2017 (10) TMI 382 - HC - Income Tax

Reopening of assessment - computation of cost of acquisition of land for the purpose of computing long term capital gain or loss on sale of such land - Held that - The petitioner never challenged the order of CIT(Appeals) which was in part against the petitioner. If the petitioner was aggrieved by the directions issued by the CIT(Appeals), it ought to have challenged the same before the appropriate forum. The petitioner having accepted and acquiesced in the order cannot question the wisdom or authority of CIT(Appeals) to issue such directions. Stand of CIT(Appeals) in on one hand annulling the reassessment on the grounds of previously scrutinized claim and no failure on part of the assessee to disclose truly and fully material facts and at the same time directing the reopening of the assessment, was not in any manner incongruent. His observations or conclusions for invalidating the assessment were based on materials which were before the Assessing Officer at the time of issuing the notice for reopening. His directions were based on the materials which came before him during the appellate proceedings. By assessee s own account, correct valuation as on 1.4.1981 of the land in question would be ₹ 108.27 per sq mtr. This would have two elements. One, that the original scrutiny would no longer be valid since there was an outside alien material which had later on come on record and two, that the declaration made by the assessee in the return filed and during the previous assessment proceedings would also be under a cloud. The effect of directions that the appellate authority or the Tribunal may issue during the assessment proceedings, need not be in all cases confined to saving of limitation in terms of section 150 of the Act if the directions are specific, as in the present case which can go beyond mere saving of limitation. - Decided against assessee.

Summary

Issues:
1. Validity of reopening assessment for assessment year 2005-2006 based on computation of cost of acquisition of land.
2. Authority of Commissioner (Appeals) to issue directions for reopening assessment after declaring reassessment as invalid.
3. Challenge against the directions issued by Commissioner (Appeals) for reopening assessment.

Issue 1: Validity of Reopening Assessment:
The petitioner challenged a notice issued by the Assessing Officer for reopening the assessment for the assessment year 2005-2006 based on discrepancies in the computation of cost of acquisition of land for long term capital gain. The original assessment accepted the declaration of nil income and long term capital loss of &8377; 15.80 lacs. However, the Assessing Officer, in the reassessment, determined a long term capital gain of &8377; 1.11 crores due to a different valuation of the land. The Commissioner (Appeals) held the reopening as invalid, stating that there was no failure on the assessee's part to disclose all material facts, and the issue was already examined during the original assessment.

Issue 2: Authority of Commissioner (Appeals) to Issue Directions:
The Commissioner (Appeals) declared the reassessment invalid but also gave directions for reopening based on the assessee's claim of correct cost of acquisition of land at &8377; 108.27 per sq mtr. The petitioner argued that the Commissioner (Appeals) had no authority to issue directions after declaring the reassessment invalid. However, the court held that the directions were based on new materials presented during the appellate proceedings, justifying the need for reopening the assessment.

Issue 3: Challenge Against Directions for Reopening:
The petitioner did not challenge the directions issued by the Commissioner (Appeals) for reopening the assessment. The court noted that the petitioner's acceptance of the order without challenge prevented questioning the authority of the Commissioner (Appeals) to issue such directions. The court emphasized that the directions were not incongruent, as they were based on new materials and could go beyond saving the limitation under the law.

In conclusion, the court dismissed the petition, upholding the validity of the directions issued by the Commissioner (Appeals) for reopening the assessment. The court highlighted the importance of new materials presented during appellate proceedings in justifying the need for reassessment, even if the original assessment was scrutinized previously.