Emgeeyar Pictures P. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 992/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7725 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 21-07-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 30-04-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: D ANAND
• Keywords: Reopening of assessment; Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Period of limitation; Fair market value; Difference of opinion; Time period of passing order; Revised return; Reassessment proceedings
• Section: 143(3); 50C; 142(1); 131; 27; 148; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , ! ', $ %& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO.992/MDS/2015 ( )( / ASSESSMENT YEAR : 2001-02 M/S EMGEEYAR PICTURES P. LTD., FLAT NO.3B, DOSHI RESIDENCY COMPLEX, OLD NO.9, NEW NO.17, DHANDAPANI STREET, T. NAGAR, CHENNAI - 600 017. PAN : AABCE 1440 J V. THE DEPUTY COMMISSIONER OF INCOME TAX, MEDIA CIRCLE I, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI D. ANAND, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT 1 / 2$ / DATE OF HEARING : 21.07.2015 34) / 2$ / DATE OF PRONOUNCEMENT : / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-14, CHENNA I, DATED 10.03.2015 AND PERTAINS TO ASSESSMENT YEAR 2001-02. 2 I.T.A. NO.992/MDS/15 2. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2001-02 ON 25.04.2005 IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT, DISCLOSING THE TOTAL LOSS OF ` 56,758/-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143( 3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') BY AN ORDER DATED 30.03.2006 DETERMINING THE TOTAL LOSS AT ` 2,442/-. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED ANOTHER NOTICE PURPORT ED TO BE UNDER SECTION 147 R.W.S. 150 OF THE ACT ON 10.06.2011. A CCORDING TO THE LD. COUNSEL, THE NOTICE ISSUED ON 10.06.2011 WAS BE YOND THE PERIOD OF LIMITATION FOR COMPLETING THE ASSESSMENT UNDER S ECTION 149 OF THE ACT. REFERRING TO THE ORDER OF THIS TRIBUNAL DATED 31.05.2010 IN I.T.A. NOS.327 & 328/MDS/2010 , THE LD.COUNSEL SUBM ITTED THAT THERE IS NO FINDING OR DIRECTION BY THIS TRIBUNAL T O ASSESS THE INCOME. 3. ACCORDING TO THE LD. COUNSEL, IN FACT, WHEN THE APPEAL CAME BEFORE THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2003- 04 AND 2004-05, THIS TRIBUNAL FOUND THAT THE TRANSFER TOOK PLACE IN THE YEAR 2000. THEREFORE, THE CAPITAL GAIN CANNOT BE TAXED FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05. THERE IS NEITHER A FIND ING THAT THE CAPITAL GAIN HAS TO BE TAXED IN THE ASSESSMENT YEAR 2001-02 NOR ANY DIRECTION TO ASSESS THE SAME IN THE ASSESSMENT YEAR 2001-02. 3 I.T.A. NO.992/MDS/15 THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESS ING OFFICER CANNOT TAKE THE BENEFIT OF SECTION 150(1) OF THE AC T FOR REOPENING THE COMPLETED ASSESSMENT AFTER EXPIRY OF LIMITATION PROVIDED IN SECTION 149 OF THE ACT. REFERRING TO SECTION 150(1 ) OF THE ACT, THE LD.COUNSEL POINTED OUT THAT THE ASSESSING OFFICER M AY REOPEN THE ASSESSMENT NOTWITHSTANDING ANYTHING CONTAINED IN SE CTION 149 OF THE ACT BY ISSUING A NOTICE UNDER SECTION 148, FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RE-COMPUTAT ION IN CONSEQUENCE OF ANY FINDING OR DIRECTION CONTAINED I N THE ORDER PASSED BY ANY AUTHORITY IN A PROCEEDING UNDER THIS ACT. THE ONLY PROCEEDING UNDER THIS ACT IS APPEAL BY THE ASSESSEE BEFORE THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2003-04 AND 2004- 05 IN I.T.A. NOS.327 & 328/MDS/2010 AND THERE IS NO FINDING OR D IRECTION BY THIS TRIBUNAL TO ASSESS THE CAPITAL GAIN ARISING OUT OF TRANSFER OF THE PROPERTY IN THE ASSESSMENT YEAR 2001-02. 4. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, INVITED OUR ATTENTION TO THE ORDER OF THIS TRIBUNAL DATED 31.05 .2010 AND SUBMITTED THAT SECTION 150(1) OF THE ACT SHOULD NOT BE APPLIED IN A CASE WHERE THE ASSESSMENT OR REASSESSMENT OR RE-COM PUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WAS PASSED BY THE TRIBUNAL IN VIEW OF LIMITATION PROVIDED IN SECTION 149 OF THE ACT. IN 4 I.T.A. NO.992/MDS/15 THIS CASE, ACCORDING TO THE LD. COUNSEL, THE ORDER OF THE TRIBUNAL WAS PASSED ON 31.05.2010. THE PERIOD OF LIMITATION FOR COMPLETING THE ASSESSMENT OR THE REASSESSMENT IS TWO YEARS FRO M THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST A SSESSABLE. THE INCOME WAS FIRST ASSESSABLE IN THE ASSESSMENT YEAR 2001-02. THEREFORE, AT THE BEST, THE ASSESSMENT ORDER CAN BE PASSED ON OR BEFORE 31.03.2005. THE ASSESSING OFFICER PASSED TH E INITIAL ASSESSMENT ORDER, AFTER REOPENING UNDER SECTION 147 OF THE ACT, ON 30.03.2006. THE ASSESSMENT WAS REOPENED FOR THE SE COND TIME UNDER SECTION 150 OF THE ACT, CONSEQUENT TO THE ORD ER OF THIS TRIBUNAL FOR ASSESSMENT YEARS 2003-04 AND 2004-05 D ATED 30.05.2010. REFERRING TO THE JUDGMENT OF THE APEX COURT IN CIT V. GREEN WORLD CORPORATION (2009) 314 ITR 81, THE LD.C OUNSEL SUBMITTED THAT NO NOTICE UNDER SECTION 148 SHOULD B E ISSUED SINCE FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVAN T ASSESSMENT YEAR. AT THE BEST, ASSESSING OFFICER CAN ISSUE NOT ICE UNDER SECTION 148 WITHIN A PERIOD OF SIX YEARS IN CASE THE INCOME ASSESSABLE TO TAX EXCEEDED ` 1 LAKH OR MORE. IN THIS CASE, EVEN THE SIX-YEAR PERIOD EXPIRED ON 31.03.2008. THEREFORE, THE ISSUE OF NOTICE UNDER SECTION 147 R.W.S. 150 OF THE ACT ON 10.06.2011 IS BEYOND THE PERIOD OF LIMITATION. 5 I.T.A. NO.992/MDS/15 5. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT SECTION 150(2) OF THE ACT CLEARLY SAYS THAT IF THE TIME LIMIT EXPIRED AT THE TIME OF THE ORDER WHICH WAS SUBJECT MATTER OF A PPEAL, THEN PROVISIONS OF SECTION 150(1) OF THE ACT IS NOT APPL ICABLE. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, THE ORDER OF TH E TRIBUNAL WAS PASSED ON 31.05.2010. THE LIMITATION PERIOD HAD AL READY EXPIRED, THEREFORE, NO ORDER CAN BE PASSED UNDER SECTION 150 (1) OF THE ACT IN THE GUISE OF REOPENING UNDER SECTION 147 OF THE ACT. THE LD.COUNSEL HAS ALSO PLACED HIS RELIANCE ON THE JUDG MENT OF THE APEX COURT IN K.M. SHARMA V. ITO (2002) 254 ITR 772. TH EREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER OUGHT NOT TO HAVE REOPENED THE ASSESSMENT IN THE GUISE OF GIVING EFFECT TO THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEARS 2003 -04 AND 2004- 05. 6. THE LD.COUNSEL FURTHER SUBMITTED THAT THE CIT(AP PEALS), REFERRING TO THE CONTENTION OF THE ASSESSEE THAT TH ERE WAS NO SPECIFIC FINDING OR DIRECTION OF THE TRIBUNAL IN TH E ORDER DATED 31.05.2010, OBSERVED THAT THERE WAS AN INFERENCE TH AT THE FINDING OF THE ITAT IS THAT THE CAPITAL GAIN IS TO BE TAXED IN ASSESSMENT YEAR 2001-02. ACCORDING TO THE LD. COUNSEL, ON THE BASI S OF THE INFERENCE THERE CANNOT BE ANY ASSESSMENT UNDER SECT ION 150(1) OF 6 I.T.A. NO.992/MDS/15 THE ACT. THE LANGUAGE USED BY THE PARLIAMENT IS F INDING OR DIRECTION OF ANY AUTHORITY UNDER THE PROVISIONS OF THE INCOME-TAX ACT. IN HIS CASE THERE WAS NO FINDING OR DIRECTION BY THE ITAT. THEREFORE, THERE CANNOT BE ANY INFERENCE THAT THE T RIBUNAL INTENDED TO TAX THE CAPITAL GAIN IN THE ASSESSMENT YEAR 2001 -02. THE LD.COUNSEL HAS ALSO ADVANCED HIS ARGUMENT ON MERIT AND SUBMITTED THAT SECTION 50C OF THE ACT IS APPLICABLE FROM ASSE SSMENT YEAR 2003-04, AND THEREFORE, NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE LD.COUNSEL ALSO PLACED HIS RELI ANCE IN THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. VELLORE ELE CTRIC CORPORATION (2006) 287 ITR 50. 7. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT ON APPEAL BY THE ASS ESSEE FOR ASSESSMENT YEARS 2003-04 AND 2004-05, THIS TRIBUNAL FOUND THAT THERE WAS AN AGREEMENT FOR JOINT DEVELOPMENT OF PRO PERTY ON 25.12.2000 AND THE ASSESSEE HAD ALSO HANDED OVER TH E POSSESSION OF THE PROPERTY TO THE BUILDER ON THE SAME DAY. TH EREFORE, THIS TRIBUNAL FOUND THAT THE CAPITAL GAIN CANNOT BE TAXE D IN THE ASSESSMENT YEARS 2003-04 AND 2004-05 SINCE THE TRAN SFER TOOK PLACED IN THE ASSESSMENT YEAR 2001-02. ON THE BASI S OF THIS OBSERVATION, THE ASSESSING OFFICER REOPENED THE ASS ESSMENT UNDER 7 I.T.A. NO.992/MDS/15 SECTION 150(1) R.W.S. 147 OF THE ACT. THEREFORE, A CCORDING TO THE LD. D.R., THERE WAS A CLEAR OBSERVATION BY THIS TRIBUNA L THAT CAPITAL GAIN HAS TO BE ASSESSED IN THE ASSESSMENT YEAR 2001-02. REFERRING TO THE ORDER OF THE CIT(APPEALS), THE LD. D.R. POINTED OUT THAT THE CIT(APPEALS), BY PLACING RELIANCE ON THE JUDGMENT O F KARNATAKA HIGH COURT IN DCIT V. SPENCES HOTEL (P) LTD. (2007) 208 CTR 224, FOUND THAT NOTICE ISSUED FOR ASSESSMENT YEAR 1976-7 7 ON 17.11.1998, ON THE BASIS OF THE FINDING OF THE TRIB UNAL FOR THE ASSESSMENT YEAR 1980-81, WAS FOUND TO BE IN ORDER. THE LD. D.R. SUBMITTED THAT THE CIT(APPEALS) ALSO REFERRED TO TH E JUDGMENT OF ANDHRA PRADESH HIGH COURT IN B.A.R. ABDUL RAHMAN SA HEB V. ITO (1975) 100 ITR 541 AND SUBMITTED THAT SUB-SECTION ( 3) OF SECTION 153 WIPES THE LIMITATION PROVIDED IN SECTION 153(1) AND 153(2) OF THE ACT. REFERRING TO SUB-SECTION (2) TO SECTION 1 53, THE LD. D.R. POINTED OUT THAT IF ANY INCOME WAS EXCLUDED FROM TH E TOTAL INCOME OF THE ASSESSEE FOR AN ASSESSMENT YEAR, THEN FOR ASSES SING THAT INCOME FOR ANOTHER ASSESSMENT YEAR SHOULD BE CONSID ERED AS ONE MADE CONSEQUENT TO THE ORDER GIVING EFFECT TO THE F INDING OR DIRECTION CONTAINED IN THE ORDER THE HIGHER AUTHORITY. THERE FORE, ACCORDING TO THE LD. D.R., WHEN THE ASSESSING OFFICER PASSED AN ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 2003-04 AND 2004-05, IT HAS TO BE DEEMED THAT THE ORDER OF THE ASSESSMENT WAS 8 I.T.A. NO.992/MDS/15 PASSED GIVING EFFECT TO THE FINDING CONTAINED IN TH E ORDER OF THIS TRIBUNAL. THEREFORE, ACCORDING TO THE LD. D.R., TH E CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OF FICER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. INITIALLY THE ASSESSEE FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2001-02 ON 25.04.2005 CONSEQUENT TO THE NOTICE ISSUED UNDER SECTION 148 O F THE ACT, DISCLOSING THE LOSS OF ` 56,758/-. HOWEVER, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE AC T AND DETERMINED THE LOSS AT ` 2,442/- BY AN ORDER DATED 30.03.2006 INSTEAD OF ` 56,758/- CLAIMED BY THE ASSESSEE. 9. THE ASSESSEE FILED APPEALS BEFORE THIS TRIBUNAL AGAINST THE ORDERS OF THE LOWER AUTHORITY FOR ASSESSMENT YEARS 2003-04 AND 2004-05 IN I.T.A. NOS.327 & 328/MDS/2010. THE MAIN CONTENTION OF THE ASSESSEE BEFORE THIS TRIBUNAL WAS THAT THE CAPI TAL GAIN ARISING OUT OF THE TRANSFER OF PROPERTY CANNOT BE TAXED IN THE ASSESSMENT YEARS 2003-04 AND 2004-05. THIS CONTENTION OF THE ASSESSEE WAS ACCEPTED BY THE TRIBUNAL ON THE GROUND THAT THE JOI NT DEVELOPMENT AGREEMENT WAS ENTERED INTO ON 25.12.2000 AND THE PO SSESSION OF THE PROPERTY WAS ALSO HANDED OVER ON THE VERY SAME DAY. THEREFORE, THIS TRIBUNAL FOUND THAT THE CAPITAL GAI N CANNOT BE TAXED 9 I.T.A. NO.992/MDS/15 IN ASSESSMENT YEARS 2003-04 AND 2004-05. THIS ORDE R OF THE TRIBUNAL WAS PASSED ON 31.05.2010. WE HAVE CAREFUL LY GONE THROUGH THE PROVISIONS OF SECTION 150(2) OF THE ACT , WHICH READS AS FOLLOWS:- 150 (1) .. . . . . . . (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APPL Y IN ANY CASE WHERE ANY SUCH ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS IS REFERRED TO IN THAT SUB-SECTION RELATES TO AN ASSESSMENT YEAR IN RESPECT OF WHICH AN ASSESS MENT, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN M ADE AT THE TIME THE ORDER WHICH WAS THE SUBJECT-MATTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY BE TAKEN. 10. IN VIEW OF SECTION 150(2) OF THE ACT, THE PROVI SIONS OF SUB- SECTION (1) OF SECTION 150 OF THE ACT IS NOT APPLIC ABLE IN RESPECT OF THE ASSESSMENT YEAR IN WHICH THE ASSESSMENT, REASSE SSMENT OR RE- COMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME TH E ORDER, WHICH WAS SUBJECT MATTER OF THE APPEAL, WAS PASSED BY REA SON OF ANY OTHER PROVISIONS LIMITING THE TIME WITHIN WHICH THE ACTION FOR REASSESSMENT OR RE-COMPUTATION SHOULD BE TAKEN. IN THE CASE BEFORE US, SECTION 149 OF THE ACT PROVIDES MAXIMUM OF SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN CAS E THE INCOME CHARGEABLE TO TAX EXCEEDS ` 1 LAKH. THE RELEVANT ASSESSMENT YEAR IS 2001-02 AND THE SIX YEARS PERIOD FROM THE END OF THE RELEVANT 10 I.T.A. NO.992/MDS/15 ASSESSMENT YEAR EXPIRED ON 31.03.2008. THEREFORE, THE LIMITATION FOR REOPENING UNDER SECTION 147 OF THE ACT EXPIRED ON 31.03.2008 WHEN THE TRIBUNAL PASSED THE ORDER ON 31.05.2010. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER CANNOT TAKE ANY ADVANTAGE ON THE BASIS OF THE ORDER OF THIS TRIBUNAL DATED 31.05.2010 BY INVOKING SECTION 150(1) OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER CAN PASS AN ORDER UNDER SECTION 150(1) OF THE ACT PROVI DED THE APPELLATE / REVISIONAL ORDER WAS PASSED WITHIN THE PERIOD OF LIMITATION AVAILABLE FOR REOPENING THE ASSESSMENT. IN THIS CA SE, ON THE DATE OF APPELLATE ORDER, I.E. 31.05.2010, THE LIMITATION PE RIOD HAD EXPIRED. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICE R BY ISSUING NOTICE FOR REOPENING THE ASSESSMENT ON 10.06.2011 I S BARRED BY LIMITATION. 11. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN K.M. SHARMA (SUPRA). THE APEX COURT, AFTE R CONSIDERING THE PROVISIONS OF SECTION 150(2) OF THE ACT, FOUND THAT SUB-SECTION (2) OF SECTION 150 PUTS EMBARGO ON REOPENING ASSESS MENTS, WHICH HAVE ATTAINED FINALITY ON EXPIRY OF PERIOD OF LIMIT ATION. THE APEX COURT ALSO FOUND THAT SUB-SECTION (2) OF SECTION 15 0 MAKES IT CLEAR THAT REASSESSMENT PERMISSIBLE UNDER SECTION 150(1) OF THE ACT 11 I.T.A. NO.992/MDS/15 WOULD NOT BE AVAILABLE TO DEPARTMENT WHEN THE PERIO D OF LIMITATION FOR SUCH ASSESSMENT OR REASSESSMENT HAS EXPIRED AT THE TIME IT IS PROPOSED TO BE REOPENED. IN THIS CASE, THE REVENUE PROPOSED TO REOPEN THE ASSESSMENT ON 10.06.2011 BY ISSUING A NO TICE UNDER SECTION 148 OF THE ACT, ON WHICH DATE, THE PERIOD O F LIMITATION WAS ADMITTEDLY EXPIRED. THE APEX COURT FURTHER FOUND T HAT SUB-SECTION (2) OF SECTION 150 INSULATES ALL ASSESSMENTS, WHICH HAVE BECOME FINAL AND MAY HAVE BEEN FOUND LIABLE TO REASSESSMEN TS OR RE- COMPUTATION EITHER ON THE BASIS OF ORDERS IN PROCEE DINGS UNDER THE ACT OR ORDERS OF COURTS PASSED UNDER ANY OTHER LAW. IN FACT, THE APEX COURT HAS OBSERVED AS FOLLOWS:- WE DO NOT FIND THE ABOVE REASONING OF THE HIGH COURT IS SOUND. THE PLAIN LANGUAGE OF SUB-SECTION ( 2) OF SECTION 150 CLEARLY RESTRICTS THE APPLICATION OF SUB- SECTION (1) TO ENABLE THE AUTHORITY TO REOPEN ASSESSMENTS W HICH HAVE NOT ALREADY BECOME FINAL ON THE EXPIRY OF THE PRESCRIBED PERIOD OF LIMITATION UNDER SECTION 149. AS IS SOUGHT TO BE DONE BY THE HIGH COURT, SUB-SECTION (2) OF SECTION 150 CANNOT BE HELD APPLICABLE ONLY TO REASSES SMENTS BASED ON ORDERS IN PROCEEDINGS UNDER THE ACT AND NOT TO ORDERS OF COURT IN PROCEEDINGS UNDER ANY OTHER LAW . SUCH AN INTERPRETATION WOULD MAKE THE WHOLE PROVISION UN DER SECTION 150 DISCRIMINATORY IN ITS APPLICATION TO ASSE SSMENTS SOUGHT TO BE REOPENED ON THE BASIS OF ORDERS UNDER THE INCOME-TAX ACT AND OTHER ASSESSMENTS PROPOSED TO BE REOPENED ON THE BASIS OF ORDERS UNDER ANY OTHER LAW . THE INTERPRETATION, WHICH CREATES SUCH UNJUST AND DISCR IMINATORY SITUATION, HAS TO BE AVOIDED. WE DO NOT FIND THAT S UB-SECTION (2) OF SECTION 150 HAS THAT RESULT. SUB-SECTION (2) INT ENDS TO INSULATE ALL PROCEEDINGS OF ASSESSMENTS, WHICH H AVE ATTAINED FINALITY DUE TO THE THEN EXISTING BAR OF LI MITATION. 12 I.T.A. NO.992/MDS/15 TO ACHIEVE THE DESIRED RESULT IT WAS NOT NECESSARY TO MAKE ANY AMENDMENT IN SUB-SECTION (2) CORRESPONDING TO SU B- SECTION (1), AS IS THE REASONING ADOPTED BY THE HIG H COURT. SUB-SECTION (2) AIMS AT PUTTING AN EMBARGO ON REOPENING ASSESSMENTS, WHICH HAVE ATTAINED FINALITY ON THE EXPIRY OF THE PRESCRIBED PERIOD OF LIMITATION. SUB-S ECTION (2) IN PUTTING SUCH EMBARGO REFERS TO THE WHOLE OF S UB- SECTION (1) MEANING THEREBY TO INSULATE ALL ASSESSM ENTS, WHICH HAVE BECOME FINAL AND MAY HAVE BEEN FOUND LIA BLE TO REASSESSMENTS OR RECOMPUTATION EITHER ON THE BASIS OF ORDERS IN PROCEEDINGS UNDER THE ACT OR ORDERS OF CO URTS PASSED UNDER ANY OTHER LAW. THE HIGH COURT, THEREFO RE, WAS IN ERROR IN NOT READING THE WHOLE OF THE AMENDED SU B- SECTION (1) INTO SUB-SECTION (2) AND COMING TO THE C ONCLUSION THAT THE REASSESSMENT PROPOSED ON THE BASIS OF THE ORDER OF THE COURT IN PROCEEDINGS UNDER THE LAND ACQUISIT ION ACT COULD BE COMMENCED EVEN THOUGH THE ORIGINAL ASSESSM ENTS FOR THE RELEVANT YEARS IN QUESTION HAVE ATTAINED FI NALITY ON THE EXPIRY OF THE PERIOD OF LIMITATION UNDER SECTION 149 OF THE ACT. ON A COMBINED READING OF SUB-SECTION (1) A S AMENDED WITH EFFECT FROM APRIL 1, 1989, AND SUB-SECTIO N (2) OF SECTION 150 AS IT STANDS, IN OUR VIEW, A FAIR AND JUST INTERPRETATION WOULD BE THAT THE AUTHORITY UNDER TH E ACT HAS BEEN EMPOWERED ONLY TO RE-OPEN ASSESSMENTS, WHI CH HAVE NOT ALREADY BEEN CLOSED AND ATTAINED FINALITY DUE TO THE OPERATION OF THE BAR OF LIMITATION UNDER SECTIO N 149. 12. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF KARNATAKA HIGH COURT IN SPENCES HOTEL (P) LTD. (SUP RA). IN THE CASE BEFORE KARNATAKA HIGH COURT, IT FOUND THAT SECTION 150(1) OF THE ACT BEGINS WITH THE WORDS NOTWITHSTANDING ANYTHING CON TAINED IN SECTION 149. THEREFORE, THE NOTICE ISSUED TO THE ASSESSEE, PURSUANT TO THE FINDING OF THE TRIBUNAL WITH REGARD TO ESCAPED INCOME FOR ASSESSMENT, WAS FOUND TO BE VALID. REF ERRING TO SECTION 13 I.T.A. NO.992/MDS/15 150(2) OF THE ACT, THE KARNATAKA HIGH COURT FOUND T HAT PLACING RELIANCE ON SECTION 150(2) WAS MISPLACED. THE KARN ATAKA HIGH COURT HAD NO BENEFIT OF GOING THROUGH THE SUBSEQUEN T JUDGMENT OF APEX COURT IN K.M. SHARMA (SUPRA). IN VIEW OF FIND ING OF THE APEX COURT IN K.M. SHARMA (SUPRA), AS EXTRACTED ABOVE, T HE JUDGMENT OF KARNATAKA HIGH COURT IN SPENCES HOTEL (P) LTD. (SUP RA) MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE. 13. NOW COMING TO THE JUDGMENT OF ANDHRA PRADESH HI GH COURT IN B.A.R. ABDUL RAHMAN SAHEB (SUPRA), THE ASSESSEE BEFORE THE ANDHRA PRADESH HIGH COURT CHALLENGED THE ORDER OF T HE ASSESSING OFFICER BEFORE THE APPELLATE ASSISTANT COMMISSIONER , WHO ALLOWED THE APPEAL HOLDING THAT THE UNEXPLAINED INVESTMENT DURING THE ACCOUNTING YEARS 1956-57 AND 1957-58 SHOULD BE BROU GHT TO TAX IN THE ASSESSMENT YEARS 1957-58 AND 1958-59 AND THE AD DITION MADE IN THE ASSESSMENT YEAR 1959-60 COULD NOT BE SUSTAIN ED. SUBSEQUENT TO THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER, THE INCOME TAX OFFICER ISSUED NOTICE ON 20.03.1969 TO SHOW CAUSE WHY THE ASSESSMENTS FOR ASSESSMENT YEARS 1957-58 AN D 1958-59 SHOULD NOT BE REOPENED AND UNEXPLAINED INVESTMENTS IN THE RESPECTIVE ACCOUNTING YEARS ADDED. THE ASSESSEE CH ALLENGED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE NOTICE ISSUED 14 I.T.A. NO.992/MDS/15 ON 20.03.1969 FOR REOPENING ASSESSMENTS FOR ASSESSM ENT YEARS 1957-58 AND 1958-59 WERE TIME BARRED AND BAD IN LAW . THE ANDHRA PRADESH HIGH COURT FOUND THAT EXPLANATION 2 TO SECT ION 153 OF THE ACT PROVIDES FOR TAKING STEPS UNDER SECTION 147 TO ASSESS THE INCOME OF ANOTHER YEAR WITHOUT ANY LIMITATION PRESC RIBED BY SECTION 149 AS REGARDS THE ISSUE OF NOTICE UNDER SECTION 14 8 OF THE ACT. THE ANDHRA PRADESH HIGH COURT HAD ALSO NO OCCASION TO CONSIDER THE SUBSEQUENT JUDGMENT OF APEX COURT IN K.M. SHARM A (SUPRA). 14. WE HAVE ALSO GONE THROUGH THE JUDGMENT OF ALLAH ABAD HIGH COURT IN ASHWANI DHINGRA V. CCIT (2004) 141 TAXMAN 651. IN THE CASE BEFORE ALLAHABAD HIGH COURT, THE ASSESSEES LA ND WAS ACQUIRED BY THE GOVERNMENT OF PUNJAB ON 20.08.1973 UNDER THE LAND ACQUISITION ACT, 1894. THE COMPENSATION WAS A WARDED ON 12.09.1990 AND 29.05.1993 BY THE ORDERS OF PUNJAB & HARYANA HIGH COURT. INTEREST WAS ALSO PAID ON 21.08.2001 FROM T HE DATE OF TAKING OVER THE POSSESSION OF THE LAND. SUBSEQUENTLY, THE ASSESSEE SHIFTED TO NOIDA IN THE YEAR 1991 AND DOING BUSINES S THERE. AFTER RECEIVING THE INTEREST ON THE COMPENSATION AMOUNT O N 21.08.2001, THE ASSESSEE FILED REVISED RETURN ON 14.01.2001 FOR ASSESSMENT YEARS 1995-96 TO 2001-02. THE ASSESSING OFFICER RE OPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 FOR THE ASSESSMENT 15 I.T.A. NO.992/MDS/15 YEARS 1989-90 TO 1994-95. THE ASSESSEE CHALLENGED THE NOTICE BEFORE THE ALLAHABAD HIGH COURT ON THE GROUND THAT THE ASSESSMENTS CANNOT BE REOPENED. THE ALLAHABAD HIGH COURT, BY PLACING JUDGMENT OF APEX COURT IN K.M. SHARMA (SUPR A), FOUND THAT THE WORDS OR BY A COURT IN ANY PROCEEDING UNDER AN Y OTHER LAW WERE INSERTED BY DIRECT TAX LAWS (AMENDMENT) ACT, 1 987 WITH EFFECT FROM 01.04.1989. THE ALLAHABAD HIGH COURT F OUND THAT THE NOTICE WAS ISSUED AFTER 01.04.1989, I.E. AFTER THE AMENDED ACT CAME INTO EFFECT FROM 01.04.1989 AND ACCORDINGLY, REJECT ED THE CONTENTION OF THE ASSESSEE. 15. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF MADRAS HIGH COURT IN VELLORE ELECTRIC CORPORATION (SUPRA). IN THE CASE BEFORE THE MADRAS HIGH COURT, THE ISSUE AROSE FOR C ONSIDERATION WAS WHETHER THE PERIOD OF LIMITATION PRESCRIBED FOR REOPENING THE ASSESSMENT WAS APPLICABLE EVEN FOR AN ORDER PASSED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 150 OF THE ACT. THE MADRAS HIGH COURT, BY PLACING RELIANCE ON THE JUDGMENT OF THE APEX COURT IN K.M. SHARMA (SUPRA) FOUND THAT TH E PLAIN LANGUAGE OF SUB-SECTION (2) OF SECTION 150 CLEARLY RESTRICTS THE APPLICATION OF SUB-SECTION (1) OF SECTION 150 TO EN ABLE THE AUTHORITIES TO REOPEN THE ASSESSMENTS WHICH HAVE NO T ALREADY 16 I.T.A. NO.992/MDS/15 BECOME FINAL ON THE EXPIRY OF THE PERIOD OF LIMITAT ION PRESCRIBED UNDER SECTION 149(2) OF THE ACT. THE MADRAS HIGH C OURT FURTHER FOUND THAT THE WHOLE SUB-SECTION (1) OF SECTION 150 INSULATES ALL ASSESSMENTS WHICH HAVE BECOME FINAL AND MAY HAVE BE EN FOUND LIABLE FOR REASSESSMENT OR RE-COMPUTATION ON THE BA SIS OF ORDERS OF THE AUTHORITIES UNDER INCOME-TAX ACT OR ORDERS OF H IGH COURT OR UNDER ANY OTHER LAW. THE MADRAS HIGH COURT FURTHER FOUND THAT SECTION 150(1) AS AMENDED WITH EFFECT FROM 01.04.19 89 DID NOT ENABLE THE AUTHORITIES TO REOPEN ASSESSMENTS WHICH HAVE BECOME FINAL DUE TO THE BAR OF LIMITATION PRIOR TO 01.04.1 989 AND THIS POSITION WAS EQUALLY APPLICABLE TO REASSESSMENTS PROPOSED ON THE BASIS OF ORDERS PASSED UNDER THE ACT OR UNDER ANY OTHER LAW. 16. IN VIEW OF THE ABOVE FINDING OF THE MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE JUDG MENT OF ALLAHABAD HIGH COURT IN ASHWANI DHINGRA (SUPRA), THE JUDGMENT OF KARNATAKA HIGH COURT IN SPENCES HOTEL (P) LTD. (SUPRA) AND TH E JUDGMENT OF ANDHRA PRADESH HIGH COURT IN B.A.R. ABDUL RAHMAN SA HEB (SUPRA) WOULD NOT BE APPLICABLE TO THE FACTS OF THE CASE. 17. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF THE APEX COURT IN GREEN WORLD CORPORATION (SUPRA). AFT ER REFERRING TO SECTION 150 OF THE ACT, THE APEX COURT OBSERVED THA T IF NO 17 I.T.A. NO.992/MDS/15 PROCEEDINGS BEFORE THE AUTHORITY OR IF THE ASSESSME NT YEAR IN QUESTION IS NOT A SUBJECT MATTER WHICH WOULD FALL F OR CONSIDERATION, SECTION 150 OF THE ACT WILL HAVE NO APPLICATION. I N FACT, THE APEX COURT HAS OBSERVED AS FOLLOWS AT PARA 60 TO 67 OF I TS JUDGMENT:- 60. THE AFOREMENTIONED PROVISION ALTHOUGH APPEARS TO BE OF A VERY WIDE AMPLITUDE, BUT WOULD NOT MEAN THAT RECO URSE TO REOPENING OF THE PROCEEDINGS IN TERMS OF SECTIONS 1 47 AND 148 OF THE ACT CAN BE INITIATED AT ANY POINT OF TIME WHATSOEVER. SUCH A PROCEEDING CAN BE INITIATED ONLY WITHIN THE PERIOD OF LIMITATION PRESCRIBED THEREFOR AS CON TAINED IN SECTION 149 OF THE ACT. 61. SECTION 150 (1) OF THE ACT IS AN EXCEPTION TO THE AFOREMENTIONED PROVISION. IT BRINGS WITHIN ITS AMBI T ONLY SUCH CASES WHERE REOPENING OF THE PROCEEDINGS MAY B E NECESSARY TO COMPLY WITH AN ORDER OF THE HIGHER AUT HORITY. FOR THE SAID PURPOSE, THE RECORDS OF THE PROCEEDING S MUST BE BEFORE THE APPROPRIATE AUTHORITY. IT MUST EXAMINE THE RECORDS OF THE PROCEEDINGS. IF THERE IS NO PROCEEDI NG BEFORE IT OR IF THE ASSESSMENT YEAR IN QUESTION IS ALSO NOT A MATTER WHICH WOULD FALL FOR CONSIDERATION BEFORE TH E HIGHER AUTHORITY, SECTION 150 OF THE ACT WILL HAVE NO APPLI CATION. 62. IN ITO V. MURLIDHAR BHAGWAN DAS [1964] 52 ITR 335 (SC), IT WAS HELD (PAGE 339) : ' THE PROCEEDINGS WOULD BE IN TIME, IF THE SECOND P ROVISO TO SECTION 34(3) OF THE ACT COULD BE INVOKED. THE QUESTIO N, THEREFORE, IS WHAT IS THE TRUE MEANING OF THE TERMS OF THE SECOND PROVISO TO SECTION 34(3) OF THE ACT. IT READS : ' PROVIDED FURTHER THAT NOTHING IN THIS SECTION LIM ITING THE TIME WITHIN WHICH ANY ACTION MAY BE TAKEN, OR ANY O RDER, ASSESSMENT OR REASSESSMENT MAY BE MADE, SHALL APPLY TO A REASSESSMENT MADE UNDER SECTION 27 OR TO AN ASSESSMEN T OR REASSESSMENT MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FIND ING OR DIRECTION 18 I.T.A. NO.992/MDS/15 CONTAINED IN AN ORDER UNDER SECTION 31, SECTION 33, SE CTION 33A, SECTION 33B, SECTION 66 OR SECTION 66A.' PRIMA FACIE THIS PROVISO LIFTS THE BAN OF LIMITATIO N IMPOSED BY THE OTHER PROVISIONS OF THE SECTION IN THE MATTE R OF TAKING AN ACTION IN RESPECT OF OR MAKING AN ORDER O F ASSESSMENT OR REASSESSMENT FALLING WITHIN THE SCOPE OF THE SAID PROVISO. THE SCOPE OF THE PROVISO IS CON FINED TO AN ASSESSMENT OR REASSESSMENT MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF AN ORDER TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN ANY ORDER MADE UN DER SECTION 31, I.E., IN AN APPEAL BEFORE THE ASSISTANT APPELLATE COMMISSIONER, UNDER SECTION 33, I.E., IN AN APPEAL BE FORE THE TRIBUNAL, UNDER SECTION 33A, I.E., IN A REVISION BEFO RE THE COMMISSIONER, UNDER SECTION 33B, I.E., IN A REVI SION BEFORE THE COMMISSIONER AGAINST AN ORDER OF THE INCOME-TAX OFFICER, AND UNDER SECTIONS 66 AND 66A, I.E., IN A REFE RENCE TO THE HIGH COURT AND APPEAL AGAINST THE HIGH COURT ' S ORDER TO THE SUPREME COURT. LEARNED COUNSEL FOR THE APPEL LANT CONTENDS THAT THE SCOPE OF THE PROVISO IS ONLY CONF INED TO THE ASSESSMENT OF THE YEAR THAT IS THE SUBJECT-MATT ER OF THE APPEAL OR THE REVISION, AS THE CASE MAY BE. LEA RNED COUNSEL FOR THE DEPARTMENT ARGUES THAT THE COMPREHE NSIVE PHRASEOLOGY USED IN THE PROVISO TAKES IN ITS BROAD SWEEP ANY FINDING GIVEN BY THE APPROPRIATE AUTHORITY NECESSAR Y FOR THE DISPOSAL OF THE APPEAL OR THE REVISION, AS THE CASE MAY BE, AND TO ANY DIRECTION GIVEN BY THE SAID AUTHORITY TO EFFECTUATE ITS FINDING AND THAT THE SAID FINDING OR DIRECTION MAY BE IN RESPECT OF ANY YEAR OR ANY PERSON. AS THE PHRA SEOLOGY USED IN THE PROVISO IS NOT CLEAR OR UNAMBIG UOUS, THE QUESTION RAISED CANNOT BE SATISFACTORILY RESOLVED W ITHOUT HAVING A PRECISE APPRECIATION OF A BRIEF HISTORY OF SECTION 34 OF THE ACT CULMINATING IN THE ENACTMENT OF THE PRO VISO IN THE PRESENT FORM.' 63. THIS COURT NOTICED THE DEVELOPMENT OF LAW AS ALSO THE FACT THAT THE DECISION OF THE INCOME-TAX OFFICER GIV EN IN A PARTICULAR YEAR DOES NOT OPERATE AS RES JUDICATA TO OPINE (PAGE 343) : ' THE LIFTING OF THE BAN WAS ONLY TO GIVE EFFECT TO THE ORDERS THAT MAY BE MADE BY THE APPELLATE, REVISIONA L OR REVIEWING TRIBUNAL WITHIN THE SCOPE OF ITS JURISDIC TION. IF THE 19 I.T.A. NO.992/MDS/15 INTENTION WAS TO REMOVE THE PERIOD OF LIMITATION IN RESPECT OF ANY ASSESSMENT AGAINST ANY PERSON, THE PROVISO W OULD NOT HAVE BEEN ADDED AS A PROVISO TO SUB-SECTION (3) OF S ECTION 34, WHICH DEALS WITH COMPLETION OF AN ASSESSMENT, BUT WOULD HAVE BEEN ADDED TO SUB-SECTION (1) THEREOF.' 64. IN REGARD TO THE QUESTION THAT WHAT WOULD BE THE MEANING OF THE TERM ' FINDING' OR ' DIRECTION', IT WAS HELD (PAGE 345) : ' A ' FINDING', THEREFORE, CAN BE ONLY THAT WHICH I S NECESSARY FOR THE DISPOSAL OF AN APPEAL IN RESPECT OF AN ASSE SSMENT OF A PARTICULAR YEAR. THE APPELLATE ASSISTANT COMMISSI ONER MAY HOLD, ON THE EVIDENCE, THAT THE INCOME SHOWN BY THE ASSESSEE IS NOT THE INCOME FOR THE RELEVANT YEAR AN D THEREBY EXCLUDE THAT INCOME FROM THE ASSESSMENT OF T HE YEAR UNDER APPEAL. THE FINDING IN THAT CONTEXT IS TH AT THAT INCOME DOES NOT BELONG TO THE RELEVANT YEAR. HE MAY INCIDENTALLY FIND THAT THE INCOME BELONGS TO ANOTHE R YEAR, BUT THAT IS NOT A FINDING NECESSARY FOR THE DISPOSA L OF AN APPEAL IN RESPECT OF THE YEAR OF ASSESSMENT IN QUES TION. THE EXPRESSION ' DIRECTION' CANNOT BE CON STRUED IN VACU UM, BUT MUST BE COLLATED TO THE DIRECTIONS WHICH THE APPELL ATE ASSISTANT COMMISSIONER CAN GIVE UNDER SECTION 31. UN DER THAT SECTION HE CAN GIVE DIRECTIONS, INTER ALIA, UN DER SECTION 31(3)(B), (C) OR (E) OR SECTION 31(4). THE EXPRESSION ' DIRECTIONS' IN THE PROVISO COULD ONLY REFER TO THE DIRECTIONS WHICH THE APPELLATE ASSISTANT COMMISSIONER OR OTHER TRIBUNALS CAN ISSUE UNDER THE POWERS CON FERRED ON HIM OR THEM UNDER THE RESPECTIVE SECTIONS. THEREFORE, THE EXPRESSION ' FINDING' AS WELL AS THE EXPRESSION ' DIR ECTION' CAN BE GIVEN FULL MEANING, NAMELY, THAT THE FINDING IS A FINDING NECESSARY FOR GIVING RELIEF IN RESPECT OF T HE ASSESSMENT OF THE YEAR IN QUESTION AND THE DIRECTIO N IS A DIRECTION WHICH THE APPELLATE OR REVISIONAL AUTHO R ITY, AS THE CASE MAY BE, IS EMPOWERED TO GIVE UNDER THE SECTION S MENTIONED THEREIN.' 65. IT WAS CLARIFIED THAT THE WORDS ' ANY PERSON' WOU LD REFER TO THOSE WHO WERE NOT EO NOMINE PARTIES TO TH E APPEAL ALTHOUGH THE ASSESSMENT OF THEIR INCOME WOULD DEPEN D UPON THE ASSESSMENTS OF THE ASSESSEE. 20 I.T.A. NO.992/MDS/15 66. MUDHOLKAR J., SPEAKING FOR THE MINORITY, REFERRE D TO THIS COURT' S DECISION IN S. C. PRASHAR V. VASANTSE N DWARKADAS [1963] 49 ITR 1 WHEREIN THE VALIDITY OF THE AFOREMENTIONED PROVISIONS WAS QUESTIONED ; READ DOW N THE PROVISO APPENDED TO SECTION 34(1) STATING (PAGE 349 OF 52 ITR) : ' NO DOUBT, THIS COURT HAS RECENTLY HELD IN S. C. P RASHAR V. VASANT SEN DWARKADAS [1963] 49 ITR 1 THAT THE PROVISO IN SO FAR AS IT REMOVES THE BAR OF LIMITATION WITH RES PECT TO PERSONS OTHER THAN THE ASSESSEE, IS INVALID AS IT I NFRINGES THE PROVISIONS OF ARTICLE 14 OF THE CONSTITUTION. TH AT, HOWEVER, IS A QUESTION APART. WHAT WE HAVE TO CONSI DER IS THE LEGISLATIVE INTENT, AND FOR ASCERTAINING IT, IT IS LEGITIMATE TO LOOK ALSO AT THAT PART OF THE ENACTMENT WHICH HA S BEEN HELD TO BE INVALID.' 67. TO THE SIMILAR EFFECT ARE THE DECISIONS OF THIS C OURT IN N. KT. SIVALINGAM CHETTIAR V. CIT [1967] 66 ITR 586 AND RAJINDER NATH V. CIT [1979] 120 ITR 14 (SC). IN THE CASE BEFORE US, THE TRIBUNAL HAS NOT EXAMINE D THE RECORDS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. MOREOVER, NO PROCEEDING WAS BEFORE THE TRIBUNAL FOR THE YEAR UND ER CONSIDERATION. THEREFORE, AS HELD BY THE APEX COUR T, SECTION 150 OF THE ACT IS NOT APPLICABLE FOR THE YEAR UNDER CONSID ERATION. IN OTHER WORDS, THE OBSERVATION MADE BY THE TRIBUNAL IN THE ORDER DATED 31.05.2010 CANNOT BE CONSIDERED EITHER AS FINDING OR DIRECTION. 18. WE FIND THAT THE ANDHRA PRADESH HIGH COURT IN I N CIT V. G. VISWANATHAM (1988) 172 ITR 401 CONSIDERED AN IDENTI CAL ISSUE AND OBSERVED AS FOLLOWS AT PAGES 408 & 409 OF ITR:- 21 I.T.A. NO.992/MDS/15 A READING OF THESE EXPLANATIONS CLEARLY SHOWS THAT THEY MERELY ILLUSTRATE AND CLARIFY THE MEANING OF THE WO RDS ' IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION ' CONTAINED IN AN APPELLATE, REVISIONAL OR ANY OTHE R ORDER. EXPLANATION 2 SAYS THAT WHERE AN APPELLATE, REVISIONA L OR OTHER ORDER EXCLUDES ANY INCOME FROM THE TOTAL INCOM E OF THE ASSESSEE FOR AN ASSESSMENT YEAR, THE ASSESSMENT OF SUCH INCOME FOR ANOTHER ASSESSMENT YEAR SHALL, FOR THE PURPOSES OF BOTH SECTION 150 AND SECTION 153, BE DEEMED TO BE ONE MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN THE ORDER. SIMILA RLY, EXPLANATION 3 SAYS THAT WHERE BY AN APPELLATE, REVISI ONAL OR OTHER ORDER ANY INCOME IS EXCLUDED FROM THE TOTAL IN COME OF ONE PERSON AND HELD TO BE THE INCOME OF ANOTHER PER SON, THE ASSESSMENT OF INCOME OF SUCH OTHER PERSON SHALL, BO TH FOR THE PURPOSES OF SECTION 150 AND SECTION 153, BE DEEMED TO BE ONE MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN THE ORDER, PROVID ED, OF COURSE, SUCH OTHER PERSON WAS GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE THE SAID ORDER WAS MADE. WHAT IS, HOWE VER, CLEAR IS THAT EXPLANATIONS 2 AND 3 DO NOT PURPORT TO OBLITERATE OR REMOVE THE RESTRICTION CONTAINED IN S UB- SECTION (2) OF SECTION 150. THEY, NO DOUBT, REFER TO S ECTION 150, BUT FOR A LIMITED PURPOSE, MENTIONED ABOVE. A REVIEW OF THE ABOVE PROVISIONS MAKES IT CLEAR THA T THE ACT PROVIDES CERTAIN TIME LIMITS BOTH FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 AS WELL AS FOR COMPLETI ON OF SUCH PROCEEDINGS. THE TIME LIMITS FOR INITIATION OF SUCH PROCEEDINGS ARE CONTAINED IN SECTIONS 149 AND 150, WHIL E THE TIME LIMITS FOR COMPLETION OF SUCH PROCEEDINGS ARE MENTIONED IN SUB-SECTIONS (2) AND (3) OF SECTION 153 JU ST AS SECTION 150 IS A PROVISO TO SECTION 149, SUB-SECTION (3) OF SECTION 153 IS A PROVISO TO SUB-SECTION (2) THEREOF. EXPLANATIONS 2 AND 3, NO DOUBT, ARE RELEVANT BOTH FOR SECTION 150 AND SECTION 153(3), BUT THEIR PURPOSE IS MER ELY TO ILLUSTRATE CERTAIN WORDS OCCURRING THEREIN, AND NOT TO REMOVE OR OBLITERATE THE TIME LIMITS PRESCRIBED IN THE SEVERAL PROVISIONS REFERRED TO ABOVE. 22 I.T.A. NO.992/MDS/15 LEARNED STANDING COUNSEL FOR THE REVENUE BROUGHT TO OUR NOTICE CERTAIN DECISIONS, ALL OF WHICH APPEAR TO HA VE BEEN RENDERED WITH REFERENCE TO EXPLANATION 2 IN SECTION 1 53. IN B. A. R. ABDUL RAHMAN SAHEB V. ITO [1975] 100 ITR 541 , A BENCH OF THIS COURT HELD THAT THE EFFECT OF SECTION 150 AND SUB-SECTION (3) OF SECTION 153 READ WITH EXPLANATION 2 IS THAT, IF ANY INCOME IS DELETED FROM ASSESSMENT BY T HE ORDER OF A HIGHER AUTHORITY, ON THE GROUND THAT IT IS NOT THE INCOME OF THAT YEAR, STEPS MAY BE TAKEN UNDER SECTI ON 147 TO ASSESS IT AS THE INCOME OF ANOTHER YEAR, WITHOUT ANY LIMITATION PRESCRIBED UNDER SECTION 149 AS REGARDS TH E ISSUE OF NOTICE UNDER SECTION 148 OR AS TO THE COMPLETION O F THE ASSESSMENT OR REASSESSMENT PRESCRIBED BY SECTION 153. THE BENCH READ SUB- SECTION (2) OF SECTION 150 AS PROVIDING THAT THE PROVISIONS OF SUB-SECTION (1) THEREOF WILL NOT APPLY TO A CASE OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION O F INCOME, IF IT RELATED TO AN ASSESSMENT YEAR IN RESP ECT OF WHICH ASSESSMENT, REASSESSMENT, ETC., COULD NOT HAV E BEEN MADE AT THE TIME WHEN THE ORDER, WHICH WAS THE SUBJ ECT- MATTER OF APPEAL, REFERENCE OR REVISION, WAS MADE, BY REASON OF THE TIME LIMITS FIXED UNDER SECTION 153 FOR MAKING THE ASSESSMENT, REASSESSMENT, ETC. (VIDE PARAGRAPH 2 AT PAGE 545). IT WOULD IMMEDIATELY BE SEEN THAT SUB-SECTION (2) OF SECTION 150 DOES NOT REFER TO SECTION 153. IT ONLY REFE RS TO 'ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATION MAY B E TAKEN '. THE WORD ' TAKEN ' REFERS ONLY TO INITIATI ON OF PROCEEDINGS AND NOT TO COMPLETION. SIMILARLY, AT PA GE 547, THE BENCH OBSERVED: ' THE EFFECT OF SECTION 150 AND TH IS SUB-SECTION (SECTION 153(3)) READ WITH EXPLANATION 2 IS THAT IF ANY INCOME IS DELETED FROM ASSESSMENT IN A HIGHE R PROCEEDING ON THE GROUND THAT IT IS NOT THE INCOME OF THAT YEAR, STEPS MAY BE TAKEN UNDER SECTION 147 TO ASSESS IT AS THE INCOME OF ANOTHER YEAR, WITHOUT ANY LIMITATION APPLYING TO THE ISSUE OF NOTICE UNDER SECTION 148 OR TO THE COMPLETION OF THE ASSESSMENT OR REASSESSMENT...' WI TH GREAT RESPECT, WE THINK THAT THIS OBSERVATION OVERL OOKS THE PROVISIONS CONTAINED IN SUB-SECTION (2) OF SECTION 150. HOWEVER, INASMUCH AS THE CASE BEFORE US IS NOT ONE FALLING UNDER EXPLANATION 2 TO SECTION 153, WE DO NOT THINK IT NECESSARY TO REFER THE MATTER TO A LARGER BENCH. 23 I.T.A. NO.992/MDS/15 19. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE A PEX COURT IN K.M. SHARMA (SUPRA) AND THE JUDGMENT OF MADRAS HIGH COURT IN VELLORE ELECTRIC CORPORATION (SUPRA), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ORDER OF THE ASSESSING OFFICER IS BARRED BY LIMITATION, THEREFORE, THE SAME CANNOT STAND IN THE EYES OF LAW. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 2015 AT CHEN NAI. UNDER SEPARATE ORDER SD/- ( ! ' ) ( ... ) (CHANDRA POOJARI) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 15 TH SEPTEMBER, 2015. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 3. 1 :2 () /CIT(A)-16, CHENNAI-34 2. -.+, /RESPONDENT 4. 1 :2 /CIT-10, CHENNAI 5. 8; -2 /DR 6. <( = /GF. 24 I.T.A. NO.992/MDS/15 PER CHANDRA POOJARI: ACCOUNTANT MEMBER I HAVE GONE THROUGH THE DRAFT ORDER PROPOSED BY T HE LEARNED JUDICIAL MEMBER. I AM NOT ABLE TO PERSUADE MYSELF TO AGREE WITH THE FINDINGS THEREIN. THEREFORE, I AM CONSTRAINED TO PASS A SEPARATE ORDER AS HERE UNDER: 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-14 (CIT(A)-14) IN UPHOLDING THE RE-OPENIN G OF ASSESSMENT IS WRONG, ILLEGAL AND OPPOSED TO FACTS O F THE CASE. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT RE-OPENI NG OF THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02 ON THE B ASIS OF NOTICE UNDER SECTION 148 DATED 10.06.2011 IS HOPELE SSLY BARRED BY LIMITATION. 2. THE LEARNED COMMISSIONER OUGHT TO HAVE SEEN THAT THERE IS NO FINDING OR DIRECTION GIVEN BY THE HON'BLE INCOME TAX APPELLATE TRIBUNAL I N APPELLANTS OWN CASE FOR THE A.Y.2003 - 04 & 2004-05 IN ITA NO . 327 & 328 OF 2010 TO INVOKE JURISDICTION UNDER SECTION 150(1) OF THE INCOME TAX ACT . THE LEARNED COMMISSIONER OUGHT TO HAVE SEEN THAT THE HON'BLE IT AT WHILE PASSING THE AFORESAID ORDERS HAS ONLY GIVEN FINDING TO THE EFFECT THAT THE CAPITAL GAINS WILL NOT ARISE DURING THE A. Y.2003-04 & 2004-05 BUT HOWEVER THERE IS NO SPEC I FIC FINDING OR DIRECTION TO THE EFFECT THAT CAPITAL GAINS WILL HAVE TO BE ASSES SED IN THE A. Y.2001-02. 3. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THAT THE FINDING OF THE HON'BLE TRIBUNAL THAT INCOME DOES NOT BELONG TO THE RELEVANT YEAR MAY INCIDENTALLY FI ND THAT THE INCOME BELONGS TO ANOTHER YEAR, BUT THAT IS NOT A F INDING AS ENVISAGED SECTION 150(1) OF THE INCOME TAX ACT. 4. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THAT THE ORDER OF THE HON'BLE ITAT IS CONSPICU OUS WITH ABSENCE OF ANY OBSERVATION RELEVANT TO THE A. Y.200 1 - 02 AND THEREFORE SECTION 150(1) CANNOT BE INVOKED BY THE ASSESSING OFFICER FOR THE PURPOSE OF RE-OPENING T HE ASSESSMENT. 25 I.T.A. NO.992/MDS/15 5. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER DOES NOT GET UNBRID LED POWER UNDER SECTION 150(1) OF THE INCOME TAX ACT TO OPEN ANY ASSESSMENT ORDER. THE RESTR I CTIVE COVENANT FOR APPLICATION OF SECTION 150(1) IS CLEARLY DEALT WITH IN SECTION 150 ( 2) OF THE INCOME TAX ACT AND THAT SECTION 150(2) DEALS WITH CIRCUMSTANCES IN WHICH SECTION 150(1) IS NOT APPLI CABLE . 6. THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAV E SEEN THAT THE CASE OF THE APPELLANT IS SQUARELY COV ERED BY THE DECISION OF THE APEX COURT IN CIT VS GREEN WORLD CO RPORATION IN WHICH THE HIS LORDSHIPS HAVE OBSERVED THAT SEC . 150(1) BRINGS WITHIN ITS AMBIT ONLY SUCH CASES WHERE REOPE NING OF THE PROCEEDINGS MAY BE NECESSARY TO COMPLY WITH AN ORDE R OF THE HIGHE R AUTHORITY AND FOR THE SAID PURPOSE , THE RECORDS OF THE PROCEEDINGS MUST BE BEFORE THE APPROPRIATE AUTHORIT Y AND THAT IT MUST EXAMINE THE RECORDS OF THE PROCEEDINGS. IF THERE IS NO PROCEEDING BEFORE IT OR IF THE ASSESSMENT YEAR IN Q UESTION IS ALSO NOT A MATTER WHICH WOULD FALL FOR CONSIDERATIO N BEFORE THE HIGHER AUTHORITY, S. 150 OF THE ACT WILL HAVE NO AP PLICATION. 7. THE LEARNED CIT(A) ERRED IN RELYING ON THE DECISION OF B . A.R.ABDUL RAHMAN SAHIB VS ITO (100 ITR 541) , AMBAJI TRADERS VS ITO (105 ITR 273) & T DCIT VS SPENCERS HOTEL (208 CTR 224) TO AFFIRM THE ORDER OF RE-ASSESSMENT. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE FACT OF THE AFOR ESAID CASE IS DISTINGUISHABLE IN SO FAR AS THE TRIBUNAL HAS GIVEN A SPECIFIC FINDING THAT THE INCOME WILL HAVE TO BE ASSESSED FO R A PARTICULAR ASSESSMENT YEA R HOWEVER IN THE INSTANCE CASE THERE IS NO SUCH FINDING OR DIRECTION. 8. ASSUMING WITHOUT CONCEDING THAT THE ORDER OF THE HO N'BLE TRIBUNAL CONTAINS A FINDING /DIRECTION TO ASSESS TH E INCOME FOR THE A.Y.2001 - 02 THE LEARNED COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THAT T H E SAID ORDER OF THE TRIBUNAL IS PASSED AFTER THE TIME LIMIT AVAILABLE FOR RE- OPENING THE ASSESSMENT FOR THE A. Y. 2001-02 HAS EXPIRED . HENCE BY OPERATION OF SECTION 150(2) OF THE INCOME TAX ACT THE PROVISION OF SECTI ON 150(1) CANNOT EXTEND THE PERIOD OF LIMITATION. 26 I.T.A. NO.992/MDS/15 9. T HE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT EVEN THE COMPUTATION OF CAPITAL GAINS BY THE ASSESSING OFFIC ER IS ERRONEOUS. 10. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO SE E THAT IN COMPUTING THE CAPITAL GAINS FOR THE A. Y.2001-02 THE ASSESSING OFFICER ERRED IN APPLYING SECTION 50C OF THE INCOME TAX ACT . THE LEARNED COMMISSIONER OUGHT TO HAVE SEEN THAT SECTION 50C IS APPLICABLE ONLY W . E.F A.Y.2003-04 AND NOT FOR EARLIER YEARS. 3. THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A LIMITED COMPANY AND WAS ENGAGED IN THE BUSINESS OF FILM PRODUCTION AND LEASING FILM RIGHTS. SINCE 1994 THER E WERE NO BUSINESS ACTIVITIES, THE ASSESSEE WAS DERIVING R ENTAL INCOME FROM RESIDENTIAL FLAT LOCATED AT OLD DOOR NO .9 (NEW NO. 17), DHANDAPANI STREET, T.NAGAR, CHENNAI-600017 . 3.1 THE COMPANY WAS THE OWNER OF 7 GROUNDS (APPROX. 18000 SQ. FEET) OF LAND AT DANDAPANI STREET, T. NAG AR, CHENNAI-600017. THIS PROPERTY WAS UNDER A DEED OF S ALE DATED 3.2.1970 REGISTERED AS DOCUMENT NO.159 OF 197 0 IN THE OFFICE OF THE SUB-REGISTRAR, THEYAGARAYANAGAR F ROM EXECUTOR OF THE ESTATE OF LATE PASUPULETI KANNAMBAL . 3.2 IN THE ASSESSMENT YEAR 2001-02 , THE ASSESSEE COMPANY ENTERED INTO A DEVELOPMENT AGREEMENT ON 25 TH DECEMBER 2000 WITH A BUILDER, NAMELY M/ S DOSHI HOUSING LIMITED, CHENNAI. UNDER THE SAID DEVELOPMENT AGREEM ENT, 27 I.T.A. NO.992/MDS/15 THE ASSESSEE AGREED TO TRANSFER 40% UNDIVIDED SHARE OF LAND IN THE ABOVE PROPERTY TO THE BUILDER OR HIS NOMINEE S IN CONSIDERATION OF THE BUILDER PROVIDING 60% OF THE B UILDING TO BE PUT UP THE SAID PROPERTY AND, A FURTHER SUM OF ` 10,00,000/-. 3.3 FOR ASSESSMENT YEAR 2001-02, THE ASSESSEE COMPANY DID NOT FILE RETURN OF INCOME U/S 139(1). CONSEQUENT TO A SEARCH CONDUCTED IN THE PREMISES OF DR. RAJADURAI, WHO HAPPENED TO BE THE TENANT OF THE ASS ESSEE, IT CAME TO THE NOTICE OF THE DEPARTMENT THAT ASSESS EE HAS NOT FILED ITS RETURN OF INCOME FOR THE ASSESSMENT Y EAR 2001- 2002 ALTHOUGH IT HAD RENTAL INCOME ON LEASE OF FLAT NO.3A, DOSHI APARTMENTS, OLD DOOR NO.9(NEW NO.17), DHANDAP ANI STREET, T.NAGAR, CHENNAI-600017. SINCE THERE WAS ESCAPEMENT OF INCOME NOTICE UNDER SECTION 148 OF TH E INCOME TAX ACT WAS SERVED ON THE ASSESSEE CALLING U PON THE ASSESSEE TO FILE ITS RETURN OF INCOME FOR THE A.Y.2001- 02. IN RESPONSE TO THE AFORESAID NOTICE THE ASSESSE E FILED ITS RETURN OF INCOME ON 25.04.2005 ADMITTING TOTAL LOSS OF ` 2,442/- WHICH INCLUDED BUSINESS LOSS OF ` 56,758/-, LEASE RENTALS OF ` 31,500/ AND CLAIMED EXPENSES AMOUNTING TO ` 54,316/-. THE ASSESSING OFFICER VIDE HIS ORDERS DAT ED 28 I.T.A. NO.992/MDS/15 30.03.2006 COMPLETED THE ASSESSEES ASSESSMENT UNDE R SECTION 143(3) R.W.S 147 DISALLOWING THE EXPENSE OF ` 54,316/ - CLAIMED BY THE ASSESSEE AND DETERMINED TH E TOTAL INCOME OF THE ASSESSEE AT ` 2442/-. 3.4 AN ENQUIRY WAS CONDUCTED WITH MRS. NIRMALA RAVINDRAN, ONE OF THE DIRECTORS OF THE ASSESSEE CO MPANY BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTM ENT. A STATEMENT U/S. 131 WAS RECORDED FROM HER ON 03.02.2 005. THE ISSUE OF CAPITAL GAINS TAX LIABILITY AROSE REGA RDING SALE OF COMPANY'S PROPERTY AT NO.9, DHANDAPANI STREET, T . NAGAR, CHENNAI FOR JOINT DEVELOPMENT OF THE SAID PR OPERTY WITH M/S. DOSHI HOUSING LTD. 3.5 NO INCOME RELATED TO THE CAPITAL GAINS WAS OFFE RED FOR THIS YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS FOR THE ASSESSMENT YEAR 2001-02 U/S. 143(3) R.W.S. 147, THE ASSESSEE VIDE LETTER OF ITS AUTHORIZED REPRESENTATI VE SHRI C.G.RAMESHBABU, CA, M/S K.SRIRAMAN & CO, HAD SUBMITTED IN REGARD TO THE RECEIPT OF ` 10 LAKHS WHICH IS ACCOUNTED IN ITS BOOKS AS BUILDING ADVANCE BUT NOT OFFERED FOR TAXATION THAT- 'THE COMPANY OWNED ABOUT 7.5 GROUNDS IN T.NAGAR. THE COMPANY WAS MANAGED BY ONE MR.K.RAVINDRAN [LATE] TILL HIS SUDDEN DEMISE DURING 1991. THEREAFT ER HIS 29 I.T.A. NO.992/MDS/15 WIFE MRS. NIRMALA RAVINDRAN AND HER FATHER MR. K. P . MADHAVAN, WHO IS ABOUT 80 YEARS OLD, HAVE BEEN MANAGING THE SHOW. BUT THEY BOTH COULD NOT DEVELOP THE BUSINESS AND HENCE RESORTED TO THE JOINT PROMOT ION OF THE SAID PROPERTY WITH THE BUILDER, MLS DOSHI HOUSING LTD. THE ARRANGEMENT WITH THE BUILDER WAS TO GET ` 10.00 LAKHS AS CASH COMPENSATION AND 60% OF THE CONSTRUCTED AREA OF RESIDENTIAL APARTMENTS WITH PROPORTIONATE SHARE OF UNDIVIDED LAND AREA. WE REFER CLAUSE 29 OF THE JOINT DEVELOPMENT AGREEME NT DATED 25 TH DECEMBER 2000 WHEREIN IT WAS CLEARLY STATED THAT THE OWNER SHALL REMAIN IN CONSTRUCTIVE POSSESSION OF THE SAID PROPERTY FOR CARRYING OUT THE PROJECT CONTEMPLATED UNDER THE AGREEMENT. ALSO THE CONSIDERATION FOR SELLING 40% OF UNDI VIDED SHARE IN THE PROPERTY IS THE COST OF 60% OF BUILDIN G AREA TO BE CONSTRUCTED AND ALLOTTED TO THE COMPANY HENCE IT WAS APPROPRIATE TO RETURN THE CAPITAL GAINS INCOME FOR THE TRANSFER OF LAND UNDER THE JV PROJECT ONLY AT T HE TIME OF HANDLING OVER OF THE 60% OF THE CONSTRUCTION IN THE BUILDING AND PRECISELY THAT WAS HAPPENED ONLY DURIN G THE FY 2003-2004 AND HENCE THE COMPANY HAS RETURNED THE CAPITAL GAINS ON THE TRANSFER OF LAND IN THE AY 2004-05 AND PAID TAXES ON THE TAXABLE INCOME. WE REFER CLAUSE 10 OF JV AGREEMENT DATED 25 TH DECEMBER 2000 WHEREIN THE CONSIDERATION FOR THE TRANSFER OF 40% OF UNDIVIDED SHARE OF THE LAND SHAL L BE IN FULL SETTLEMENT OF THE COST OF 60% AREA CONSTRUC TED AND ALLOTTED TO THE OWNER BY THE DEVELOPER & PART CONSIDERATION OF ` 10.00 LAKHS PAID BY THE DEVELOPER TO THE OWNER'. THE AO A CCEPTED THE SUBMISSIONS OF THE ASSESSEE AND THE 30 I.T.A. NO.992/MDS/15 ASSESSMENT WAS COMPLETED FOR AY 2001-02 ON 30.03.20 06. 3.6 A.YS. 2003-04 AND 2004-05: UPON COMPLETION OF PROPERTY AND AS PER THE JOINT DEVELOPMENT AGREEMENT THE PROPERTY WAS HANDED OVER TO THE ASSESSEE DURING THE LAST QUARTER OF 2003. ASSESSEE RECEIVED 9 FLATS (17442 S QFT). TWO FLATS WERE USED AS RESIDENCE BY MRS. NIRMALA RAVINDRAN, ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY, ONE F LAT WAS SOLD IN MARCH 2003 AND REMAINING FLATS WERE SOLD DU RING THE FINANCIAL YEAR 2003-04. 3.7 SUBSEQUENTLY, ASSESSEE HAD FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 2001-02, 2003-04 & 2004-05 IN RESPONSE TO THE NOTICES U/S 148 AND 142(1) ON 25.04.2005 RESPECTIVELY. IN THE RETURNS FILED, THE ASSESSEE ADMITTED LTCG OF ` 13,70,752/- AND ` 60,79,708/ - FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY A ND PAID THE TAX ON THE CAPITAL GAINS AS PER RETURN OF INCOME. THE LONG TERM CAPITAL GAINS WERE RELATED TO THE SAL E OF LAND IN A JOINT VENTURE. 3.8 THE ASSESSEE HAD COMPUTED THE CAPITAL GAINS AN D PAID TAXES AS UNDER: 31 I.T.A. NO.992/MDS/15 S.NO. AY COMPUTATION OF CAPITAL GAINS AS PER ASSESSEES WORKING DATE OF PAYMENT AMOUNT REMARKS 1. 2003-04 13,66,883 22.11.2004 4,00,000 FOR SALE OF FLAT 2. 2004-05 53,19,925 22.11.2004 17,00,000 FOR SALE OF FLAT 3- 2004-05 60,158 FOR SALE OF 40% OF UNDIVIDED SHARE IN LAND 3.9 IN THE ASSESSMENT YEAR 2003-04, THE ASSESSEE COMPANY HAD COMPUTED THE LONG TERM CAPITAL GAINS AS UNDER:- TOTAL CONSIDERATION ON THE SALE OF ONE APARTMENT APARTMENT OWNED BY THE COMPANY SOLD TO 40,79,675 VIJAYAVALLI DURING THE YEAR LESS: COST OF CONSTRUCTION OF THE ABOVE SALE 15,77,225 2010 SQ.FT. LESS: I NDEXED VALUE OF LAND SOLD(NOTE BELOW) 11,31,698 27,08,923 CAPITAL GAINS ON THE SALE OF OWNED CONSTRUCTION 13,70,752 IN THE ASSESSMENT ORDER MADE U/S 143(3) R.W.S. 147 ON 30.03.2006, THE AO APPLIED THE GUIDELINE VALUE FURN ISHED BY THE SUB-REGISTRAR AS THE FAIR MARKET VALUE AS ON 1. 4.1981 AT ` 25/- PER SQ.FT U/S 2(22B) OF THE INCOME-TAX ACT, 1961 AND RECOMPUTED THE CAPITAL GAINS AS UNDER:- TOTAL CONSIDERATION ON THE SALE OF ONE APARTMENT 40,79,675 APARTMENT OWNED BY THE COMPANY SOLD TO 32 I.T.A. NO.992/MDS/15 VIJAYAVALLI DURING THE YEAR LESS: COST OF CONSTRUCTION OF THE ABOVE 15,77,225 SALE 2010 SQ.FT LESS: INDEXED VALUE OF LAND SOLD (NOTE 1 1,30,345 17,07,570 BELOW)1166.4FX ` .25X447/100 CAPITAL GAINS ON THE SALE OF OWNED CONSTRUCTION 23,72,105 3.10 IN THE ASSESSMENT YEAR 2004-05, THE ASSES SEE COMPANY HAD STATED THAT THE FOLLOWING PORTION OF LA ND WERE SOLD IN THE RELEVANT PREVIOUS YEAR AND COMPUTED THE LONG TERM CAPITAL GAINS AT ` 60,79,708:- CONSTRUCTION COST OF THE BUILDING(NOTE 1 BELOW) 1,18,64,975 INITIAL CASH COMPONENT, NON-REFUNDABLE 10,00,000 MONTHLY RENTALS GIVEN 7500X41 MONTHS 3,07,500 TOTAL CONSIDERATION RECEIVED 1,31,72,475 LESS: INDEXED VALUE OF 40% OF COST OF LAND EXCHANGED(NOTE 1) 68,07,395 LESS: COST OF CONSTRUCTION OF THE AREA COMPENSATED TO THE LESSEE MRS. NIRMALA SFT4010 LESS: IMPROVEMENT COST TO BUILDING, THAT STANDS 4,50,000 (1,24,11,974) STANDS DEMOLISHED CAPITAL GAINS ON THE SALE OF 40% OF THE LAND TO A 7,60,501 THE DEVELOPER TOTAL CONSTRUCTION ON THE SALE OF 5 1,66,15,100 APARTMENTS OWNED BY THE COMPANY SOLD DURING THE RELEVANT PREVIOUS YEAR LESS: COST OF CONSTRUCTION OF THE ABOVE SALE 9,188 SQ.FT 59,16,950 33 I.T.A. NO.992/MDS/15 LESS: INDEXED VALUE OF LAND SOLD (NOTE 1 53,78,943 1,12,95,893 1 BELOW)1166.4SFX ` 25X447 CAPITAL GAINS ON THE SALE OF OWNED CONSTRUCTIONS B 53,19,207 TOTAL CAPITAL GAINS ON WHICH TAX IS PAYABLE A+B 60,79,708 THE AO ASSESSED THE TAXABLE INCOME AS FOLLOWS: VALUE AS ADOPTED 2,02,98,911 LESS: COST OF CONSTRUCTION OF THE FLATS SOLD 59,16, 950 LESS: INDEXED COST OF LAND SOLD(5458.06X25X4.63) 6,31,770 65,48,720 LONG TERM CAPITAL GAINS AT THE TIME OF SALE 1,37,50,191 OF LANDS TO ALLOTTEE OF FLATS LONG TERM CAPITAL GAINS ON SALE OF FLATS 1,46,12,0 90 TOTAL CAPITAL GAINS (1,146,12,090 + 1,37,50,191) 2,83,62,281 3.11 THE ASSESSEE FILED APPEALS BEFORE THE CIT(A ). IN REGARD TO ADOPTION OF GUIDELINE VALUE ON TRANSFER O F PROPERTY U/S. 50C, THE CIT(A) HAD UPHELD THE ORDER OF THE ASSESSING OFFICER BUT REGARDING ADOPTION OF GUIDELI NE VALUE FOR DETERMINING THE FAIR MARKET VALUE AS ON 1/4/198 1, THE CIT(A) HAS DIRECTED THE AO TO ADOPT A VALUE OF ` 143 PER SQ.FT. 34 I.T.A. NO.992/MDS/15 3.12 FOR THE AY 2004-05, THE CIT(A) HAS DIRECTE D THE ASSESSING OFFICER TO ADOPT THE CONSIDERATION AT ` 1,40,32,800 FOR THE 40% UNDIVIDED SHARE OF LAND DIS POSED OF BY THE ASSESSEE AND REGARDING FULL VALUE HE UPHE LD THE ORDER OF THE ASSESSING OFFICER AS PROVISION 50C IS BINDING. 3.13 WHILE DISPOSING THE REVENUE APPEAL, ITAT ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/1981 AT 85 SQ.FT. AS AGAINST 143 PER SQ.FT ES TIMATED BY CIT (A). 3.14 HOWEVER, THE ITAT SEPARATELY ADJUDICATED THE ASSESSE'S APPEAL FOR THE ASSESSMENT YEARS 2003-04 & 2004-05, VIDE ITS ORDER DATED 31.05.2010. ON THE IS SUE PERTAINING TO CAPITAL GAINS ARISING ON ACCOUNT OF DEVELOPMENT OF ITS PROPERTY THE TRIBUNAL WHILE ADJU DICATING THE SAID ISSUE, ON THE BASIS OF JUDGMENT RENDERED BY THE JURISDICTION HIGH COURT IN THE CASE OF D.KASTURI VS. CIT REPORTED IN 251 ITR 532 H ELD THAT NO CAPITAL GAINS WOULD ARISE FOR THE ASSESSMENT YEA RS 2003-04 AND 2004-05 SINCE THE ASSESSEE HAD ENTERED INTO DEVELOPMENT AGREEMENT AS EARLY AS 25.12.2000 AND HA D ALSO HANDED OVER POSSESSION OF THE PROPERTY ON THE SAME DATE. THUS, THE ITAT DELETED ENTIRE ADDITION. 35 I.T.A. NO.992/MDS/15 3.15 THEREAFTER, THE ASSESSING OFFICER ISSUED NO TICE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE ON 10.06.201 1 AND RE- OPENED THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSING OFFICER RE-OPENED THE SAID ASSESSMENT ON THE BASIS OF OBSERVATION IN PARA 6 OF THE ORDER OF THE ITAT FOR THE A.YS. 2003-04 & 2004-05 IN ITA NOS. 327 & 328/MDS/2010. 3.16 ON THE BASIS OF THE AFORESAID REASONS, T HE AO REOPENED THE ASSESSMENT FOR THE AFORESAID ASSESSMENT YEAR AN D COMPLETED THE ASSESSMENT VIDE HIS ORDER DATED 25.3.2013 ASSES SING THE ENTIRE CAPITAL GAINS IN THE ASSESSMENT YEAR 2001-02 ON THE BASIS OF THE DEVELOPMENT AGREEMENT DATED 25.12.2000. 4. WITH REGARD TO TIME LIMIT FOR REOPENING THE ASSE SSMENT, BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS), THE ASSESSE SUBMITTED AS FOLLOWS: THE APPELLANT INVITES THE ATTENTION OF THE LEARNED COMMISSIONER TO SECTION 149 OF THE INCOME TAX ACT W HICH DEALS WITH THE TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. UNCONTROVERTED, THE LANGUAG E USED IN THE SECTION 149 IS WITHOUT AMBIGUITY AND FOR DET ERMINING THE PERIOD OF LIMITATION WHAT IS CONSIDERED IN THE SAID SECTION IS THE RELEVANT ASSESSMENT YEAR AND NOT THE YEAR IN WHICH THE ASSESSMENT ORDER IS PASSED. THUS NO NOTICE UND ER SECTION 148 OF THE INCOME TAX ACT WOULD HAVE LEGAL SANCTITY IF THE SAME IS ISSUED AFTER 31.3.2007 VIZ THE MAXIM UM TIME OF 6 YEARS AS MENTIONED IN CLAUSE (2) TO SECTION 14 9 OF THE INCOME-TAX ACT. 36 I.T.A. NO.992/MDS/15 4.2 THE CIT(APPEALS) OBSERVED THAT THE AO HAD INVO KED THE PROVISIONS OF SEC.150 WHICH READS AS: PROVISION FOR CASE WERE ASSESSMENT IS IN PURSUANCE OF AN ORDER ON APPEAL, ETC.-(1) NOTHWITHSTANDING ANYTHING CONTAINED IN SECTION 149, THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING UND ER THIS ACT BY WAY OF APPEAL, REFERENCE OR REVISION OR BY A COURT IN ANY PROCEEDING UNDER ANY OTHER LAW. 4.3 THE CIT(APPEALS) OBSERVED THAT THE PROVISIONS O F SEC.150(1) BEGINS WITH THE WORDS NOTWITHSTANDING ANYTHING CON TAINED IN SEC.149 AND IT STATES THAT NOTICE MAY BE ISSUED A T ANY TIME TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THE ACT. THE NOTICE ISSUED TO THE ASSESSE WAS PURSUANT TO THE FINDING OF THE TRIB UNAL. THUS, THE TIME LIMIT SET OUT IN SECTION 149 HAS NO RELEVANCE TO THE PRESENT CASE. 4.4 REGARDING THE CONTENTION OF THE ASSESSEE THAT T HERE IS NO SPECIFIC DIRECTION OF THE TRIBUNAL AND HENCE, SEC.1 50 CANNOT BE INVOKED, THE COMMISSIONER OF INCOME-TAX(APPEALS) OB SERVED THAT THE TRIBUNAL IN HIS ORDER OBSERVED AS UNDER: HAVING OBSERVED THE FACT THAT THE TRANSFER OF THE ASSET HAS ALREADY TAKEN PLACE IN THE YEAR 2000, CAPITAL GAINS CANNOT BE TAXED IN THE AY 2003-04 & 2004-05 37 I.T.A. NO.992/MDS/15 THUS, IT IS CLEARLY INFERRED THAT THE FINDING OF TH E ITAT IS THAT THE CAPITAL GAINS IS TO BE TAXED IN AY 2001-02 AS THE Y EAR OF TRANSFER OF PROPERTY IS FY 2000-01. 4.5 SEC. 150 PROVIDES FOR SPECIAL PROVISIONS FOR CA SES WHERE THE ASSESSMENT IS IN PURSUANCE OF AN ORDER ON APPEAL, E TC. SUB-SECTION READS AS FOLLOWS: (1) NOTHWITHSTANDING ANYTHING CONTAINED IN SECTION 149, THE NOTICE UNDER SECTION 148 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT T O ANY FINDING OR DIRECTION CONTAINED IN AN ORDER PASSED BY ANY AUTHORITY IN ANY PROCEEDING UNDER THIS ACT BY WAY O F APPEAL, REFERENCE OR REVISION OR BY A COURT IN ANY PROCEEDI NG UNDER ANY OTHER LAW. THUS, SECTION 150(1) PROVIDES THAT THE TIME-LIMIT S ET OUT IN SECTION 149 DOES NOT APPLY IN THE FOLLOWING SITUATION: A) ANY ASSESSMENT OR REASSESSMENT OR RECOMPTION IS SOUGHT TO BE MADE B) IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDI NG OR DIRECTION C) SUCH FINDING OR DIRECTION IS CONTAINED IN AN ORD ER PASSED D) THIS PROVISION IS HOWEVER NOT APPLICABLE TO INDE PENDENT TIME-LIMIT OF FOUR YEARS PROVIDED BY THE PROVISO TO SECTION 147 UNDER SOME SPECIAL CIRCUMSTANCES. 4.6 THERE IS CLEAR FINDING BY THE ITAT AND AO I S DUTY BOUND TO FOLLOW IT. HE IS JUSTIFIED IN INITIATING PROCEEDIN GS U/S 147 IN ORDER TO GIVE EFFECT TO THE OBSERVATIONS AND FINDINGS OF THE ITAT. THUS THE 38 I.T.A. NO.992/MDS/15 CIT(APPEALS) REJECTED THE CONTENTIONS OF THE ASSESS E AND DISMISSED THIS GROUND OF APPEAL. 4.7 REGARDING THE APPLICABILITY OF SEC.150(2) OF T HE ACT, THE COMMISSIONER OF INCOME-TAX(APPEALS) OBSERVED THAT T HERE ARE TWO EXPLANATIONS TO SEC.153, WHICH ARE MADE APPLICABLE FOR SEC.150 ALSO AND THE SAME ARE REPRODUCED HEREIN BELOW: EXPLANATION 2.- WHERE, BY AN ORDER REFERRED TO IN CLAUSE (II) OF SUB-SECTION (3), ANY INCOME IS EXCLUDED FROM THE TOTAL INCOME OF THE ASSESSES FOR AN ASSESSMENT YEAR, THEN , AN ASSESSMENT OF SUCH INCOME FOR ANOTHER ASSESSMENT YE AR SHALL, FOR THE PURPOSES OF SEC.150 AND THIS SECTION , BE DEEMED TO BE ONE MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN THE SAID O RDER. EXPLANATION 3.-.. THE CIT(APPEALS) FURTHER OBSERVED THAT EXPLANATION 2 TO SEC.153 ARE APPLICABLE NOT ONLY TO SEC.153, BUT ALSO FOR TH E PURPOSES OF SEC.150. SEC.150 CANNOT BE READ IN ISOLATION BUT H AS TO BE READ ALONG WITH EXPLANATIONS 2 AND 3 TO SEC.153, WHICH S ET OUT THE CIRCUMSTANCES IN WHICH THE ASSESSMENT, REASSESSMENT , ETC. IS DEEMED TO BE ONE MADE IN CONSEQUENCE OF OR TO GIVE EFFECT TO AN ORDER PASSED IN AN APPEAL, REVISION ETC. EXPLANATIO NS 2 AND 3 CLEARLY ILLUSTRATE AND CLARIFY THE MEANING OF THE W ORDS IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN APPELLATE, REVISIONAL OR ANY OTHER ORDER. 39 I.T.A. NO.992/MDS/15 4.8 THE CIT(APPEALS) OBSERVED THAT SUB-SEC.(3) OF S EC.153 WIPES AWAY THE TIME LIMIT PRESCRIBED BY THE ACT IN CERTAIN SITUATIONS. THE PRESENCE OF SUCH ENABLING PROVISION WAS NECESSA RY AS A PRAGMATIC MEASURE. FOR EXAMPLE, THE AO MAY WRONGLY ASSESS IN THE YEAR X WHICH OUGHT TO HAVE BEEN ASSESSED IN THE YEAR Y. THIS MAY COME TO LING IN THE APPEAL FILED. IF THE AO WI SHES TO PROCEED FOR THE YEAR Y, THE TIME LIMIT FOR MAKING ASSESSMEN T OR REASSESSMENT IN Y PRESCRIBED BY SUB-SS.(1) AND (2) OF SEC.153 MIGHT HAVE EXPIRED. IT IS IN SUCH A SITUATION THAT SUB-SEC.(3) COMES TO THE RESCUE OF THE REVENUE. EXPLANATION 2 TO SEC .153 HAS THE EFFECT OF ENLARGING THE PERIOD OF LIMITATION FOR CO MPLETION OF AN ASSESSMENT OR REASSESSMENT. 4.9 THE CIT(APPEALS), AFTER RELYING ON CERTAIN D ECISIONS, HELD THAT IF ANY INCOME IS DELETED FROM ASSESSMENT BY THE ORD ER OF A HIGHER AUTHORITY ON THE GROUND THAT IT IS NOT THE INCOME O F THAT YEAR, STEPS MAY BE TAKEN U/S.147 TO ASSESS IT AS THE INCOME OF ANOTHER YEAR WITHOUT ANY LIMITATION PRESCRIBED U/S.149 AS REGARD S THE ISSUE OF NOTICE U/S.148 OR AS TO THE COMPLETION OF THE ASSES SMENT OR REASSESSMENT PRESCRIBED BY SEC.153. ACCORDINGLY, H E REJECTED THE GROUNDS. AS SUCH, THE ASSESSEE IS IN APPEAL BEFORE US. 5. IT IS SEEN FROM THE ABOVE THAT THE ASSESSMENT FO R THE YEAR 2001-02 WAS REOPENED ON THE BASIS OF THE FINDINGS O F THE TRIBUNAL IN 40 I.T.A. NO.992/MDS/15 THE ASSESSMENT YEARS 2003-04 AND 2004-05 IN ITA NOS .327 & 328/MDS/10 DATED 31.5.2010. AS THE TRIBUNAL OBSERV ED THAT TRANSFER OF ASSET HAS ALREADY TAKEN IN THE YEAR 200 0, THE CAPITAL GAINS CANNOT BE TAXED IN THE ASSESSMENT YEARS 2003- 04 AND 2004- 05. IN ORDER TO GIVE EFFECT TO THE ABOVE FINDINGS OF THE TRIBUNAL, THE ASSESSING OFFICER INITIATED PROCEEDINGS U/S.147 OF THE ACT BY DULY ISSUING NOTICE U/S.148 OF THE ACT ON 10.2.2011. IT IS SEEN FROM THE RECORDS THAT SEC.149 PRESCRIBED TIME LIMIT FOR ISSU E OF NOTICE U/S.148 OF THE ACT. THIS SECTION WAS AMENDED BY THE FINANC E ACT, 2001 W.E.F. 1.6.2001 DESCRIBING DIFFERENT TIME LIMITS TH AN THOSE PRESCRIBED PRIOR TO THE SAID DATE. DIFFERENT TIME LIMITS HAVE BEEN PRESCRIBED DEPENDING UPON THE AMOUNT, INCOME CHARGEABLE TO TAX THAT HAS ESCAPED ASSESSMENT. SEC.150 MAKES PROVISION FOR CA SES WHERE AN ASSESSMENT MADE IN PURSUANCE OF AN ORDER ON APPEAL, REFERENCE OR REVISION OR AN ORDER OF A COURT IN ANY PROCEEDING U NDER ANY OTHER LAW. SUB-SEC.(1) OF SEC.150 SAYS THAT THE TIME LIM ITS PRESCRIBED IN S.149 WILL NOT APPLY, WHICH MEANS THAT A NOTICE U/S .148 MAY BE ISSUED AT ANY TIME FOR THE PURPOSE OF MAKING AN ASS ESSMENT OR REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN ANY ORDER PASSED UNDER THE ACT BY WAY OF APPEAL, REFERENCE OR REVISION OR BY A COURT IN ANY PROCEEDINGS UNDER ANY OTHER LAW. HAVING THUS REMOV ED THE TIME 41 I.T.A. NO.992/MDS/15 LIMITS FOR ISSUING NOTICE U/S.148 IN SUCH CASES, SU B-SEC.(2) OF SEC.150 HASTENS TO ADD THAT WHERE ANY APPEAL, REFER ENCE OR REVISION OR AN ORDER OF A COURT IN ANY PROCEEDINGS UNDER ANY OTHER LAW IS SOUGHT TO BE MADE IN RESPECT OF AN ASSESSMENT YEAR WHERE SUCH AN ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER, WHICH WAS THE SUBJECT MATTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE M AY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, REASSESSMENT OR RECOMPUTATIO N MAY BE TAKEN, THEN NO NOTICE U/S.148 CAN BE ISSUED. THE R ATIONAL BEHIND THIS PROVISIONS IS NOT TO CONFER UPON THE AO THE JU RISDICTION TO REOPEN AN ASSESSMENT WHICH THE ACT DID NOT OTHERWIS E POSSESS. IT SAYS THAT WHERE THE REASSESSMENT PROCEEDINGS WOULD HAVE BEEN BARRED BY TIME EVEN AT THE POINT OF TIME WHEN THE O RDER WHICH BECAME SUBJECT MATTER OF THE APPEAL, REVISION ETC., WAS PASSED, RESORT CANNOT BE MADE TO SUB-SEC.(1) OF SEC.150. 6. AN EXAMPLE MAY MAKE THE POSITION CLEAR. SUPPOSI NG FOR THE ASSESSMENT YEAR 1999-2000 THE AO INCLUDES AN ITEM O F INCOME WHICH ON APPEAL IS HELD TO RELATE TO THE ASSESSMENT YEAR 1998-99. THIS FINDING ON APPEAL CAN BE UTILIZED TO REOPEN TH E ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 WITHOUT ANY TIME LIMIT BY VIRTUE OF THE PROVISIONS OF SEC.150(1), THE REASON BEING THAT HAD THE AO BEEN 42 I.T.A. NO.992/MDS/15 AWARE EVEN WHEN HE COMPLETED THE ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000 THAT THE INCOME WAS ASSESSABLE IN TH E ASSESSMENT YEAR 1998-99, HE WOULD AND COULD HAVE INCLUDED THE INCOME IN THAT ASSESSMENT YEAR ITSELF. THIS IN TURN POSTULATES TH AT AN ASSESSMENT OR REASSESSMENT FOR THE ASSESSMENT YEAR 1998-99 WOU LD HAVE BEEN PERMISSIBLE AT THE POINT OF TIME WHEN THE ASSESSMEN T ORDER FOR THE ASSESSMENT YEAR 1999-2000 WAS PASSED. THAT IS THE REASON WHY SUB-SEC.(2) OF SEC.150 PROVIDES THAT THE ENLARGEMEN T OF TIME PROVIDED IN SUB-SEC.(1) WILL NOT BE AVAILABLE WHERE , EVEN ON THE DATE WHEN THE ASSESSMENT WAS COMPLETED, AN ASSESSMENT OR REASSESSMENT OF THE INCOME FOR THE ASSESSMENT YEAR 1998-99 (IN THIS EXAMPLE) WOULD HAVE BEEN BARRED BY TIME. 7. KEEPING IN VIEW OF THE ABOVE, LET ME EXAMINE THE FACTS OF THE PRESENT CASE. THE ASSESSMENT FOR THE ASSESSMENT YE AR 2001-02 COMPLETED U/S.143(3) R.W.SEC.147 VIDE ORDER DATED 3 0.3.2006. THE ASSESSMENT FOR THE ASSESSMENT YEARS 2003-04 AND 200 4-05 WAS PASSED ON 30.3.2006 AND 28.12.2006 RESPECTIVELY (RE F. AOS ORDER AT PAGE 12). THE ASSESSMENT FOR THE ASSESSMENT YEA RS 2003-04 AND 2004-05 WAS SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL IN ITS ORDER DATED 31.5.2010 OBSERVED THAT TRANSFER OF CAPITAL HAS ALREADY TOOK PLACE IN THE YEAR 2000, CAPITAL GAINS CANNOT BE TAXED IN THE ASSESSMENT YEARS 2003-04 AND 2004-05. 43 I.T.A. NO.992/MDS/15 8. THE QUESTION FOR CONSIDERATION IS WHETHER 28.12 .2006, THE DATE ON WHICH THE ASSESSMENT FOR THE ASSESSMENT YEA RS 2003-04 AND 2004-05 WAS FRAMED, THE AO COULD HAVE TAKEN ACT ION BY ISSUE OF NOTICE U/S.149(1)(B) OF THE ACT. AS IT STOOD W. E.F. 1.6.2001, NO NOTICE U/S.148 SHALL BE ISSUED FOR THE RELEVANT ASS ESSMENT YEAR, IF FOUR YEARS BUT NOT MORE THAN SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THUS, ON 28.12.2006, THE AO COULD HAVE ISSUED NOTICE U/S.148 IN RESPECT OF ASSESSMENT YEAR 2001-0 2. THEREFORE, THE AO COULD HAVE VALIDLY ISSUED NOTICE U/S.148 ON 10.6.2011 TAKING ADVANTAGE OF THE DIRECTION ISSUED BY THE TRIBUNAL I N THE APPEAL FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05. SUCH A N OTICE IS SAVED BY SUB-SEC.(1) OF SEC.150 AND THE PROVISIONS OF SUB-SEC.(2) OF SEC.150 ARE NOT APPLICABLE. THE CONTENTION OF THE LD. AR IS THAT THE PROVISIONS OF SEC.149(1)(B) IS APPLICABLE, ACCORDIN G TO WHICH ASSESSMENT OF SIX YEARS WOULD HAVE BEEN LAPSED FRO M THE ASSESSMENT YEAR 2002-03 TO THE DATE OF SERVICE OF N OTICE ON 10.6.2011. I AM UNABLE TO ACCEPT THE CONTENTION OF THE LD. AR BECAUSE SEC.150(2), THE TIME LIMIT WITHIN WHICH NOT ICE U/S.148 COULD BE ISSUED BY THE AO HAS TO BE RECKONED, IN THE VERY NATURE OF THINGS, UNDER THE PROVISIONS OF SEC.149, AS THEY ST OOD ON 28.12.2006. AS IT CLEAR FROM THE WORDS ASSESSMEN T YEAR IN RESPECT OF WHICH ON ASSESSMENT, REASSESSMENT OR RECOMPUTAT ION COULD NOT 44 I.T.A. NO.992/MDS/15 HAVE BEEN MADE AT THE TIME THE ORDER WHICH WAS THE SUBJECT MATTER OF THE APPEAL, REFERENCE OR REVISION, AS THE CASE M AY BE, WAS MADE BY REASON OF ANY OTHER PROVISION LIMITING THE RECOM PUTATION MAY BE TAKEN. IN THE VERY NATURE OF THINGS, SUCH OTHER PR OVISION LIMITING THE TIME FOR ISSUE OF NOTICE U/S.149 HAS TO BE RECKONED WITH ONLY ON THE DATE ON WHICH THE ASSESSMENT ORDER FOR THE ASSESSME NT YEARS 2003-04 AND 2004-05 WAS PASSED, WHICH WAS ON 30.3.2 006 AND 28.12.2006 RESPECTIVELY. THE AO COULD HAVE ISSUED NOTICE U/S.148 WITHIN THE TIME LIMIT AS PROVIDED BY SEC.149(1)(B) OF THE ACT AS IT STOOD ON THAT DATE. THEREFORE, THIS CONTENTION OF THE LD. AR CANNOT BE ACCEPTED. THE AO IS VERY WELL WITHIN THE TIME LIMIT TO ISSUE NOTICE U/S.148 OF THE ACT FOR THE AY 2001-02 AS ON THE DATE OF ASSESSMENT FOR THE AY 2004-05 I.E.28.12.2006 (BEING THE LATEST DATE). SINCE THERE IS A DIRECTION OF THE TRIBUNAL IN THE AYS 2003-04 & 2004-05 THAT THE TRANSFER OF ASSET TOOK PLACE IN THE YEAR 2000, IN VIEW OF THE PROVISIONS OF SEC.150(2) OF THE ACT, TH E EXTENDED TIME IS AVAILABLE TO ISSUE NOTICE U/S.148 FOR THE AY 2001-0 2. THUS, NOTICE FOR REOPENING OF ASSESSMENT ISSUED ON 10.6.2011 FOR THE ASSESSMENT YEAR 2001-02 AS THE ASSESSMENT ORDER FOR AY 2004-05 PASSED ON 28.12.2006 WAS JUSTIFIED. READING OF SEC .150(2) SHOWS THAT SUCH REOPENING OF ASSESSMENT IS NOT BARRED BY LIMITATION AND THE PROVISIONS OF SUB-SEC.(1) OF SEC.150 CAME TO TH E ASSISTANCE OF 45 I.T.A. NO.992/MDS/15 THE DEPARTMENT. REGARDING THE CONTENTION OF THE AS SESSEE THAT THERE IS NO FINDING OR DIRECTION OF TRIBUNAL IN HIS ORDER CITED SUPRA, WHEN THE TRIBUNAL OBSERVED THAT THE TRANSFER OF CAP ITAL ASSET HAS ALREADY TAKEN PLACE IN 2000 AND THE CAPITAL GAINS C ANNOT BE TAXED IN THE ASSESSMENT YEAR 2003-04 AND 2004-05, IS NOT COR RECT. IT IMPLIES THAT IF THE INCOME IS INCLUDED FROM THE TOTAL INCOM E FOR ONE ASSESSMENT YEAR UNDER APPEAL THEN IT IS NATURAL THA T IT IS OPEN TO THE ASSESSING OFFICER TO BRING THE DELETED INCOME BY TH E APPELLATE AUTHORITY TO TAXATION IN ANOTHER ASSESSMENT YEAR TO WHICH ASSESSMENT YEAR IT IS RELATED. 9. BEING SO, WHEN THE TRIBUNAL EXCLUDED THE CAPITA L GAINS IN ASSESSMENT YEARS 2003-04 AND 2004-05 AND OBSERVED T HAT TRANSFER OF CAPITAL ASSET HAS TAKEN PLACE IN THE YEAR 2000, THE AO HAS RIGHTLY BROUGHT TO TAX CAPITAL GAINS IN THE ASSESSMENT YEAR 2001-02. THIS VIEW OF MINE IS SUPPORTED BY THE JUDGMENT OF THE KA RNATAKA HIGH COURT, RELIED ON BY THE LD. DR, IN THE CASE OF DY C IT VS. SPENCES HOTEL (P) LTD. (208 CTR 224), WHEREIN IT WAS HELD T HAT NOTICE UNDER S. 148 FOR ASST. YEAR 1976-77 ISSUED ON 17 TH NOV., 1998, ON THE BASIS OF THE FINDING OF THE TRIBUNAL IN ITS ORDER F OR ASST. YEAR 1980- 81 THAT CERTAIN INCOME WAS ASSESSABLE IN ASST. YEAR 1976-77 WAS NOT BARRED BY LIMITATION UNDER S. 149 IN VIEW OF OV ERRIDING PROVISIONS OF S. 150(1). IT WAS OBSERVED: 46 I.T.A. NO.992/MDS/15 THE TRIBUNAL IN ITS ORDER DT. 26 TH JUNE, 1998 HELD THAT THE ESCAPED TAX SHALL BE ASSESSED FOR THE YEAR 1976-77. THAT ORDER HAS BECOME FINAL AND THE SAME WAS WITHIN THE KNOWLEDGE OF THE APPELLANT. ON THE BASIS OF THIS FI NDING OF THE TRIBUNAL IN ITS ORDER REGARDING ESCAPED INCOME OF THE ASSESSE, NOTICE UNDER S. 148 WAS ISSUED ON 17 TH NOV., 1998. THE PROVISION OF S. 150(1) BEGINS WITH THE WORDS NOTWITHSTANDING ANYTHING CONTAINED IN S. 149 AND IT STATES THAT NOTICE MAY BE ISSUED AT ANY TIME TO GIVE EFF ECT TO ANY FINDING CONTAINED IN ANY ORDER PASSED BY ANY AUTHOR ITY IN ANY PROCEEDING UNDER THE ACT. THE NOTICE ISSUED TO THE ASSESSE WAS PURSUANT TO THE FINDING OF THE TRIBUNAL REFERRED TO SUPRA REGARDING THE ESCAPED INCOME FOR ASSESSMEN T OF INCOME-TAX. THEREFORE, THE SINGLE JUDGE COMMITTED A N ERROR IN LAW BY QUASHING THE SAME, AS THE SAME IS CONTRAR Y TO THE FINDING RECORDED BY THE TRIBUNAL WITH REGARD TO THE ESCAPED TAXABLE INCOME DERIVED BY THE ASSESSE. THE LEGAL SUBMISSION MADE BY THE COUNSEL PLACING RELIANCE UPO N S. 150(2) IN JUSTIFICATION OF THE ORDER OF THE SINGLE JUDGE IS MISPLACED FOR THE REASON THAT THE ABOVE PROVISION I S NOT APPLICABLE TO THE CASE ON HAND. THUS, IN MY OPINION, WHEN BY AN ORDER OF THE TRIBUN AL, THE INCOME IS EXCLUDED FROM THE TOTAL INCOME OF THE ASSESSEE FOR ASSESSMENT YEARS 2003-04 AND 2004-05, THEN THE ASSESSMENT OF S UCH INCOME FOR THE ASSESSMENT YEAR 2001-02 SHALL BE DEEMED TO BE ONE MADE IN CONSEQUENCE OF, OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION IN THAT ORDER (IN APPEAL) FOR THE PURPOSE OF LIFTING THE BA N OF LIMITATION UNDER EXPLANATION 2 TO SEC.153(3). RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS : (I) KAMLAPATH MOTILAL VS. CIT (SC) 193 ITR 338 (II) MAHADEO PRASAD RAIS (DECD. BY LRS.) VS. ITO (S C) 192 ITR 402 47 I.T.A. NO.992/MDS/15 (III) ASHWANI DHINGRA V. CCIT (ALL.) 141 TAXMAN 651 ). IN VIEW OF THE ABOVE, IN MY OPINION, THE PROVISIONS OF SEC.150(1) ARE APPLICABLE. THUS, GROUND NOS. 1 TO 8 ARE DISMISSED . 10. NOW, THE ASSESSEE HAS RAISED GROUND NOS.9 & 10 FOR THE FIRST TIME BEFORE US, WHICH ARE NOT BEFORE THE COMM ISSIONER OF INCOME-TAX(APPEALS) AND HE HAD NO OCCASION TO CONS IDER THE SAME. BEING SO, IN THE INTEREST OF JUSTICE, I REMI T THE ISSUES RELATING TO GROUND NOS. 9 & 10 TO THE FILE OF THE COMMISSION ER OF INCOME- TAX(APPEALS) FOR FRESH CONSIDERATION. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- ( ! ' ) (CHANDRA POOJARI) $ /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED, THE 14 TH SEPT., 2015. MPO* 48 I.T.A. NO.992/MDS/15 , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , ! ! BEFORE SHRI D. MANMOHAN, VICE PRESIDENT (THIRD MEMBER) ./ I.T.A.NO.992/MDS/2015 ( )( / ASSESSMENT YEAR : 2001-02 M/S EMGEEYAR PICTURES P. LTD FLAT NO.3B, DOSHI RESIDENCY COMPLEX OLD NO.9, NEW NO.17 DHANDAPANI STREET T. NAGAR, CHENNAI 600 017 VS. THE DEPUTY COMMISSIONER OF INCOME-TAX MEDIA CIRCLE - I CHENNAI [PAN AABCE 1440 J ] ( +, /APPELLANT) ( -.+, /RESPONDENT) +, / 0 / APPELLANT BY : SHRI D. ANAND, ADVOCATE -.+, / 0 /RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT/DR 1 / 2$ / DATE OF HEARING : 26 - 02 - 2016 / O R D E R ON ACCOUNT OF DIFFERENCE OF OPINION BETWEEN THE LE ARNED ACCOUNTANT MEMBER AND LEARNED JUDICIAL MEMBER, THE MATTER WAS REFERRED TO THE HON'BLE PRESIDENT FOR NOMINATING A THIRD MEMBER UNDER SECTION 255(4) OF THE INCOME TAX ACT, 1961, TO RESO LVE THE POINTS OF DIFFERENCE. IT MAY BE NOTED THAT EVEN WHILE FRAMIN G THE POINTS OF DIFFERENCE, THERE WAS A DIFFERENCE OF OPINION. ACC ORDING TO THE LEARNED JUDICIAL MEMBER, THE FOLLOWING QUESTIONS NEED TO BE RESOLVED: 49 I.T.A. NO.992/MDS/15 (1) IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, IN THE ABSENCE OF ANY SPECIFIC FINDING/DIRECTION TO ASSESS THE INCOME FOR THE ASSESSMENT YEAR 2001- 02 IN THE ORDER OF THIS TRIBUNAL DATED 31.05.2010, CAN THERE BE AN INFERENCE/PRESUMPTION, ESPECIALLY, WHEN NO PROCEEDING FOR THE ASSESSMENT YEAR 2001-02 WAS BEFORE THE TRIBUNAL, AS HELD BY APEX COURT IN CIT V. GREEN WORLD CORPORATION (2009) 314 ITR 81? (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN ADMITTEDLY, THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001-02 WAS NOT SUBJECT MATTER OF APPEAL BEFORE THIS TRIBUNAL, CAN THE OBSERVATION, IF ANY, MADE BY THE TRIBUNAL, BE CONSIDERED AS FINDING/DIRECTION TO ASSESS THE INCOME FOR THE ASSESSMENT YEAR 2001-02 IN VIEW OF THE DECISION OF THIS TRIBUNAL IN SUN METAL FACTO R (I) (P.) LTD. V. ACIT (2010) 124 ITD 14, ESPECIAL LY WHEN THIS BENCH OF THE TRIBUNAL IN SRIRAM CAPITAL LTD. V. DCIT IN I.T.A. NOS.512 & 513/MDS/2015 DATED 26.06.2015 (THE VERY SAME LD. ACCOUNTANT MEMBER IS A PARTY/AUTHOR) FOUND THAT THE APPELLATE AUTHORITY CANNOT TRAVEL BEYOND THE ASSESSMENT YEAR IN APPEAL AND EXPUNGE THE DIRECTIONS (TO REFER P.63 & 64 AT PARA 19.3 OF THE TRIBUNAL ORDER IN I.T.A. NOS.512 & 513/MDS/2015 DATED 26.06.2015)? (3) IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, WHETHER THE REOPENING MADE UNDER SECTION 147 OF THE ACT AND CONSEQUENT ORDER OF ASSESSMENT ARE BARRED BY LIMITATION? 2. ON THE OTHER HAND, THE LEARNED ACCOUNTANT MEMBE R, FORMULATED THE FOLLOWING THREE QUESTIONS WHILE REFE RRING THE MATTER TO THE HON'BLE PRESIDENT U/S 255(4) OF THE ACT: (1) WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE NOTICE ISSUED IS BARRED BY LIMITATION AS PROVID ED UNDER 50 I.T.A. NO.992/MDS/15 SECTIONS 149(1)(B), 150(1) AND 150(2) OF THE I.T. A CT, 1961, AS THE SAME HAS BEEN ISSUED IN CONSEQUENCE TO THE ORDE R PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 2003-04 & 2004-05? (2) WHETHER, ON THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CAS E OF CIT VS. GREEN WORLD CORPORATION (2009) 314 ITR 81 IS APPLIC ABLE TO THE PRESENT CASE WHICH IS DELIVERED ON DIFFERENT CONTEX T? (3) WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE RATIO LAID DOWN BY THE CHENNAI BENCH OF THE TRI BUNAL IN THE CASES OF SUN METAL FACTOR (I) (P.) LTD. VS. ACIT (2 010) 124 ITD 14 AND SRIRAM CAPITAL LTD. VS. DCIT IN ITA NOS.512 & 513/MDS/2015 DATED 26.6.2015 IS APPLICABLE TO THE F ACTS OF THE PRESENT CASE, AS THE ABOVE ORDERS ARE DELIVERED ON DIFFERENT CONTEXT? 3. AT THE TIME OF HEARING, THE PARTIES WERE DIRECTE D TO EXAMINE THE POINTS OF DIFFERENCE AND TO BRING FORTH APPROPRIATE / COMMON POINTS OF DISPUTE SO AS TO ENABLE THE THIRD MEMBER TO RESOLVE THE ISS UES. ACCORDINGLY, THE LEARNED COUNSEL AS WELL AS THE LEARNED DEPARTMENTAL REPRESENTATIVE FORMULATED THE POINTS OF DIFFERENCE EMERGING OUT OF THE RESPECTIVE ORDERS OF HON'BLE MEMBERS. ON GOING THROUGH THE SAME, AND AF TER DISCUSSING THE MATTER WITH THE PARTIES, I HAVE REFRAMED THE POINTS OF DIFFERENCE AS UNDER: 1. WHETHER THE NOTICE ISSUED U/S 148 R.W.S 150( 1)OF THE ACT DATED 10.6.2011 FOR THE ASSESSMENT YEAR 2001-0 2 IS BASED ON ANY FINDING OR DIRECTION ISSUED BY THE ITA T IN I.T.A.NOS.327 & 328/MDS/2010? 2. IN THE EVENT OF HOLDING THAT THERE IS A FINDIN G OR DIRECTION, WHETHER THE NOTICE ISSUED U/S 148 OF THE ACT DATED 10.6.2011 IS BARRED BY LIMITATION OR NOT? 51 I.T.A. NO.992/MDS/15 4. SINCE BOTH THE PARTIES HAVE AGREED TO THE REFRAM ED QUESTIONS, I HAVE PROCEEDED TO DISPOSE OF THE POINTS OF DIFFEREN CE ACCORDINGLY. 5. FACTS NECESSARY IN THIS CONTEXT ARE REFERRED TO IN BRIEF. IN RESPECT OF THE ASSESSMENT YEAR 2001-02, THE ASSESSE E DISCLOSED TOTAL LOSS OF ` 56,758/- IN RESPONSE TO NOTICE U/S 148 OF THE ACT W HEREAS THE ASSESSMENT WAS COMPLETED BY DETERMINING THE TOTAL L OSS AT ` 2,442/- BY AN ORDER DATED 30.3.2006. 6. IT IS TO BE NOTICED THAT THERE WAS AN AGREEMENT FOR JOINT DEVELOPMENT OF PROPERTY ON 25.12.2000 AND THE ASSES SEE HANDED OVER THE POSSESSION OF THE PROPERTY TO THE BUILDER ON TH E SAME DATE. THE ASSESSEE OFFERED TO TAX THE CAPITAL GAINS THEREON I N THE ASSESSMENT YEARS 2003-04 AND 2004-05, BUT AT A LATER STAGE, IT WAS CONTENDED THAT NO TRANSFER TOOK PLACE IN THE RESPECTIVE ASSESSMENT YEARS AND HENCE, IT IS NOT ASSESSABLE TO TAX ON CAPITAL GAINS IN ASSESS MENT YEARS 2003-04 AND 2004-05. THE ITAT, IN ITS ORDER DATED 31.5.201 0 (I.T.A.NOS.327 & 328/ MDS/ 2010), WHILE DISPOSING OF THE APPEALS FOR ASSESSMENT YEARS 2003-04 AND 2004-05, OBSERVED THAT THE CAPITAL GAIN S, ARISING OUT OF TRANSFER OF THE PROPERTY, CANNOT BE TAXED IN ASSESS MENT YEARS 2003-04 AND 2004-05. RELEVANT OBSERVATION OF THE TRIBUNAL, AS EXTRACTED IN PARA 4.4 OF THE ORDER PASSED BY THE LEARNED ACCOUNTANT M EMBER, IS EXTRACTED BELOW FOR IMMEDIATE REFERENCE: 52 I.T.A. NO.992/MDS/15 HAVING OBSERVED THE FACT THAT THE TRANSFER OF THE ASSET HAS ALREADY TAKEN PLACE IN THE YEAR 2000, CAPITAL GAINS CANNOT BE TAXED IN THE AY 2003-04 AND 2004-05. 7. BASED ON THE OBSERVATION MADE BY THE ITAT, THE A SSESSING OFFICER SOUGHT TO INVOKE THE PROVISIONS OF SEC. 148 , R.W.S 150 OF THE ACT, FOR THE ASSESSMENT YEAR 2001-02 AND ACCORDINGLY, IS SUED A NOTICE ON 10.6.2011. THE CASE OF THE ASSESSEE THAT THE PROCEE DINGS FOR THE ASSESSMENT YEAR 2001-02 ARE BARRED BY LIMITATION AN D HENCE NOTICE ISSUED U/S 148 R.W.S 150 IS BEYOND THE PERIOD OF LI MITATION, WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS WELL AS THE CI T(A) AND ACCORDINGLY ASSESSMENT WAS MADE WHEREIN THE AMOUNT RECEIVABLE O N TRANSFER OF ASSET WAS BROUGHT TO TAX. BEFORE THE TRIBUNAL, THE CASE OF THE ASSESSEE WAS THAT THERE WAS NO FINDING OR DIRECTION BY THE I TAT WHILE DISPOSING OF THE APPEALS FOR ASSESSMENT YEARS 2003-04 AND 2004-0 5 WITH REGARD TO TAXABILITY OF THE CAPITAL GAINS IN ASSESSMENT YEAR 2001-02 AND HENCE, ON THE BASIS OF MERE OBSERVATION, THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2001-02 CANNOT BE REOPENED; THE ASSESSING OFFICER C ANNOT TAKE THE BENEFIT OF SEC. 150 OF THE ACT FOR REOPENING THE CO MPLETED ASSESSMENT AFTER EXPIRY OF LIMITATION PROVIDED U/S 149 OF THE ACT. IT WAS ALSO CONTENDED THAT EVEN IF THE OBSERVATION OF THE TRIBU NAL IS CONSIDERED AS A FINDING OR DIRECTION, THE ASSESSING OFFICER IS ENTI TLED TO REOPEN THE ASSESSMENT ONLY WHEN IT IS NOT BARRED BY LIMITATION PERIOD OF MAXIMUM 53 I.T.A. NO.992/MDS/15 SIX YEARS, RECKONED FROM THE END OF THE ASSESSMENT YEAR. IN THIS CASE LIMITATION PERIOD EXPIRES ON 31.3.2008 AND SO THE A SSESSING OFFICER IS NOT ENTITLED TO REOPEN THE ASSESSMENT SINCE THE TR IBUNAL WHILE DISPOSING OF THE APPEALS IN ASSESSMENT YEARS 2003-04 AND 2004 -05 HAD MADE THE RELEVANT OBSERVATION ONLY IN THE YEAR 2010. RELIAN CE WAS PLACED UPON SEVERAL JUDGMENTS INCLUDING THE JUDGMENT OF THE APE X COURT IN K.M.SHARMA VS ITO (2002) 254 ITR 772. 8. THE LEARNED JUDICIAL MEMBER HAS OBSERVED THAT WH ILE DISPOSING OF THE APPEALS FOR ASSESSMENT YEARS 2003-04 AND 200 4-05, THE LIMITED CONTENTION OF THE ASSESSEE WAS THAT THE CAPITAL GAI NS ARISING OUT OF THE TRANSFER OF ASSET CANNOT BE TAXED IN ASSESSMENT YEA RS 2003-04 AND 2004-05 WHICH WAS ULTIMATELY ACCEPTED ON THE GROUND THAT THE JOINT DEVELOPMENT AGREEMENT WAS ENTERED INTO ON 25.12.200 0 AND THE POSSESSION OF THE PROPERTY WAS ALSO HANDED OVER ON THE SAME DATE. THIS CANNOT BE EQUATED TO A FINDING OR DIRECTION. HE ALSO ANALYSED THE PROVISIONS OF SEC. 150(1) AND 150(2) OF THE ACT TO HIGHLIGHT THAT THE PROVISIONS OF SEC. 150(1) ARE NOT APPLICABLE IN RES PECT OF ASSESSMENT YEAR IN WHICH THE ASSESSMENT, RE-ASSESSMENT OR RE-C OMPUTATION COULD NOT HAVE BEEN MADE IF THE PROCEEDINGS ARE ALREADY B ARRED BY LIMITATION BY THE DATE THE TRIBUNAL PASSED THE ORDER AND THE A O INITIATED PROCEEDINGS. HE FURTHER OBSERVED THAT SEC. 149 OF THE ACT PROVIDES FOR MAXIMUM PERIOD OF SIX YEARS FROM THE END OF THE REL EVANT ASSESSMENT 54 I.T.A. NO.992/MDS/15 YEAR IN CASE THE INCOME CHARGEABLE TO TAX EXCEEDS ` 1 LAKH. BY APPLYING THIS FORMULA, THE LIMITATION EXPIRED ON 31.3.2008, WHEREAS THE TRIBUNAL PASSED THE ORDER ON 31.5.2010 IN WHICH EVENT THE AS SESSING OFFICER CANNOT MAKE ANY ADDITION ON THE BASIS OF A LATER OR DER OF THE TRIBUNAL BY INVOKING THE PROVISIONS OF SECTION 150(1) OF THE AC T. 9. HE ALSO REFERRED TO THE JUDGMENT OF THE APEX COU RT IN THE CASE OF K.M.SHARMA (SUPRA) TO HIGHLIGHT THAT SEC. 150(2) OF THE ACT PUTS AN EMBARGO ON REOPENING OF ASSESSMENTS WHICH HAVE ATTA INED FINALITY ON EXPIRY OF PERIOD OF LIMITATION AND IN THE LIGHT OF THE BINDING JUDGMENT OF THE APEX COURT AND THE FACTS OF THIS CASE, THE ASSE SSING OFFICER IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT BY ISSUING NO TICE U/S 148 R.W.S 150 OF THE ACT. HE ALSO REFERRED TO VARIOUS JUDGME NTS OF HIGH COURTS TO HIGHLIGHT THAT EITHER THEY ARE NOT DIRECTLY APPLICA BLE OR RENDERED WITHOUT TAKING INTO CONSIDERATION THE BINDING JUDGMENT OF T HE APEX COURT IN THE CASE OF K.M.SHARMA (SUPRA). 10. HE ALSO REFERRED TO THE JUDGMENT OF THE APEX C OURT IN THE CASE OF CIT VS GREEN WORLD CORPORATION (2009) 314 ITR 81 , TO EMPHASISE THAT IF NO PROCEEDINGS WERE PENDING BEFORE THE AUTH ORITY BEFORE THE EXPIRY OF LIMITATION PERIOD, SUCH PROCEEDINGS CANNO T BE REACTIVATED MERELY ON THE BASIS OF A SUBSEQUENT ORDER PASSED BY THE APPELLATE AUTHORITY. IN CONCLUSION, THE LEARNED JUDICIAL MEMB ER OBSERVED THAT EVEN 55 I.T.A. NO.992/MDS/15 IF IT IS ASSUMED THAT THERE IS A FINDING OR DIRECTI ON, STILL THE PROVISIONS OF SECTION 150(2) OF THE ACT COMES INTO PLAY IN WHICH EVENT THE PROCEEDINGS WHICH WERE ALREADY BARRED BY LIMITATION CANNOT BE R EACTIVATED. HE THUS, SET ASIDE THE ORDERS PASSED BY THE LOWER AUTHORITIE S. 11. THE LEARNED ACCOUNTANT MEMBER, ON THE OTHER HAN D, OBSERVED THAT THE ASSESSEE HAS NOT OFFERED ANY INCOME RELAT ED TO CAPITAL GAINS IN THE ASSESSMENT YEAR 2001-02 AND ONLY DURING APPELLA TE PROCEEDINGS IT WAS SUBMITTED THAT BY VIRTUE OF THE JOINT DEVELOPME NT AGREEMENT, THE TRANSFER TOOK PLACE IN DECEMBER 2000. IT WAS THUS OBSERVED THAT ONLY BASED UPON A FINDING BY THE TRIBUNAL, WHILE ADJUDIC ATING THE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2003-04 AND 2004-05, T HE ISSUE HAS COME TO LIGHT THAT THE AMOUNT IS TAXABLE IN ASSESS MENT YEAR 2001-02 AND THUS, THE ASSESSING OFFICER WAS JUSTIFIED IN RE OPENING THE ASSESSMENT BY ISSUING NOTICE U/S 148 R.W.S 150 OF THE ACT SINCE IT AMOUNTS TO A DIRECTION OR FINDING BY THE TRIBUNAL. 12. WITH REGARD TO TIME LIMIT FOR REOPENING OF ASSE SSMENT, THE LEARNED ACCOUNTANT MEMBER WAS OF THE OPINION THAT T HE PROVISIONS OF SEC. 150 OF THE ACT ENABLE THE ASSESSING OFFICER TO ISSUE NOTICE. THIS SECTION CLEARLY SAYS THAT NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 149 NOTICE MAY BE ISSUED AT ANY TIME AND THUS, THERE IS NO TIME 56 I.T.A. NO.992/MDS/15 LIMIT FOR REOPENING THE ASSESSMENT IN THE INSTANT C ASE. HE WAS THUS, OF THE OPINION THAT THE ASSESSING OFFICER WAS JUSTIFIE D IN REOPENING THE ASSESSMENT AND IT IS NOT BARRED BY LIMITATION IN VI EW OF THE OVERRIDING PROVISIONS OF SEC. 150(1) OF THE ACT. 13. ON ACCOUNT OF DIFFERENCE OF OPINION, THE MATTER WAS REFERRED TO THE HON'BLE PRESIDENT U/S 255(4) OF THE ACT AND TH E HON'BLE PRESIDENT, IN TURN, WAS PLEASED TO NOMINATE ME AS THIRD MEMBER TO RESOLVE THE POINTS OF DIFFERENCE. AS ALREADY STATED HEREINABOVE, THE P RECISE POINTS OF DIFFERENCE WERE REFRAMED AND PLACED BEFORE BOTH TH E PARTIES WHO HAVE ACCEPTED THAT THE POINTS OF DIFFERENCE AS REFRAMED WOULD CORRECTLY FOCUS THE ISSUES. ARGUMENTS WERE ADVANCED ACCORDINGLY. 14. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT APART FROM THE TWO JUDGMENTS OF THE APEX COUR T CITED BY THE LEARNED JUDICIAL MEMBER, THE ISSUE IS SQUARELY COVE RED BY THE UNREPORTED JUDGMENT OF THE HON'BLE MADRAS HIGH COUR T IN THE CASE OF M/S GOLDMINE INVESTMENTS IN TAX CASE (APPEAL) NO.21 5 OF 2008 DATED 29.11.2013, WHEREIN ON IDENTICAL CIRCUMSTANCES, THE HON'BLE COURT OBSERVED THAT EVEN IF IT IS TREATED AS A FINDING OR DIRECTION, ASSESSMENT CANNOT BE REOPENED BEYOND THE PERIOD OF LIMITATION. HE HAS REFERRED TO VARIOUS OTHER DECISIONS/JUDGMENTS TO SUBMIT THAT EV EN IF NO TIME LIMIT IS PRESCRIBED (AS ASSUMED BY THE LEARNED AM), STILL A REASONABLE TIME 57 I.T.A. NO.992/MDS/15 FRAME HAS TO BE ASSUMED, AS OTHERWISE, THE ASSESSIN G OFFICER WILL GET UNLIMITED TIME TO REOPEN THE ASSESSMENT AT HIS OWN WILL WHICH IS NOT PERMITTED IN LAW. IN THIS REGARD, HE RELIED UPON T HE DECISION OF ITAT, HYDERABAD, IN THE CASE OF S.SANKARA REDDY VS. ASSES SING OFFICER (2005) 92 ITD 84. 15. IN THE INSTANT CASE, THE PERIOD OF LIMITATION E XPIRED IN 2008 WHEREAS THE TRIBUNAL HAS PASSED AN ORDER, WHILE DIS POSING OF THE APPEALS FOR ASSESSMENT YEARS 2003-04 AND 2004-05, I N 2010, BY WHICH DATE NO PROCEEDINGS CAN BE SAID TO HAVE BEEN PENDIN G AND HENCE, EVEN IF IT IS ASSUMED THAT THE ORDER OF THE TRIBUNAL CON TAINS A FINDING OR DIRECTION, STILL REOPENING OF ASSESSMENT IS BAD IN LAW BECAUSE IT IS BEYOND THE PERIOD OF LIMITATION, AS HELD BY THE HON 'BLE MADRAS HIGH COURT IN THE CASE OF M/S GOLDMINE INVESTMENTS (SUPR A). 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON TH E OTHER HAND, STRONGLY RELIED UPON THE ORDER PASSED BY THE LEARNE D ACCOUNTANT MEMBER AND SUBMITTED THAT THE ORDER OF THE TRIBUNAL SHOULD BE TREATED AS A FINDING OR DIRECTION BASED ON WHICH THE ASSESS ING OFFICER IS ENTITLED TO REOPEN THE ASSESSMENT. WITH REGARD TO INTERPRET ATION PLACED BY THE LEARNED ACCOUNTANT MEMBER, VIS--VIS THE NON-APPLIC ABILITY OF LIMITATION PERIOD PRESCRIBED IN SEC. 150(2) OF THE ACT - IN TH E BACKDROP OF THE LANGUAGE EMPLOYED IN SEC. 149 AND 150(1) OF THE ACT - THE LD. 58 I.T.A. NO.992/MDS/15 DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF M/S GOLDMI NE INVESTMENTS (SUPRA) SQUARELY COVERS THE ISSUE IN HAND. 17. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. AS COULD BE NOTICED FROM THE OBSERVATI ONS MADE BY THE TRIBUNAL, WHILE DISPOSING OF THE APPEALS FOR ASSESS MENT YEARS 2003-04 AND 2004-05, A CASUAL OBSERVATION WAS MADE TO DEAL WITH THE ISSUE BEFORE THEM AS TO WHETHER THE CAPITAL GAINS IS ATTR ACTED IN ASSESSMENT YEAR 2003-04 AND 2004-05; BUT THERE IS NO SPECIFIC FINDING OR DIRECTION THAT IT IS ASSESSABLE TO TAX IN ASSESSMENT YEAR 200 1-02. EVEN IF IT IS ASSUMED THAT THERE IS A FINDING OR DIRECTION, IN MY HUMBLE OPINION, THE HON'BLE MADRAS HIGH COURT, IN THE CASE OF M/S GOLDM INE INVESTMENTS (SUPRA), HAS CONSIDERED AN IDENTICAL ISSUE WHEREIN IT WAS HELD THAT IN RESPECT OF ANY ASSESSMENT YEAR WHEREIN FURTHER PROC EEDINGS ARE BARRED BY LIMITATION, THE SAME CANNOT BE REOPENED MERELY B Y VIRTUE OF AN OPINION EXPRESSED BY ANY HIGHER FORUM AT A LATER DA TE I.E. SUBSEQUENT TO THE DATE OF LIMITATION PERIOD. IN FACT, THE JUDGME NTS OF THE APEX COURT ARE ALSO ON THE SAME LINES. HAVING REGARD TO THE CIRCUM STANCES OF THE CASE, I AM OF THE VIEW THAT THE REOPENING OF ASSESSMENT I S BAD IN LAW SINCE THE PROCEEDINGS U/S 148 OF THE ACT ARE SOUGHT TO BE IN ITIATED BY ISSUING A 59 I.T.A. NO.992/MDS/15 NOTICE AFTER THE PERIOD OF LIMITATION. IN THE LIG HT OF THE ABOVE FINDINGS, THE REFRAMED QUESTIONS ARE ANSWERED AS FOLLOWS: (1) THE NOTICE ISSUED U/S 148 R.W.S 150(1) OF THE A CT, CANNOT BE SAID TO BE BASED ON ANY FINDING OR DIRECTION ISSUED BY THE ITAT IN I.T.A.NOS.327 & 328/MDS/2010. (2) EVEN OTHERWISE THE NOTICE ISSUED U/S 148 OF TH E ACT IS BARRED BY LIMITATION. 18. NOW, THE CASE WILL BE PLACED BEFORE THE REGULA R BENCH FOR PASSING A CONCLUDING ORDER IN ACCORDANCE WITH THE M AJORITY VIEW. SD/- ( . ) (D. MANMOHAN) ! / VICE PRESIDENT 6 / DATED: 11 TH MARCH, 2016 RD 60 I.T.A. NO.992/MDS/15 , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI # . . # . $ , % & #'( () * + , , & ! - [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.992/MDS/2015 ( )( / ASSESSMENT YEAR : 2001-02 M/S EMGEEYAR PICTURES P. LTD FLAT NO.3B, DOSHI RESIDENCY COMPLEX OLD NO.9, NEW NO.17 DHANDAPANI STREET T. NAGAR, CHENNAI 600 017 VS. THE DEPUTY COMMISSIONER OF INCOME-TAX MEDIA CIRCLE - I CHENNAI [PAN AABCE 1440 J ] ( +, /APPELLANT) ( -.+, /RESPONDENT) +, / 0 / APPELLANT BY : SHRI D. ANAND, ADVOCATE -.+, / 0 /RESPONDENT BY : SHRI R. DURAIPANDIAN, ADDL. CIT 1 / 2$ / DATE OF HEARING : 18 - 03 - 2016 34) / 2$ / DATE OF PRONOUNCEMENT : 18 - 03 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER SINCE THERE WAS A DIFFERENCE OF OPINION BETWEEN THE MEMBERS CONSTITUTING THE BENCH, THE ISSUE WAS REFERRED TO T HE THIRD MEMBER FOR RESOLVING THE DISPUTE. THE THIRD MEMBER FOUND THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 148 R.W.S 150(1) OF THE ACT CANNOT BE SAID TO BE BASED ON ANY FINDING OR DIRECTION OF THE TRIBUNAL IN I.T. A.NOS.327 & 328/MDS/2010. 61 I.T.A. NO.992/MDS/15 THE THIRD MEMBER ALSO HELD THAT THE NOTICE ISSUED B Y THE ASSESSING OFFICER U/S 148 OF THE ACT IS BARRED BY LIMITATION. IN VIE W OF THE MAJORITY OPINION, THE ORDERS OF THE LOWER AUTHORITIES ARE QUASHED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 2. IN THE RESULT, THE APPEAL OF THE ASS ESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( () * + ) (CHANDRA POOJARI) , & / ACCOUNTANT MEMBER ( # . . # . $ ) ) (N.R.S. GANESAN) % & / JUDICIAL MEMBER / CHENNAI 6 / DATED: 18 TH MARCH, 2016 RD / -278 98)2 / COPY TO: 1 . +, / APPELLANT 4. 1 :2 / CIT 2. -.+, / RESPONDENT 5. 8; -2 / DR 3. 1 :2 () / CIT(A) 6. <( = / GF