2019 (5) TMI 1443 - AT - Income Tax

Reopening of assessment u/s 147 - as alleged no notice has been served on the assessee - service of notice made in the hands of the Hindu undivided family of the assessee - sale of land by Hindu undivided family - HELD THAT - The notices were sent at the address which is mentioned in the sale deed. Assessee did not file any return of income nor mentioned the PAN in the sale deed. The return filed by the assessee are also for Ay 2011-12 and not Ay 2008-09. AO did not have any mechanism to find out who is the person who has sold the land. The only source of information is the copy of the sale deed and address mentioned there in , notices / communication were sent. It is not the claim of the assessee that in sale deed wrong address is mentioned. Therefore, the argument of the assessee that no notice has been served on the assessee is rejected. Further with respect to the claim of the assessee that the land belongs to the Hindu undivided family and not in the status of individual is also dealt with by the learned CIT-A wherein he held that in the documents submitted by the assessee for the sale of land, it is nowhere mentioned that the assessee has sold the above land in the name of Hindu undivided family. Further in all the documents the names of all the appellant s including Sri Dalel Singh is mentioned in their individual capacity only. Further the enquiry report also names the appellant s in their individual capacity only. We reject the claim of the assessee that capital gain is chargeable to tax even if it is at all in the hands of the Hindu undivided family. As we already rejected the argument of the assessee that land belongs to the Hindu undivided family and not to the assessee in his individual capacity, all the arguments of the assessee with respect to the service of notice not made in the hands of the Hindu undivided family of the assessee is also rejected. Capital gain on sale of land - adoption of the estimated market value as on 1/4/1981 - HELD THAT - According to the provisions of section 2 (22B) the fair market value in relation to a capital asset means the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date i.e 01/04/1981. AO has not given any evidence that how the fair market value has been determined by him, we reject the fair market value adopted by the AO of INR 1,650,000 per acre as on 1/4/81. It is also true that assessee has also not produced before the lower authorities any evidence with respect to FMV of the land as on 1/4/1981. We set aside this issue back to the file of the learned assessing officer to determine the fair market value of the impugned property as on 1/4/81 by giving an opportunity to the assessee to first show the cost of acquisition of the asset and fair market value of the asset. Then at the option of the assessee any one of them can be taken as cost of acquisition of the asset for indexation. If the AO is not satisfied with the fair market value of the asset shown by the assessee as on 1/4/1981, then the learned assessing officer may decide the whole issue either by referring the matter to the district valuation officer for determining the fair market value or accepting the fair market value shown by the assessee and then decide the computation of the capital gain on sale of the above land in accordance with the provisions of the law. Accordingly ground number 4 of the appeal of the assessee is set aside to the file of the learned assessing officer with above direction.

Issues Involved:
1. Validity of the notice issued under sections 147/148 of the Income Tax Act, 1961.
2. Assessment under section 144 of the Income Tax Act, 1961 without specific notice.
3. Opportunity of hearing before completing the assessment.
4. Adoption of estimated fair market value for capital gains tax calculation.
5. Denial of deduction under section 54B for investment in agricultural land.

Issue-wise Detailed Analysis:

1. Validity of the Notice Issued Under Sections 147/148:
The assessee contested that the notice under section 148 was never served. The CIT(A) verified the assessment record and found that the notice was issued through speed post and there was no evidence of it being returned unserved. The Tribunal upheld this, citing the presumption of valid service in the absence of contrary evidence. The assessee's claim that the notice was not served was rejected.

2. Assessment Under Section 144 Without Specific Notice:
The assessee argued that the assessment was carried out in the wrong hands without a specific notice. The CIT(A) found that the property was sold in the individual capacity of the assessee, not as part of a Hindu Undivided Family (HUF). The Tribunal agreed, noting that all documents and the enquiry report indicated the sale was made by the assessee in an individual capacity. The argument that the assessment should have been made in the name of the HUF was rejected.

3. Opportunity of Hearing Before Completing the Assessment:
The assessee claimed that the assessment was completed without providing a reasonable opportunity of hearing. The Tribunal noted that multiple notices were issued, and the assessee did not respond. Therefore, the assessment under section 144 was justified due to non-compliance by the assessee. The Tribunal dismissed this ground.

4. Adoption of Estimated Fair Market Value for Capital Gains Tax Calculation:
The assessee challenged the fair market value adopted by the AO, arguing it was based on arbitrary valuation without evidence. The Tribunal found that the AO estimated the fair market value based on market enquiries but did not provide evidence of such enquiries. The Tribunal set aside this issue to the AO to determine the fair market value of the property as on 1/4/1981, allowing the assessee an opportunity to present evidence. The AO was directed to consider the fair market value or refer the matter to the district valuation officer if necessary.

5. Denial of Deduction Under Section 54B:
The assessee's claim for deduction under section 54B for investment in agricultural land was not argued before the Tribunal. Consequently, this ground of appeal was dismissed due to lack of arguments.

Conclusion:
The appeal was partly allowed. The Tribunal upheld the validity of the notice under sections 147/148 and the assessment under section 144. However, it set aside the issue of fair market value determination for capital gains tax calculation to the AO for reconsideration, while dismissing the claim for deduction under section 54B. The Tribunal directed the AO to provide an opportunity to the assessee to present evidence regarding the fair market value of the property as on 1/4/1981.

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