2018 (3) TMI 382 - AT - Income Tax

Reopening of assessment - accessibility of capital gain from sale of capital asset - Held that - Since, the assessee did not raise this issue before the authorities below and the agreement dated 13.05.2005 is not the basis of the AO to initiate the proceedings u/s 147/148 of the Act therefore, in the absence of the leave of the Tribunal to raise a fresh ground which is altogether setting up a new case and also purely factual in nature, adjudication of the same requires investigation of the facts first time pleaded by the assessee at this stage, the same cannot be allowed. Hence, we reject the ground No. 2(iii) of the assessee s appeal and the same is not arising from the impugned orders of the authorities below Index cost of acquisition being fair market value of the asset as on 01.04.1981 and full value consideration as per the provisions of section 50C - Held that - Since, the issue of assessability of capital gain in the year under consideration or for the A.Y. 2004-05 has been set aside to the record of the Assessing Officer which goes to the root of the matter therefore, the other issues are only consequential and can be examined only after deciding the issue of taxability of the capital gain whether in the assessment year under consideration or for the A.Y. 2004-05. Accordingly, these issues are also set aside to the record of the Assessing Officer for consideration and adjudication after deciding the issue of chargeability of capital gain in the year under consideration.

Issues Involved:
1. Validity of reopening assessment
2. Assessability of capital gain from sale of capital asset for the assessment year 2005-06

Validity of Reopening Assessment:
The appeal raised concerns regarding the validity of the reopening of the assessment for the assessment year 2005-06. The assessee contended that the notice issued under section 148 was based on a wrong foundation and defective, as it was beyond four years and the alleged escapement of income was minimal. However, during the hearing, the assessee withdrew this ground, and it was dismissed as not pressed. The Tribunal dismissed ground no. 1 of the appeal accordingly.

Assessability of Capital Gain:
The main issue raised by the assessee was the assessability of capital gain from the sale of a capital asset in the assessment year 2005-06. The assessee claimed that the transfer of the asset had already been completed in the assessment year 1976-77 itself, as per specific sections of the Income Tax Act. However, it was observed that the assessee did not raise this objection before the authorities below. The Tribunal rejected this ground as it required a fresh investigation of facts not previously pleaded.

Regarding the grounds related to the assessment year 2004-05, it was noted that the Assessing Officer had initiated proceedings based on the sale deed dated 04.03.2004, which was known to the authorities. The Tribunal set aside these issues to the Assessing Officer for further examination, emphasizing that if the capital gain pertained to the assessment year 2004-05, the AO could reopen the assessment for that year.

Additionally, issues concerning the index cost of acquisition and full value consideration were deemed consequential and set aside for consideration after deciding the issue of taxability of the capital gain. The Tribunal partly allowed the appeal for statistical purposes, emphasizing that objections related to fair market value and full value consideration should be considered before passing a fresh order.

In conclusion, the Tribunal addressed the issues raised by the assessee regarding the validity of reopening the assessment and the assessability of capital gain, setting aside certain matters for further examination by the Assessing Officer and partially allowing the appeal for statistical purposes.

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