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2018 (4) TMI 693 - AT - Income TaxReopening of assessment - Addition on account of Long Term Capital Gains on protective basis - Held that - The assessee admitted that the sale-deed was registered in the year 2011-12 but he received full consideration in the A.Y. 2008-09, therefore, he offered the same to tax under the head of long term capital gain. In the above said facts and circumstances of the case, the Long term capital gain has been assessed to tax on protective basis in the A.Y. 2008-09. The long term capital gain assessed on protected basis in the assessment year 2008-09 is herby treated as substantive assessment. Therefore in the said circumstances, we are of the view that the notice u/s 148 of the I.T. Act, 1961 to the assessee dated 21.03.2012 for the A.Y. 2005-06 and 2006-07 are not justifiable and are held to be wrong against law and facts and are hereby ordered to be set aside by relying upon the law settled in Hindustan Lever Ltd. Vs. R. B. Wadkar (2004 (2) TMI 41 - BOMBAY High Court).
Issues Involved:
1. Re-opening of assessment beyond four years of limitation. 2. Taxation of capital gains in the assessment years 2005-06 and 2006-07. 3. Protective assessment for the assessment year 2008-09. Issue-wise Detailed Analysis: 1. Re-opening of assessment beyond four years of limitation: The assessee challenged the re-opening of assessments for the years 2005-06 and 2006-07, arguing that it was beyond the four-year limitation period. The assessee contended that there was full and true disclosure of material facts during the original assessment proceedings. The Tribunal examined the reasons provided by the Assessing Officer (AO) for re-opening the assessments, which were based on the observation that the assessee had not declared certain sale transactions resulting in under-assessment of income. The Tribunal noted that the original assessments were completed under section 143(3) of the Income Tax Act, and there was no failure on the part of the assessee to disclose material facts. Citing legal precedents, the Tribunal held that the re-opening of assessments after four years was not justified and set aside the notices issued under section 148 of the Act for the assessment years 2005-06 and 2006-07. 2. Taxation of capital gains in the assessment years 2005-06 and 2006-07: The assessee argued that the capital gains should be taxed in the assessment year 2008-09, as the transfer of property was effected in that year. The assessee had entered into agreements to sell in the years 2005-06 and 2006-07, but the possession of the property was not given as it was under construction. The Tribunal observed that the sale would be deemed to be concluded after the full payment and registration, which occurred after the assessment year 2006-07. The Tribunal referred to legal precedents, including the Supreme Court's ruling in Suraj Lamp and Industries P. Ltd. vs. State of Haryana, which clarified that the transfer of property is complete only upon registration. The Tribunal concluded that the capital gains should be taxed in the assessment year 2008-09, as the sale was completed in that year. 3. Protective assessment for the assessment year 2008-09: The AO had made an addition of ?17,97,490 on account of long-term capital gains on a protective basis for the assessment year 2008-09. The Tribunal noted that the capital gains were offered to tax by the assessee in the assessment year 2008-09. The Tribunal held that the long-term capital gain assessed on a protective basis in the assessment year 2008-09 should be treated as a substantive assessment. Consequently, the Tribunal allowed the assessee's appeals for the assessment years 2005-06 and 2006-07 and ordered that the substantive assessment for the assessment year 2008-09 be maintained. Conclusion: The Tribunal allowed the appeals filed by the assessee, setting aside the re-opening of assessments for the years 2005-06 and 2006-07, and upheld the substantive assessment of long-term capital gains for the assessment year 2008-09. The decision was pronounced in the open court on 19.03.2018.
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