2023 (1) TMI 951 - AT - Income Tax

Reopening of assessment u/s 147 - jurisdiction of the ld. AO related to calculation of capital gain of the assessee without referring the issue to DVO - HELD THAT - After a thoughtful consideration from all four amended grounds, we found that the assessing authority had passed the order beyond his jurisdiction by calculating the cost of acquisition on basis of his own assumption. So, the entire issue is setting aside to the ld. AO and the issue should be referred to DVO for considering the cost of acquisition of the property before computing the total income. Both the revenue and the counsel of the assessee had not made any objection for remanding back the issue before the ld. AO. Needless to say, that the AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidence/explanation submitted by assessee in its defence shall be admitted by the AO, and adjudicated on merits in accordance with law. We order accordingly.

Summary

Issues:
1. Jurisdiction for issuance of notice u/s 148 by the ld. AO.
2. Calculation of capital gain without referring the issue to DVO.

Analysis:

Issue 1: Jurisdiction for issuance of notice u/s 148 by the ld. AO

The appeal was against the order of the ld. Commissioner of Income Tax (Appeals) for A.Y. 2010-11, emanating from the order of the ld. Income Tax Officer, Ward-2(1), Bathinda, under sections 143/147 of the Income Tax Act 1961. The assessee challenged the reopening of the case u/s 147, questioning the sufficiency of material before the ld. AO for forming a reasonable belief. The appellant contended that the sanction for reopening was mechanical and invalid. The appellant also disputed the estimation of escaped income by the ld. AO. The ld. Counsel of the assessee referred to legal precedents and the CBDT Standard Procedure to challenge the jurisdiction of the notice u/s 148. The Tribunal found that the ld. AO had exceeded his jurisdiction by calculating the cost of acquisition based on assumptions. The issue was remanded back to the ld. AO for proper consideration and referral to DVO for determining the cost of acquisition before computing the total income.

Issue 2: Calculation of capital gain without referring the issue to DVO

The assessee's case was reopened based on information related to the sale of land. The assessment was completed, determining the capital gain with the benefit of index cost of acquisition. The appellant challenged both legal and factual grounds before the ld. CIT(A), who upheld the ld. AO's order. The Tribunal, after considering the arguments and documents, found that the ld. AO had calculated the cost of acquisition without referring the issue to DVO. The Tribunal set aside the decision and directed the issue to be referred to DVO for proper consideration. Both the revenue and the assessee's counsel did not object to remanding the issue. The Tribunal emphasized providing the assessee with a fair opportunity to present its case during the reassessment proceedings.

In conclusion, the appeal of the assessee was allowed for statistical purposes, and the case was remanded back to the ld. AO for reconsideration in accordance with the Tribunal's directions.

This comprehensive analysis covers the legal issues raised in the judgment, detailing the arguments presented by the parties and the Tribunal's decision on each issue.