2011 (7) TMI 1244 - AT - Income Tax

Summary

Issues involved: Jurisdiction of assessing officer u/s 144 and validity of addition of Long Term Capital Gain.

Jurisdiction of Assessing Officer u/s 144:
The case involved a dispute regarding the jurisdiction of the Assessing Officer (AO) to frame the assessment u/s 144 of the Income Tax Act. The AO at the Income Tax Office (HQ)(CIB) computed Long Term Capital Gain in the hands of the assessee based on information received, as the assessee did not respond to notices. The assessee contended that the AO did not have proper legal jurisdiction over the case, as the return of income was filed with a different AO. The AO's jurisdiction was challenged, and the first appellate authority, the Commissioner of Income-tax (Appeals) (CIT(A)), deleted the addition. The Revenue appealed this decision.

Validity of Addition of Long Term Capital Gain:
The Revenue challenged the deletion of the addition of Long Term Capital Gain by the CIT(A). The Revenue argued that the CIT(A) entertained additional evidence without following proper procedures. The assessee, on the other hand, argued that the property in question was not transferred to the developer as per the development agreement, and therefore, no capital gain should be assessed. The CIT(A) upheld the deletion of the addition, citing various reasons including the non-quantification of sale consideration, lack of possession given to the developer, absence of building plan approval, and inaction by the developer. The Tribunal upheld the CIT(A)'s decision on this issue.

Conclusion:
The Tribunal found that the AO at the HQ(CIB) did not have jurisdiction to frame the assessment u/s 144, as the assessee had already filed the return with a different AO. The assessment made by the AO was deemed null and void. Additionally, the Tribunal agreed with the CIT(A) that the development agreement did not constitute a transfer of property, and therefore, the addition of Long Term Capital Gain was not justified. The appeal by the Revenue was dismissed, and the Tribunal upheld the CIT(A)'s decision.