2019 (3) TMI 1001 - AT - Income Tax

Revision u/s 154 - computation of Long Term Capital Gain - whether doctrine of merger prevents the undersigned from a ruling at variance with CIT(A) order pre-existing and very much alive? - rectify the assessment u/s 154 by replacing value determined by the DVO - HELD THAT - When the AO has taken one of the possible view at the time of 143(3) assessment can he rectify the assessment u/s 154 by replacing value determined by the DVO. The provisions of section 154 makes it clear that in order rectify any order u/s 154 there should be a prima-facie mistake apparent from record. If the issue is debatable which can be decided on prolonged discussions or deliberations, the same cannot be subject matter of 154 proceedings. In this case, the issue of full value of consideration is a subject matter of deliberations and which can be decided by prolonged discussions and a view can be taken, therefore, the Ld. CIT(A) came to the conclusion that there is prima facie merit in the arguments of the assessee insofar as subject matter of 154 proceedings, but he went on to decide the issue on technical grounds by applying the principle of doctrine of merger because in earlier proceedings, the CIT(A) has decided the issue of computation of Long Term Capital Gain against the assessee. CIT(A) has been accepted the fact that the assessee has strong case on legal grounds of initiating 154 on subject matter in question, wrong in not adjudicating the issue on merit. We, therefore, of the opinion that, there is no merit in the finding of the CIT(A) and hence, we set-aside order of CIT(A) and restore the issue to the file of the AO to decide the issue on the basis of DVO report and objections of the assessee.- Appeal filed by the assessee is allowed for statistical purpose.

Summary

Issues involved:
1. Appeal against order of Ld. CIT(A)-28, Mumbai for AY 2007-08.
2. Challenge to revised long term capital gain valuation.
3. Condonation of delay in filing appeal.
4. Legality of order u/s 154 of the Act.
5. Doctrine of merger in appeal proceedings.

Detailed Analysis:

Issue 1: Appeal against order of Ld. CIT(A)-28
The assessee filed an appeal against the order of the Ld. CIT(A)-28, Mumbai, dated 11/10/2017 for AY 2007-08. The grounds of appeal raised by the assessee included challenges to the dismissal of the appeal on technical grounds and the confirmation of revised long term capital gain valuations.

Issue 2: Challenge to revised long term capital gain valuation
The assessee contested the revised long term capital gain valuation at &8377; 37,89,450/- as on 06/12/2006 and at &8377; 1,54,350/- as on 01/04/1981. The appellant argued for acceptance of a different valuation submitted by them. Additionally, a petition was filed challenging the order of the Ld. CIT(A) in sustaining the order passed by the AO u/s 154 of the Act.

Issue 3: Condonation of delay in filing appeal
The assessee sought condonation of a 121-day delay in filing the appeal, citing reasons such as the age and health condition of the assessee, which led to the delay in noticing the order passed by the Ld. CIT(A). The delay was considered reasonable due to the circumstances, and the appeal was admitted for hearing.

Issue 4: Legality of order u/s 154 of the Act
The AO passed a 154 order to rectify the assessment by replacing the fair market value (FMV) determined by the DVO, which was contested by the assessee. The issue revolved around whether there was a prima facie mistake apparent on record justifying the rectification u/s 154. The Tribunal found that the issue was debatable and required prolonged discussions, concluding that the order passed was not based on a clear mistake and set aside the Ld. CIT(A)'s decision.

Issue 5: Doctrine of merger in appeal proceedings
The Ld. CIT(A) dismissed the appeal on the ground of doctrine of merger, stating that the issue had already been considered in previous proceedings. However, the Tribunal disagreed, finding that the Ld. CIT(A) should have adjudicated the issue on its merits, especially considering the legal grounds raised by the assessee regarding the initiation of proceedings u/s 154.

In conclusion, the Tribunal allowed the appeal filed by the assessee for statistical purposes, setting aside the order of the Ld. CIT(A) and restoring the issue to the file of the Ld. AO for further consideration based on the DVO report and objections of the assessee.