2024 (8) TMI 415 - AT - Income Tax

Validity of re-assessment proceedings u/s 148 - sale of immovable property by the assessee - difference between the stamp value and consideration is taxable u/s 50C - HELD THAT - Transaction of sale actually got concluded in AY 2007 08 itself and assessment u/s 143(3) of the Act was also framed accepting the stand of the assessee. While this is so, for the very same property, how can there be capital gains in AY 2011- 12. Admittedly, there was no reopening made for AY 2007 08 or revision proceeding made u/s 263 of the Act for AY 2007-08 disturbing the findings recorded by the ld AO with regard to capital gains in the scrutiny assessment proceedings for AY 2007 08. In our considered opinion, mere execution of the sale deed dated 20.09.2010, which was effectively a registration deed on account of certain objections raised by the local authorities could not fasten any capital gains tax liability on the assessee for AY 2011-12 when the capital gains for the very same property had already offered by the assessee and assessed by the ld AO in scrutiny assessment proceedings in AY 2007-08. This view of ours is further fortified by the decision of case of Poddar Cements 1997 (5) TMI 2 - SUPREME COURT Hence, there cannot be any application of provisions of section 50C of the Act for the subject mentioned property in AY 2011-12 when there cannot be any assessment of capital gains per se on the subject mentioned property in AY 2011-12. Thus, we hold that very assumption of the jurisdiction by the ld AO u/s 147 of the Act is illegal and in any case, there cannot be any assessment of capital gains on merits and on law for AY 2011-12. Accordingly, the grounds raised by the assessee are allowed.

Issues:
Reopening of assessment beyond the time limit under section 147/143(3); Application of provisions of section 50C/43CA for enhancing sale consideration of immovable assets; Determination of capital gain in the year of registry of sale deed; Charging interest under sections 234A and 234B; Setting off long-term capital gain with carried over loss; Enhancing book profit under section 115JB with capital gain computed under section 50C.

Issue 1: Reopening of assessment beyond the time limit under section 147/143(3):
The appeal challenged the order of the Commissioner of Income Tax (Appeals) and the Assessing Officer for reopening the assessment for AY 2011-12 beyond the four-year limit from the original assessment year. The appellant contended that the provisions of section 151 were not applicable as the transaction in question did not occur during AY 2011-12. The Tribunal considered the reasons recorded for reopening the assessment, which were based on information received regarding the sale of immovable property. The Tribunal analyzed the facts and held that the jurisdiction assumed by the Assessing Officer under section 147 was illegal, as the capital gains had already been assessed for the same property in AY 2007-08, and there was no valid reason for reassessment in AY 2011-12. The grounds raised by the assessee were allowed, and the appeal was upheld.

Issue 2: Application of provisions of section 50C/43CA for enhancing sale consideration of immovable assets:
The appellant contested the application of sections 50C/43CA by the Commissioner of Income Tax (Appeals) and the Assessing Officer to enhance the sale consideration of immovable assets. The Tribunal examined the timeline of events related to the sale of the property and the registration process. It was observed that the capital gains on the property had already been declared and assessed in AY 2007-08. The Tribunal held that the execution of the sale deed in 2010 could not impose capital gains tax liability in AY 2011-12 when the gains had already been offered and assessed earlier. Citing relevant case law, the Tribunal concluded that there was no valid basis for applying section 50C to the property in AY 2011-12. Consequently, the grounds raised by the assessee were allowed, and the appeal was granted.

Issue 3: Determination of capital gain in the year of registry of sale deed:
The appellant challenged the decision of the Commissioner of Income Tax (Appeals) and the Assessing Officer in determining capital gains based on the year of registry of the sale deed rather than the year of sale consideration received and possession given. The Tribunal analyzed the facts surrounding the sale of the property and the assessment history. It was established that the transaction had concluded in AY 2007-08, and capital gains had been assessed accordingly. The Tribunal held that there was no justification for reassessing capital gains in AY 2011-12. The grounds raised by the assessee were accepted, and the appeal was upheld.

Issue 4: Charging interest under sections 234A and 234B:
The appellant disputed the charging of interest under sections 234A and 234B by the Commissioner of Income Tax (Appeals) and the Assessing Officer. The Tribunal reviewed the assessment details and the legality of reassessment for AY 2011-12. Given the findings related to the improper jurisdiction assumed by the Assessing Officer and the absence of valid reasons for reassessment, the Tribunal concluded that the interest charged under sections 234A and 234B was unwarranted. The grounds raised by the assessee were allowed, and the appeal was granted.

Issue 5: Setting off long-term capital gain with carried over loss:
The appellant contested the failure of the Commissioner of Income Tax (Appeals) and the Assessing Officer to set off the long-term capital gain with the carried over loss from an earlier year. The Tribunal examined the details of the carried over loss and the assessment history. It was noted that the capital gains had been declared and assessed in AY 2007-08, and there was no valid reason for reassessment in AY 2011-12. The Tribunal held that the failure to set off the carried over loss was unjustified. Consequently, the grounds raised by the assessee were accepted, and the appeal was upheld.

Issue 6: Enhancing book profit under section 115JB with capital gain computed under section 50C:
The appellant challenged the enhancement of book profit under section 115JB with the capital gain computed under section 50C by the Commissioner of Income Tax (Appeals) and the Assessing Officer. The Tribunal reviewed the application of section 50C to the property and the assessment history. Given that the capital gains had already been assessed in AY 2007-08, the Tribunal held that there was no legal basis for enhancing the book profit in AY 2011-12. The grounds raised by the assessee were allowed, and the appeal was granted.

In conclusion, the Appellate Tribunal ITAT Delhi ruled in favor of the assessee on all the issues raised, highlighting the improper jurisdiction assumed by the Assessing Officer for reassessment in AY 2011-12 when the capital gains had already been assessed in AY 2007-08. The Tribunal emphasized the legal principles and case law supporting the decision to disallow the reassessment and the application of certain provisions to the property in question. The appeal was allowed, and the order was pronounced in favor of the assessee on 24/04/2024.

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