2017 (10) TMI 1408 - AT - Income Tax

Re-opening of assessment - AO has not supplied her with the reasons recorded for re-opening the assessment - Computation of LTCG - Held that - In support of assessee s contention that the AO has not supplied her with the reasons recorded for re-opening the assessment despite the assessee s specific request vide letter dated 22/2/2012, the assessee has filed an Affidavit dated 23/9/2017 wherein she has stated that she had requested the AO for being supplied with reasons recorded vide letter dated 22/2/2012. We find that the orders of both the AO as well as the impugned order of the CIT(A) are silent on this issue and therefore it is not possible to render a conclusive finding without referring to the records of assessment on this issue. It is well settled proposition of law that in case the assessee requests for being supplied with the reasons recorded for re-opening the assessment, the AO is duty bound to supply the reasons and thereafter to decide upon the objections, if any, raised by the assessee against the notice issued u/s 148, prior to the framing of the order of assessment. It is clear that when this issue raised by the assessee has not been considered by the authorities below, it is only in the fitness of things that we remit this issue to the file of the ld AO for consideration. Non granting of correct cost of acquisition of land while computing the LTCG - Held that - We are of the view that since the examination of this claim of the assessee, while computing the LTCG of transfer of said land, would not require the examination of any new facts other than those already on the records of the Department, the same is admitted for consideration and adjudication. The same is also remitted to the file of the AO for consideration and adjudication in accordance with law. Since the issue of validity of the reopening has been remitted to the file of the AO, therefore the other grounds modified/additional grounds of appeal raised on merits are also remitted to the file of the AO for consideration and adjudication thereon after affording the assessee adequate opportunity of being heard in the matter. - Assessee s appeal allowed for statistical purposes.

Summary

Issues:
1. Assessment of Long Term Capital Gains (LTCG) on transfer of land.
2. Violation of Principles of Natural Justice.
3. Interpretation of Section 2(47)(v) of the Income-tax Act.
4. Consideration of cost of construction as full value of land.
5. Non-granting of Section 54/54F exemption.
6. Levy of interest under Section 234A and 234B.
7. Validity of re-opening assessment under Section 148.
8. Correct cost of acquisition of land for LTCG computation.

Analysis:
1. The case involved the assessment of LTCG on the transfer of land by the assessee through a Joint Development Agreement (JDA). The Assessing Officer initiated proceedings under Section 147 as the assessee had not filed her return for the relevant year. The AO determined the LTCG based on the share of land transferred by the JDA. The CIT(A) upheld the AO's decision, leading to the appeal by the assessee.

2. The appellant raised issues of violation of Principles of Natural Justice, arguing that the CIT(A) did not provide sufficient opportunity for the assessee to present necessary documents and did not consider the remand report. The appellant contended that the order was passed without following due process, impacting the outcome.

3. Interpretation of Section 2(47)(v) was crucial in determining whether there was an event of "transfer" for the assessment year. The appellant argued that no possession was handed over to the developer during the relevant period, challenging the basis for considering the transaction as a transfer for tax purposes.

4. The consideration of the cost of construction as the full value of the land was disputed by the appellant. The authorities had valued the land based on the developer's cost of construction, leading to a specific amount for the sale consideration. The appellant contended that the guideline value of the land should have been considered instead.

5. The non-granting of Section 54/54F exemption was another issue raised by the appellant. The CIT(A) was criticized for not considering the presence of a residential property on the land before development and for overlooking key evidence supporting the exemption claim under the relevant sections of the Act.

6. The appellant challenged the levy of interest under Sections 234A and 234B, arguing that the calculation and method adopted for interest imposition were incorrect and not transparent. The appellant sought relief from the interest levied under these sections.

7. The validity of re-opening the assessment under Section 148 was a significant issue raised by the appellant. The appellant argued that the notice issued for re-assessment was legally flawed as there was no prior assessment order for the relevant year, and the reasons for re-opening were not communicated adequately.

8. Correct cost of acquisition of land for LTCG computation was a critical aspect disputed by the appellant. The appellant contended that the correct cost of acquisition for the developer's portion of land was not considered, and there were errors in determining the cost of consideration and granting indexation benefits.

In conclusion, the ITAT Bangalore allowed the appellant's appeal for the assessment year 2008-09 for statistical purposes, remitting several issues back to the Assessing Officer for further consideration and adjudication in accordance with the law and principles discussed during the proceedings.