2017 (2) TMI 29 - AT - Income Tax

Validity of reopening - long term capital gains addition arising from sale of land - proof of capital asset u/s.2(14)(iii) - locus for the assessee left any more as she has already paid the taxes in question well before Section 148 proceedings - Held that - We notice that a co-ordinate bench of this tribunal in ACIT vs. Satyanarayan Agarwal (2002 (3) TMI 207 - ITAT CALCUTTA-B ) holds that an admission made in the return is not binding in case an assessee seeks to change or modify his or her stand. Learned co-ordinate bench is of the view that an assessee can always seek to prove that the income declared earlier was not taxable. We draw support therefrom to reject Revenue s above contention of non maintainability of the instant assessee s appeal. We therefore remit the assessee s latter substantive ground as well back to the CIT(A) to decide afresh as to whether her land sold was a capital asset or not u/s.2(14)(iii) of the Act in tune with the other group cases (supra). It is made clear that the assessee would be at liberty to place on record all the relevant details in order to prove the fact that her land sold was agricultural not forming a capital asset under the above statutory provision. It would be appreciated if the ld. CIT(A) decides all these group cases together. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Validity of reopening of assessment
2. Correctness of long term capital gains addition arising from the sale of land

Validity of Reopening of Assessment:
The appeal for assessment year 2006-07 challenged the validity of reopening the assessment. The Assessing Officer issued a Section 148 notice based on a search conducted in family members' cases revealing land sales. The reasons for reopening stated the sale of jointly owned land by the assessee, which was not reported. The Assessing Officer made a long term capital gains addition, which was upheld in lower appellate proceedings. The assessee argued against the reopening, citing a previous order in a similar case remitting the issue back for further adjudication. The tribunal rejected the Revenue's argument that the assessee had no locus to appeal after paying taxes, citing a precedent allowing an assessee to challenge the taxability of previously declared income. The tribunal remitted the issue back to the CIT(A) to determine if the land sold was a capital asset under the Income Tax Act.

Correctness of Long Term Capital Gains Addition:
The substantive ground challenged the correctness of the long term capital gains addition from the land sale. The assessee contended that the lower appellate order dismissed the appeal on the grounds of not objecting to reopening and accepted income after paying taxes. The assessee referred to a co-ordinate bench's order in a related case, seeking similar directions. The tribunal accepted the assessee's appeal for statistical purposes, remitting the substantive ground back to the CIT(A) for a fresh decision on whether the land sold qualified as a capital asset under the statutory provision. The assessee was allowed to present relevant details to prove the land was agricultural and not a capital asset.

This judgment by the Appellate Tribunal ITAT Ahmedabad addressed the issues of the validity of reopening the assessment and the correctness of the long term capital gains addition arising from the sale of land. The tribunal allowed the assessee's appeal for statistical purposes, remitting the matter back to the CIT(A) for further consideration in line with relevant legal precedents and provisions of the Income Tax Act.