALSO REJECTED BY THE LD.CIT(A). 13. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT IN VIEW OF THE DEVELOPMENT AGREEMENT DATED 25-11-1999 THE CAPITAL GAIN WAS TAXABLE IN A.Y. 2000-01, HE HELD THAT SAME IS NOT TENABLE O N FACT AND IN LAW. ACCORDING TO HIM THE ASSESSEE HAD ENTERED INTO T HE DEVELOPMENT AGREEMENT WHICH WAS EXECUTED ON 25-11-199 9 AND THE CONSIDERATION FIXED WAS RS.21 LAKHS AS CASH AND A PART O F CONSTRUCTED AREA AS TOTAL CONSIDERATION. THE ASSESSEE HIMSELF HAD DISCLOSED THE PART CAPITAL GAIN DURING A.Y. 2004-05 AND NOT DURING A.Y. 2000-01. FURTHER, DURING THE COURSE OF ORIGINAL ASSESS MENT PROCEEDINGS FOR A.Y. 2004-05 THE ASSESSEE HAD NOT RAISED THESE ISSUES WHICH IS BEING RAISED DURING REASSESSMENT PROCEEDIN GS. FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT. LTD. REPORTED IN 198 ITR 2 97 AND IN CHETTINAD CORPORATION PVT. LTD. VS. CIT REPORTED IN 200 ITR 320 (SC) HE OBSERVED THAT THE HONBLE SUPREME COURT IN THE SAID DECISIONS HAS HELD THAT MATTERS WHICH ATTAINED FINALITY IN THE ORIGINAL ASSESSMENT CANNOT BE REAGITATED TO MAKE A FRESH CLAIM U NRELATED TO THE ESCAPED INCOME. THE ITO CAN BRING TO TAX ANY INCO ME WHICH HAS ESCAPED ASSESSMENT AND MATTERS ATTAINING FINALITY IN ORIGINA L ASSESSMENT CANNOT BE DISPUTED BY THE ASSESSEE. THE L D.CIT(A) ACCORDINGLY DISMISSED THE APPEAL FILED BY THE ASSESSEE. 14. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE NOTICE U /S 148 WAS ISSUED BY THE A.0. WELL WITHIN THE LIMITATION OF FOUR YEARS FR OM THE DATE OF COMPLETION OF THE ASSESSMENT U/S 143(3) OF 7-8-2006, I. E. F. Y. 2006-07 8 ITA NO.742/PN/2013 AND THEREFORE, ACTION UNDER S. 147 INITIATED ON 24- 11-2011 AND BEING PRIOR TO 31-3-2011 WAS LEGAL AND JUSTIFIED IGNORING T HE STATUTORY PROVISION THAT PERIOD IS TO BE COUNTED OF FOUR YEARS F ROM THE END OF THE ASSESSMENT YEAR. THE NOTICE ISSUED ON 24-11-2011 CONTRAVE NING THE STATUTORY PROVISIONS OF S. 147 AND UPHELD BY LD. CIT(A ), IS BAD IN LAW AND WITHOUT JURISDICTION. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SINCE NOTICE ISSUED UNDER S. 147 DT. 24-3-3011 WAS WELL WITHIN FOUR YEARS THE PROVISO T O S. 147 WAS NOT APPLICABLE. THE PROVISO TO S. 147 HAS BEEN MISINTERPR ETED BY LD. CIT(A) AS THE LIMITATION HAS BE COUNTED OF FOUR YEARS FROM T HE END OF THE ASSESSMENT YEAR. THE FOUR YEARS PERIOD WILL END ON 31-3- 2009. THEREFORE, ACTION TAKEN U/S. 147, WHERE PROVISO TO S . 147 WAS APPLIED WITHOUT RECORDING SATISFACTION THAT THE ESCAPEMENT OF INCOME WAS BECAUSE OF THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, WAS BAD IN LAW AND WITHOUT JURISDICTION. THE ASSESSMENT BE CANCELLED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD.CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION O F THE A.O. TO ADOPT SALES CONSIDERATION OF RS. 53,44,500/- AS AGAINST RS.21,00 ,000/- BY APPLYING PROVISIONS OF S. 50C OF THE ACT. THE LD. CIT (A) ERRED IN FACT AND LAW AFFIRMING THE ACTION OF THE A. 0. IN THE MATTER OF TAXATION OF LONG TERM CAPITAL GAIN TO ADOPT THE SALE CONSIDERATION OF RS. 21 ,00,000/- BY APPLYING S. 50C OF THE ACT ESPECIALLY WHEN THE CONSID ERATION IT WAS AS PER DEVELOPMENT AGREEMENT EXECUTED PRIOR TO 01-04-2003 WHEN PROVISIONS OF S. 50C WERE NOT ON THE STATUTE. IT BE HELD ACCORD INGLY. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LD. CIT (A) OUGHT TO HAVE ACCEPTED THE COMPUTATION OF CAPITAL G AIN AS PER DEVELOPMENT AGREEMENT MADE BY THE ASSESSEE. 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LEVY OF INTEREST U/S 234A, 234B AND 234C IS NOT JUSTIFIED AND I N THE CIRCUMSTANCES IT BE DELETED. 6) THE APPELLANT CRAVES/LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 15. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE ORIGINAL ASSESSMENT ORDER PASSED ON 07-08-2006, A CO PY OF WHICH IS PLACED AT PAPER BOOK PAGES 34 TO 37. REFERRI NG TO THE SAME HE SUBMITTED THAT THE AO HAS BROUGHT TO TAX THE AMOUNT OF RS.19,36,688/- AFTER CONSIDERING THE SALE OF NA PLOT AT SY.N O.410/1B AND SY.NO.410/1C AT RS.32,74,250/- TO M/S. MALPANI JAIN BU ILDERS AND THE INDEXED COST PRICE AT RS.13,34,452/-. HE SUBMITT ED THAT SINCE THE ASSESSMENT ORDER WAS PASSED U/S.143(3) FOR A.Y. 2004-05, 9 ITA NO.742/PN/2013 THEREFORE, IN VIEW OF THE PROVISO TO SECTION 147 THE 4 YEA R PERIOD ENDS ON 31-03-2009. THEREFORE, THE NOTICE ISSUED U/S.148 BY TH E AO ON 30-03-2011 IS CLEARLY BARRED BY LIMITATION. REFERRING TO TH E DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FATEH CHAND CHARITABLE TRUST VS. CIT REPORTED IN 36 TAXMANN.COM 67 H E SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISIO N HAS CATEGORICALLY HELD THAT THE PERIOD OF 4 YEARS COMES TO AN END AT THE END OF THE 4 YEAR PERIOD FROM THE RELEVANT ASSESSMENT Y EAR. THEREFORE, THE ARGUMENT OF THE LD.CIT(A) THAT THE PERIOD O F 4 YEARS COMES TO AN END FROM THE END OF THE YEAR IN WHICH THE ORDER IS PASS ED IS MISCONCEIVED AND NOT IN ACCORDANCE WITH LAW. HE ACCORDIN GLY SUBMITTED THAT THE ACTION OF THE AO IN TAKING RECOURSE T O PROVISIONS OF SECTION 147 IS VOID AB-INITIO. 16. COMING TO THE MERIT OF THE CASE HE SUBMITTED THAT T HE DEVELOPMENT AGREEMENT WAS EXECUTED ON 25-11-1999 BET WEEN MALPANI JAIN BUILDERS AND THE ASSESSEE. AS PER THE SAID DEVELOPMENT AGREEMENT THE ASSESSEE WAS SUPPOSED TO GET AN AMOUN T OF RS.21 LAKHS IN CASH AND A PART OF THE CONSTRUCTED AREA. THE AMOUNT OF RS.21 LAKHS WAS RECEIVED BY CHEQUE DURING F.Y. 1999-2000 RELEVANT TO A.Y. 2000-01. REFERRING TO THE DECISION OF THE BANGALOR E BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. N.S. NAGARAJ REPORTED IN 52 TAXMANN.COM 511 HE SUBMITTED THAT ONCE THE DEVELOPMENT AGREEMENT IS ENTERED THE ASSESSEE RELINQUISHES HIS RIGHTS IN THE LAND. THE MOMENT THE OWNERS HAVE HANDED OVER THE POSSESSIO N TO THE DEVELOPER A RIGHT TO RECEIVE THE DEVELOPED AREA WOULD AC CRUE TO THE OWNERS. IT IS A CONSIDERATION IN KIND WHICH HAS A VALUE W HICH CAN BE WORKED OUT. THEREFORE, IN THE FACTS OF THE CASE, CAPITAL G AIN, IF ANY, HAS TO BE TAXED IN THE ASSESSMENT YEAR 2000-01 AND IT CANNOT BE 10 ITA NO.742/PN/2013 TAXED IN THE IMPUGNED ASSESSMENT YEAR. HE FURTHER SUBM ITTED THAT THE PROVISIONS OF SECTION 50C WERE NOT IN THE STATUTE BO OK DURING THAT PERIOD AS THE SAME WERE INSERTED BY THE FINANCE ACT, 20 02 W.E.F., 01- 04-2003 AND THEREFORE, APPLYING THE PROVISIONS OF SECTION 50C FOR A.Y. 2000-01 ARE ALSO NOT PERMISSIBLE. HE ACCORDINGLY SUBMITTE D THAT BOTH LEGALLY AND FACTUALLY THE AO IS NOT JUSTIFIED IN BRINGING TO TAX THE CAPITAL GAIN OF RS.32,44,500/- TO TAX. 17. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF CIT(A). 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ORIGINAL ASSESSMENT IN THE INSTANT CASE WAS COMPLETED ON 07-08 -2006 AND THE ASSESSMENT YEAR INVOLVED IS 2004-05. WE FIND THE AO ISSUED NOTICE U/S.148 ON THE GROUND THAT THE ASSESSEE HAS DE CLARED SALE PRICE OF RS.21 LAKHS FOR COMPUTING THE LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF NA PLOT AT SY.NO.410/1B AND 410/1C TO MALPANI JAIN BUILDERS WHEREAS THE MARKET VALUE FOR STAMP DUTY WA S ADOPTED AT RS.53,44,500/-. WE FIND THE AO IN THE ASSESSMENT ORDER FOR A.Y. 2004-05 ON 07-08-2006 HAS DETERMINED THE TOTAL INCOME AT RS.75,08,074/-, THE DETAILS OF WHICH ARE AS UNDER : CONSIDERING THE ABOVE FACTS AND AFTER DISCUSSION THE TO TAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER : 1) INCOME FROM BUSINESS AS PER RETURN OF INCOME RS.11,45 ,518/- 2) LONG TERM CAPITAL GAIN : A I. SALE OF AGRICULTURAL LAND S.NO.315, PATHARDI ON 30-06-2003 11 ITA NO.742/PN/2013 MARKET VALUE ADOPTED FOR STAMP DUTY PURPOSE AS PER SECTION 50C(1) OF THE I.T. ACT, 1961 TO SARKAR BUILDCON-RS.81,00,0 00/- II. M/S. VANJARI & GHOGE RS.9,88,000/- -------------------- RS.90,88,000/- LESS : COST PRICE WITH INDEX RS.32,90,720 /- --------------------- RS.57,97,280/- B SALE OF NA PLOT S.NO.410/1B, 410/1C TO MALPANI JAIN BUILDERS RS.32,74,720/- LESS : COST PRICE WITH INDEX RS.13,34,452/- -------------------- RS.19,39,688/- TOTAL LONG TERM CAPITAL GAIN RS.77,36,968/- -------------------- LESS CARRIED FORWARD LONG TERM CAPITAL LOSS FOR A.Y. 2003-04 RS.2,28,89 4/- -------------------- BALANCE LONG TERM CAPITAL GAIN RS.75,08,074/- 3) INCOME FROM OTHER SOURCES RS. 63,151/- --------------------- GROSS TOTAL INCOME RS.87,16,743/- LESS : DEDUCTION U/S.80L RS. 12,000/- --------------------- TOTAL INCOME RS.87,04,743/- I.E., RS.87,04,740/- AGRICULTURAL INCOME RS.18,84,875/- 19. FROM THE ABOVE, IT IS SEEN THAT THE SALE OF NA PLOT A T SY.NO.410/1B AND 410/1C TO MALPANI JAIN BUILDERS WAS VERY MUCH IN THE KNOWLEDGE OF THE AO AND THERE IS NO ALLEGATION IN TH E NOTICE ISSUED U/S.148 THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR COMPLETION OF THE A SSESSMENT. THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S.143(3) AND T HE RELEVANT LAND ON WHICH AO ALLEGES THAT THERE IS ESCAPEME NT OF INCOME WAS VERY MUCH BEFORE THE AO. THEREFORE, IN VIEW OF THE P ROVISO TO SECTION 147 THE 4 YEAR PERIOD ENDS ON 31-03-2009. THE LD.CIT(A) IN OUR OPINION PROCEEDED ON A WRONG FOOTING THAT THE 4 YEA R PERIOD ENDS FROM THE FINANCIAL YEAR IN WHICH THE ASSESSMENT ORDER IS PASSED. 12 ITA NO.742/PN/2013 20. WE FIND THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF FATEH CHAND CHARITABLE TRUST (SUPRA) WHILE EXPLAINING THE PHRASE IN PROVISO AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR HAS HELD THAT THE STARTING UP OF 4 Y EARS PERIOD WILL BE FROM THE END OF THE ASSESSMENT YEAR. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT AT PARA 19 OF THE ORDER READS AS UNDER : 19. IT WAS THEN CONTENDED THAT THE CASE ON HAND WAS W ITHIN THE PROVISO TO SECTION 147 OF THE ACT AND AS THE PROCEEDINGS WERE INITIATED ACCORDING TO THE PETITIONER AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2006-2007, THE PROCEEDING IS BAD AS THE A SSESSEE HAD DISCLOSED ALL THE MATERIAL FACTS DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS. THE SAID ARGUMENT IS MISCONCEIVED AND PROC EEDS ON THE WRONG FOOTING THAT FOUR YEARS PERIOD FROM THE END OF THE ASSESSMENT YEAR 2006-2007 WILL COME TO AN END ON 31ST OF MARCH, 2010. THE PHRASE USED IN THE PROVISO IS - AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR'. CLEARLY, IT POSTULATES THE STA RTING UP OF FOUR YEARS PERIOD WILL BE FROM THE END OF THE ASSESSMENT YEAR I.E. FOR THE ASSESSMENT YEAR 2006-2007, THE ASSESSMENT YEAR WILL EXPIRE ON 31ST OF MARCH, 2007 AND FOUR YEARS PERIOD FROM THAT DATE EXP IRES ON 31ST OF MARCH, 2011. ADMITTEDLY, THE IMPUGNED NOTICE IS DATE D 19TH OF APRIL, 2010 AND IT IS WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR 2006-2007 AND IS CLEARLY WITHIN TIME. TH EREFORE, WE ARE NOT BURDENING THIS JUDGMENT BY REFERRING THE JUDGMEN TS RELIED UPON THE LEARNED COUNSEL FOR THE PETITIONER DELIVERED WITH RE FERENCE TO THE PROVISO TO SECTION 147. THE SAID PROVISO ON THE FACTS OF THE PR ESENT CASE IS NOT AT ALL ATTRACTED. 21. ALTHOUGH THE ABOVE DECISION WAS DECIDED AGAINST THE A SSESSEE, HOWEVER, THE RATIO IS APPLICABLE TO THE FACTS OF THE PRESEN T CASE. SINCE IN THE INSTANT CASE, THE AO HAS ISSUED THE NOTICE U/S.14 8 AFTER THE END OF 4 YEARS FROM THE RELEVANT ASSESSMENT YEAR, THEREFORE, IN VIE W OF PROVISO TO SECTION 147 SUCH NOTICE ISSUED U/S.148 IS BAD IN LAW AND VOID AB-INITIO. WE ACCORDINGLY ALLOW GROUNDS OF APPEAL NO.1 & 2 BY THE ASSESSEE. 22. SINCE THE ASSESSEE SUCCEEDS ON THIS PRELIMINARY LEGAL IS SUE THE OTHER GROUNDS BECOME ACADEMIC IN NATURE AND THEREFORE ARE NOT BEING ADJUDICATED. 13 ITA NO.742/PN/2013 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-07-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ! / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; ! DATED : 22 ND JULY, 2015. LRH'K &'(!)*+%) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # # $ ( ) -II, IQ.KS / THE CIT(A)-II, PUNE 4. # # $ -II, IQ.KS / THE CIT-II, PUNE 5. '() **+, , # +, , IQ.KS / DR, ITAT, A PUNE; 6. )./ 0 / GUARD FILE. &# , / BY ORDER , ' * //TRUE COPY// 123 *4 +5 / SR. PRIVATE SECRETARY # +,, IQ.KS / ITAT, PUNE