2019 (9) TMI 1227 - AT - Income Tax

Re-opening of assessment u/s 147 - computation of LTCG - assessee had not filed his return of income within the due date allowed either u/s 139(1) of the Act or u/s 139(4) - HELD THAT - In the case on hand the assessee has not filed his return of income u/s 139(4) of the Act and whereas in the case of UP Housing Development Board 2015 (1) TMI 570 - ITAT LUCKNOW the return of income was filed on 30.03.2006. There was no intention to file the return of income before 31.03.2010. The return of income was filed only on 26.11.2015. Thus we cannot apply the ratio of this order to the case on hand. In view of the above we hold that re-opening of assessment is valid. Hence this ground of the assessee is dismissed. Computation of LTCG - adoption of value fixed by the DVO - There were a total of three properties which were sold. As regards the property located at Mouza Mashapur, P.S. Diamond Harbour and property located at Chowbaga (West) which was sold by way of a registered sale deed, we find no infirmity in the order of the ld. CIT(A) in directing the AO to adopt the value as fixed by the DVO. In the case of the sale of the third property i.e. Chowbaga (West) which was sold by way of a Power of attorney there is no value fixed by the Stamp Valuation Authority as there was no sale deed. This was the reason why the DVO did not fix any value to the property. In our considered opinion, as the properties at Chowbaga (West) are located adjacent to each other, the value fixed by the DVO for plot no. 2, may be taken as the value of plot no. 3 for the purpose of Section 50C of the Act. When this is computed on proportionate basis, the sale value of property would work out to ₹ 6,87,382.39. In our view this value would be fair and reasonable and may be considered as the value fixed by the DVO. Hence we direct the AO to adopt this figure as the full value of consideration u/s 50C of the Act for the purpose of computing LTCG of property no. 3 as this is the sale value declared by the assessee and is in excess of ₹ 6,87,382.39 computed above. Appeal of the assessee is partly allowed.

Summary

Issues:
1. Validity of re-opening assessment u/s 147 of the Income Tax Act, 1961.
2. Valuation of properties for computation of Long Term Capital Gains (LTCG).

Issue 1: Validity of re-opening assessment u/s 147 of the Income Tax Act, 1961:

The Assessing Officer (AO) re-opened the assessment for Assessment Year 2013-14 based on the belief that taxable LTCG had escaped assessment. The Assessee contended that the notice issued on 30.01.2015 was premature as the due date for filing the return of income was 31.03.2015 under section 139(4) of the Act. The Assessee relied on precedents to support this argument. The Departmental Representative (DR) argued that the notice was valid as the return was not filed within the prescribed time. The Tribunal analyzed the case law cited and held that the re-opening of assessment was valid as the return was filed after the notice u/s 148 was issued, dismissing the Assessee's contention.

Issue 2: Valuation of properties for computation of Long Term Capital Gains (LTCG):

The Assessee challenged the valuation of properties for LTCG computation. The first two properties were valued by the Departmental Valuation Officer (DVO) as per the ld. CIT(A)'s directions. However, the third property, sold through a Power of Attorney (POA), lacked a valuation by the Stamp Valuation Authority due to the absence of a sale deed. The DVO did not provide a valuation for this property. The Tribunal determined a fair value for this property based on the adjacent properties' DVO valuation, directing the AO to adopt this value for LTCG computation. Consequently, the Assessee's appeal was partly allowed on this ground.

In conclusion, the Appellate Tribunal upheld the validity of re-opening the assessment and directed the AO to adopt specific property valuations for LTCG computation, resulting in a partial allowance of the Assessee's appeal.