2015 (10) TMI 2025 - AT - Income Tax

Taxation on capital gain - rectification of mistake - direction given by the Tribunal to the Assessing Officer to tax the capital gain in assessment year 2002-03 is not proper because the Tribunal could not have given such directions - Held that - It is seen that it is specified in sub section (3) of section 153 that Sub Sections (1), (1A), (1B) and (2) shall not apply where the assessment, reassessment or recomputation is made as per clause (ii) of sub section (3) of section 153 on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order, under sections 250, 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act. The provisions of section 150 are applicable in respect of reopening u/s 148 and not for reassessment u/s 153 as per tribunal direction. This is important to note that clause (ii) of sub section (3) of section 153 can be invoked even where the reassessment is called for as per an order of any court in a proceeding otherwise than by way of appeal or reference under this Act. Hence, in our considered opinion, the limitation u/s 150 (2) is not applicable in respect of appeal effect order to be passed u/s 153. Hence, this objection also has no merit. As per above discussion, we have seen that there is no merit in any of the contentions raised by the assessee in the Misc. Application. Therefore, we hold that there is no merit in the Misc. Application of the assessee. - Decided against assessee.

Summary

Issues Involved:
1. Validity of reassessment proceedings and notice under Section 143(2).
2. Tribunal's direction to tax capital gain in assessment year 2002-03.
3. Legality of the Tribunal's direction being barred by limitation.

Detailed Analysis:

1. Validity of Reassessment Proceedings and Notice under Section 143(2):
The assessee contended that the Tribunal either did not decide or wrongly decided the technical aspects concerning the validity of reassessment proceedings and the notice under Section 143(2). The Tribunal found these issues to be of academic interest only because the Tribunal had already followed the judgment of the Hon'ble Allahabad High Court in the assessee's own case, which led to the deletion of the addition on account of capital gain for the present year. Consequently, the Tribunal held that these technical aspects did not require separate adjudication.

2. Tribunal's Direction to Tax Capital Gain in Assessment Year 2002-03:
The assessee argued that the Tribunal's direction to the Assessing Officer to tax the capital gain in the assessment year 2002-03 was improper. The Tribunal observed that even if such a direction was claimed to be improper, it did not constitute an apparent mistake rectifiable under Section 254(2). The Tribunal emphasized that the correct income should be taxed in the correct hands in the correct year, following the settled law and the judgment of the Hon'ble Jurisdiction High Court in the assessee's own case. The Tribunal clarified that the direction to tax the income in A.Y. 2002-03 was a consequential direction arising from the relief allowed for the present year, based on the finding that the transfer of the asset took place in F.Y. 2001-02 relevant to A.Y. 2002-03.

3. Legality of the Tribunal's Direction Being Barred by Limitation:
The assessee contended that the Tribunal's direction to tax the capital gain in assessment year 2002-03 was illegal due to being barred by limitation. The Tribunal referred to the provisions of Section 153 of the Income Tax Act, which specify the time limits for completion of assessments and reassessments. The Tribunal noted that the direction to compute and tax the capital gain in A.Y. 2002-03 was to be done in accordance with the law. The Tribunal further explained that the limitation under Section 150(2) was not applicable in this case as the reassessment was to be done under Section 153 following the Tribunal's order, which falls under the exceptions provided in sub-section (3) of Section 153. Thus, the Tribunal concluded that the objection regarding the limitation had no merit.

Conclusion:
The Tribunal found no merit in any of the contentions raised by the assessee in the Miscellaneous Application. Consequently, the Miscellaneous Application of the assessee was dismissed. The order was pronounced in the open court.