2017 (1) TMI 851 - AT - Income Tax

Reopening of assessment - Computation of capital gain on Long Term Capital Gain arising on sale of two properties - assessee held undivided shares of 1.56% and 6.25% respectively along with other co-owners - valuation of the property by the Government approved Valuer - refernce to DVO challenged - AO issued a notice u/s 148 relying upon the report of the DVO in the case of another co-owner of the same properties - Held that - We find that assessment in this case had been completed u/s 143(3) of the I.T. Act. The reopening has been solely done on the basis of DVO s report in the case of a third party. No other material has come into the possession of the AO. In such circumstances the case law of ACIT vs Dhariya Construction Company (2010 (2) TMI 612 - Supreme Court of India) is applicable. Hence in our considered opinion the order of the learned CIT(Appeals) in this regard is quite correct. Accordingly we uphold the view that the reopening in this case is invalid and deserves to be cancelled. We uphold the order of learned CIT(Appeals) in this regard. As regards the merits of the issue as we have already upheld the order of learned CIT(Appeals) quashing the assessment on jurisdiction itself. In such circumstances in our considered opinion adjudicating upon the merits of the case is only of academic interest. Hence we are not engaging into the same. - Decided in favour of assessee

Summary

Issues:
Computation of capital gain on Long Term Capital Gain arising on sale of two properties.

Analysis:
The appeal by the Revenue challenged the order of the learned CIT(A) regarding the reopening of the assessment for the assessment year 2008-09. The primary issue revolved around the justification of the reopening based on the change of opinion on the same set of facts. The Revenue contended that the original assessment was made based on the value as on 01.04.1981 determined by the assessee's valuer, while the reopening was done based on the value determined by the DVO. The key contention was whether the reopening was made on the same set of facts.

The second issue involved the power of the Assessing Officer (AO) to make a reference to the DVO under section 55A of the Income Tax Act. The AO had issued a notice under section 148 relying on the DVO's report in the case of another co-owner of the same properties. The assessee objected to this reference, arguing that such a reference could only be made if the value claimed by the assessee was less than the Fair Market Value. The AO relied on a specific case law and computed the Long Term Capital Gain differently than the assessee.

The Tribunal analyzed the facts and legal precedents extensively. The learned CIT(A) favored the assessee by holding that the reopening of the assessment was invalid due to a clear case of change of opinion on the same set of facts. The Tribunal concurred with this view, upholding the decision that the reopening was not justified and should be canceled.

Regarding the merits of the case, the Tribunal referred to a decision involving another co-owner of the same property and concluded that the addition made by the AO was not sustainable on merits. However, since the Tribunal had already upheld the order quashing the assessment on jurisdictional grounds, it deemed further adjudication on the merits unnecessary.

Ultimately, the Tribunal dismissed the Revenue's appeal, emphasizing the invalidity of the reopening and declining to delve into the merits due to the jurisdictional ruling. The comprehensive analysis and legal interpretation led to the dismissal of the appeal, affirming the decision of the learned CIT(A) on the reopening issue.