2019 (7) TMI 751 - HC - Income Tax

Capital gain computation - cost of acquisition of land as on 01.04.1981 - rejection of cost of acquisition based on registered valuer without evidence - HELD THAT - The findings recorded by the appellate tribunal that the assessee submitted report of registered valuer vide dated 23.09.2013 during assessment proceedings and the value adopted by the registered valuer was ₹ 99/per sq.mt. from the assessment order, it is also discernable that the AO has completely ignore the report of the registered valuer and without any discussion thereon estimated the cost at ₹ 30/per sq.mt. without any reasonable basis and justified reasoning. They are also in agreement with the conclusion drawn by the ld. CIT(A) that the assessee was not confronted by the AO before estimating the cost of acquisition at ₹ 30/per sq.mt. and thus, the AO was not right in estimating the cost of land as on 01.04.1981 at ₹ 30/per sq.mt. without any basis and keeping aside rather ignoring the report of the registered valuer submitted before him during assessment proceedings. In our opinion, the first question is a power question of fact and we do not find any error at the end of the tribunal in taking the aforesaid view. Reopening of assessment - non- issuance of notice u/s.143(2) - HELD THAT - Tribunal upheld the finding of CIT(A) that there is not any iota of evidence or document to establish that before framing reassessment order u/s.143(3) r/w. s.147, the AO issued mandatory statutory notice u/s.143(2) to the assessee therefore, the reassessment order passed in pursuant to such proceedings without complying with the mandatory provisions of the Act cannot held as valid and sustainable. We are of the view that no error, not to speak of any error of law could be said to have been committed by the tribunal in so far as the second question, which has been passed by the revenue is concerned. - appeal is dismissed.

Summary

Issues:
1. Estimation of cost of acquisition of land for calculating LTCG.
2. Validity of reassessment proceedings due to non-issuance of notice u/s.143(2) of the Income Tax Act.

Analysis:
1. Estimation of cost of acquisition of land:
The first issue in this case pertains to the estimation of the cost of acquisition of land for calculating Long Term Capital Gains (LTCG). The Revenue challenged the decision of the Income Tax Appellate Tribunal (ITAT) upholding the direction of the Commissioner of Income Tax (Appeals) to work out the cost of acquisition at a specific rate per square meter. The Tribunal found that the Assessing Officer (AO) had estimated the cost without any basis and ignored the report of a registered valuer submitted by the assessee. The Tribunal agreed with the CIT(A) that the AO was not justified in estimating the cost without any reasonable basis and without considering the valuer's report. The Tribunal held that the CIT(A) was correct in directing the AO to adopt the cost as estimated by the registered valuer. Ultimately, the Tribunal found no error in the factual findings and upheld the decision regarding the cost of acquisition of land.

2. Validity of reassessment proceedings:
The second issue revolves around the validity of reassessment proceedings due to the non-issuance of a notice under section 143(2) of the Income Tax Act. The CIT(A) found that the assessing officer failed to produce any direct evidence of issuing the notice, and the appellant had clearly stated that no such notice was served. The CIT(A) emphasized the mandatory nature of issuing such a notice, citing relevant case laws. The Tribunal affirmed the CIT(A)'s findings, stating that the reassessment order was made without valid jurisdiction as the notice u/s.143(2) was not issued. The Tribunal concluded that the reassessment order was not legal and sustainable due to the absence of the mandatory notice. The Tribunal found no error in the CIT(A)'s decision regarding the validity of the reassessment proceedings. Consequently, the Tribunal dismissed the Revenue's grounds related to the validity of the reassessment proceedings.

In summary, the High Court dismissed the tax appeal by the Revenue, upholding the decisions of the ITAT and CIT(A) on both issues. The Court found no errors in the factual findings and legal interpretations made by the lower authorities. The judgment emphasized the importance of following proper procedures and considering all relevant evidence in tax assessments to ensure fairness and legality.