2020 (1) TMI 299 - HC - Income Tax

Reopening of assessment u/s 147 - Determining the capital gains tax - Determination of the value of immovable property - handing over possession of the property - market value of the property or actual sale consideration whichever is higher was required to be adopted - HELD THAT - Information which necessitated the AO to reopen the assessment had been found namely the communication received from the office of Inspector General of Stamps and Registration, Bangalore addressed to Commissioner of Income Tax, Bangalore which was forwarded to the jurisdictional Assessing Officer by communication dated 09.02.2012 as well as to the Directorate of Income Tax (Intelligence) vide letter dated 01.02.2012. This material which was available before the Assessing Officer had persuaded him to form an opinion that income chargeable to tax had escaped from assessment. This finding would not give rise for us to formulate substantial question of law as sought for in the appeal memorandum. Clause 6 of the said agreement would clearly indicate that possession of the property which has been delivered is symbolic possession and not physical possession. By applying Section 53A of Transfer of Property Act and Section 2(47) (v) it has been rightly held that physical possession of the property was not transferred to the purchaser under the agreement of sale. In other words, it has been held by Tribunal that in the absence of any finding about handing over of possession in any earlier year, it cannot be said that property was transferred in any earlier year and for ascertaining same, matter has been remanded back to CIT (Appeals) with regard to issue of possession and said finding recorded by the Tribunal cannot be found fault with. That apart, issue relating to valuation, Tribunal has noticed that AO had not referred the matter to the valuation officer as required under Section 50C(2). Said valuation would be the basis for determining the amount of capital gains tax which would be taxable for the relevant year. The finding recorded by the Tribunal is purely question of facts not giving rise to substantial question of law being formulated. As such, we do not find any other ground to entertain this appeal. Accordingly, it stands dismissed. We do not express any opinion with regard to valuation and contention of both parties in this regard is kept open to be urged before the Commissioner of Income Tax (Appeals) insofar as Section 50C of the Act is concerned. By applying Section 53A of Transfer of Property Act and Section 2(47) (v) of I.T. Act, it has been rightly held that physical possession of the property was not transferred to the purchaser under the agreement of sale. It has been held by Tribunal that in the absence of any finding about handing over of possession in any earlier year, it cannot be said that property was transferred in any earlier year and for ascertaining same, matter has been remanded back to CIT (Appeals) with regard to issue of possession and said finding recorded by the Tribunal cannot be found fault with. That apart, issue relating to valuation, Tribunal has noticed that Assessing Officer had not referred the matter to the valuation officer as required under Section 50C(2). Said valuation would be the basis for determining the amount of capital gains tax which would be taxable for the relevant year. The finding recorded by the Tribunal is purely question of facts not giving rise to substantial question of law being formulated. As such, we do not find any other ground to entertain this appeal. Accordingly, it stands dismissed. We do not express any opinion with regard to valuation and contention of both parties in this regard is kept open to be urged before the Commissioner of Income Tax (Appeals) insofar as Section 50C of the Act is concerned.

Issues Involved:
Assessment year 2009-10, Reopening of assessment under Section 147 of the Income Tax Act, Capital gains tax under Section 50C, Possession of immovable property, Valuation of property, Jurisdiction of Assessing Officer, Tribunal's decision, Appeal dismissal.

Detailed Analysis:

1. Reopening of Assessment under Section 147:
The appellant-assessee filed a return of income for the assessment year 2009-10, which was processed under Section 143(1)(a) of the Income Tax Act. Subsequently, the Assessing Officer issued a notice under Section 148 of the Act based on alleged information received. The Tribunal upheld the reopening of the assessment based on information from the office of Inspector General of Stamps and Registration, Bangalore, regarding the sale of immovable property at a value significantly lower than the guidance value. The Assessing Officer found that the income chargeable to tax under capital gains had escaped assessment, leading to the reopening of the assessment.

2. Capital Gains Tax and Valuation of Property:
The basis for determining the capital gains tax was the valuation of the property sold by the appellant. The Tribunal noted that the Assessing Officer did not refer the matter to the valuation officer as required under Section 50C(2) of the Act. The Tribunal remanded the issue of valuation back to the Commissioner of Income Tax (Appeals) for adjudication. The Tribunal held that the valuation would be the basis for determining the amount of capital gains tax, emphasizing the importance of accurate property valuation in tax assessment.

3. Possession of Immovable Property:
The appellant argued that possession of the property had been delivered under an agreement of sale dated 27.01.1995, and therefore, the valuation based on possession delivered later under a sale deed in 2008 was not valid. However, the Tribunal found that physical possession of the property was not transferred to the purchaser under the agreement of sale, as per Section 53A of the Transfer of Property Act and Section 2(47)(v) of the Income Tax Act. The issue of possession was remanded back to the Commissioner of Income Tax (Appeals) for further examination.

4. Jurisdiction of Assessing Officer and Tribunal's Decision:
The Tribunal rejected the appellant's contention regarding the jurisdiction of the Assessing Officer to reopen the assessment, citing the material available before the Assessing Officer as sufficient grounds for reopening. The Tribunal's decision to remand the issue of possession and valuation back to the Commissioner of Income Tax (Appeals) was upheld by the High Court. The High Court dismissed the appeal, stating that the findings were based on facts and did not give rise to substantial questions of law.

5. Appeal Dismissal and Future Contention:
The High Court dismissed the appeal, concluding that there were no grounds to entertain it further. The Court did not express any opinion on the valuation issue, leaving it open for both parties to argue before the Commissioner of Income Tax (Appeals) regarding Section 50C of the Act. The dismissal of the appeal signified the final decision on the matter.

In summary, the High Court upheld the Tribunal's decision regarding the reopening of the assessment, capital gains tax, possession of immovable property, and valuation issues. The dismissal of the appeal marked the conclusion of the legal proceedings, with the valuation matter left open for further contention before the Commissioner of Income Tax (Appeals).

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