2019 (12) TMI 697 - HC - Income Tax

Reopening of assessment - Capital gain - transfer u/s 2(47) - effective date of transfer - Year of assessment - HELD THAT - There was no effective adjudication as to what would be the effective date of transfer while deciding the correctness of the reassessment for the year 1996-97 while making protective assessment for the year 2001-02. Therefore, we fully agree with the view taken by the CIT(A) that there was no discussion on merits on the effective date of transfer. CIT(A), after elaborately considering the terms of agreement, was right in concluding that the transfer came to be actually completed during the financial year 1999-2000 and consequently, the CIT(A) was right in holding that the entire capital gains relating to 40% of the undivided share of land were subjected to tax for the assessment year 2000-01. The Tribunal re-examined the factual position and pointed out that the assessees had never admitted the capital gains on sale of 40% of undivided portion of the land, against which, consideration was held to be 60% of the constructed area. After noting that the assessee had shown the capital gains on the basis of individual sale deeds executed in favour of the nominees of the developer, it was held that it cannot be stated that the assessment order stood merged with the appellate order because the said issue was never raised by the assessee in order to be decided by the appellate authority. Assessees cannot plead a case that there has been a change of opinion and that the rules of consistency had been violated. The CIT (A) has elaborately dealt with this aspect and we concur with the view taken by the CIT(A), which was confirmed by the Tribunal. Thus, for all the above reasons, we find that the Assessing Officer has not traveled beyond the reasons, for which, the assessment was re-opened and there is no contra view of the Assessing Officer for two assessment years i.e., 1996-97 and 2000-01 as it is reiterated that at no point of time, there was discussion on the merits of the matter as to what is the actual date of transfer. Furthermore, we have also brought out the factual position to show that the assessee were inconsistent in their stand at different point of time. Thus, for the above reasons, we are of the view that the decisions relied on learned counsel for the appealant can be of no assistance to the case of the assessee . - Decided against the assessee

Issues Involved:
1. Contradicting views of the assessing officer for different assessment years.
2. Determination of the effective date of transfer within the meaning of Section 2(47)(v) of the Income Tax Act, 1961.
3. Timing of capital gains tax liability.
4. Taxability of entire capital gains in a specific assessment year.
5. Directions given by CIT(A) regarding modification of assessment orders.
6. Preclusion of assessing capital gains in different assessment years based on earlier assessments.

Issue-wise Detailed Analysis:

1. Contradicting views of the assessing officer for different assessment years:
The appellants argued that the Assessing Officer (AO) cannot travel beyond the reasons for which the assessment was reopened, as it would amount to contradicting views for the assessment years 1996-97 and 2000-01. The AO initially taxed the entire capital gains in 1996-97, rejecting the appellants' objections to tax them in 1999-2000. The appellants claimed that the AO's subsequent action of taxing the capital gains in 2000-01 was a clear case of change of opinion and violated the rules of consistency.

2. Determination of the effective date of transfer within the meaning of Section 2(47)(v):
The Tribunal held that there was no transfer within the meaning of Section 2(47)(v) during the assessment year 1996-97. The CIT(A) and Tribunal concluded that the transfer was completed during the financial year 1999-2000, making the capital gains taxable in the assessment year 2000-01. The Tribunal noted that the appellants had been inconsistent in their stand regarding the effective date of transfer, which further complicated the determination.

3. Timing of capital gains tax liability:
The appellants offered capital gains in each assessment year starting from 1999-2000 to 2003-04 based on the sale deeds executed in favor of the developer's nominees. The AO reopened the assessment for 2000-01 to tax the entire capital gains for that year. The CIT(A) upheld this decision, and the Tribunal confirmed it, stating that the capital gains relating to 40% of the undivided share of land were rightly subjected to tax in 2000-01.

4. Taxability of entire capital gains in a specific assessment year:
The Tribunal and CIT(A) concluded that the entire capital gains were taxable in the assessment year 2000-01. The Tribunal emphasized that the appellants had not admitted the capital gains on the sale of 40% of the undivided portion of the land, which was considered as 60% of the constructed area. The Tribunal noted that the appellants had taken inconsistent positions at different times, which affected the assessment.

5. Directions given by CIT(A) regarding modification of assessment orders:
The CIT(A) had directed the AO to modify the assessment orders for the years 1999-2000 and 2002-03 by deleting the sums added as long-term capital gains and recomputing the taxes payable. The Tribunal noted this direction and held that it should be applied to the years 1999-2000 to 2003-04. The AO was instructed to give effect to this order accordingly.

6. Preclusion of assessing capital gains in different assessment years based on earlier assessments:
The appellants argued that the AO, having assessed the capital gains in 1996-97, was precluded from assessing them again in 2001-02. The Tribunal found that there was no effective adjudication on the merits regarding the actual date of transfer in the earlier assessment. The Tribunal and CIT(A) noted that the appellants had taken inconsistent stands and failed to clearly establish when the actual transaction took place.

Conclusion:
The appeals filed by the assessees were dismissed, and the substantial questions of law were answered against them. The Tribunal and CIT(A) upheld the AO's decision to tax the entire capital gains in the assessment year 2000-01, noting the appellants' inconsistent positions and the lack of effective adjudication on the merits in earlier assessments. The AO was directed to modify the assessment orders for the years 1999-2000 to 2003-04 in line with the CIT(A)'s directions.

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