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2022 (1) TMI 986 - AT - Income TaxReopening of assessment u/s 147 - eligibility of reasons to believe - Addition of LTCG - taxability of the capital gain - HELD THAT - We find that Ld. AO come across information through Annual Information Report that a registered sale deed was registered by Sub-registrar on 21.10.2009. Sale consideration stated is ₹ 30,00,000, but market value assessed by the Sub- Registrar is ₹ 1,31,00,000/-. There were 22 persons who jointly sold the immovable property in question. PAN No. of the assessee was not mentioned in the registered sale deed. In our view these information were sufficient enough for the Ld. AO to move ahead and issue notice u/s 148 of the Act to examine the transaction. Issuing of notice in itself cannot be given certainty that the addition will be made in the hands of assessee. By way of issuing notice Ld. AO gathers the information and examine the transaction and making addition in the hands of assessee comes at a subsequent stage i.e. during assessment proceedings. The assessee s case was not scrutinized u/s 143(3) of the Act for A.Y. 2010-11 and information was received by the Ld. AO from external sourced. We accordingly dismiss legal ground raised by the assessee challenging the validity of assessment proceedings by issuance of notice u/s 148 of the Act. Taxability of the capital gain - As per the definition of transfer provided in subclause (v) of section 2(47) of the Act, if possession is being given in lieu of consideration, then for the purpose of Income Tax it is to be assumed as transfer . We also find that the sale deed got finally registered on 21.10.2009 but the gap between the presentation of sale deed on 27.11.2007 and the deed getting finally registered on 21.10.2009 is attributable only for the necessary formalities being carried at the Sub-Registrar office as number of sellers were 22. We are of the considered view that for the purpose of taxability of the capital gain, the transfer of property took place during F.Y. 2007-08 when the sale deed was signed and presented for registration before Sub-Registrar on 27.11.20007 and by this date total sale consideration was received from the buyers M/s Sarthak Innovations Pvt. Ltd. It is also established fact that the assessee has disclosed this transaction in its income tax return for A.Y. 2007-08. AO erred in making the addition for Long Term Capital Gain in the hands of assessee during A.Y. 2009-10. The finding of Ld. CIT(A) is set aside and the ground raised on merit by the assessee are allowed.
Issues Involved:
1. Validity of notice u/s 148 of the Act and reassessment proceedings. 2. Merits of the case regarding the addition for Long Term Capital Gain. Validity of Notice u/s 148 and Reassessment Proceedings: The appeal challenged the validity of the notice u/s 148 of the Act and the subsequent reassessment proceedings. The Assessing Officer (AO) issued the notice based on information from the Annual Information Report regarding a property sale deed with a significant price difference. The AO issued the notice to examine the transaction, and it did not guarantee an addition to the assessee's income. The transaction was not scrutinized under section 143(3) for the relevant assessment year, and the information was obtained externally. The Tribunal found the information sufficient for the AO to issue the notice, dismissing the legal challenge on this ground. Merits of the Case - Addition for Long Term Capital Gain: Upon reviewing the records and the sale deed, it was established that the sale deed was presented to the Sub-Registrar in 2007, and the sale consideration was received by the sellers. The possession was handed over to the purchasers, constituting a transfer under the Income Tax Act. The sale deed was finally registered in 2009 due to formalities. The Tribunal concluded that the transfer of property occurred in the financial year 2007-08 when the sale deed was signed and presented for registration. The AO erred in adding Long Term Capital Gain in the assessment year 2009-10, as the transaction was disclosed in the income tax return for the assessment year 2007-08. Therefore, the Tribunal allowed the grounds raised by the assessee on merit, setting aside the CIT(A)'s findings. In conclusion, the Tribunal partly allowed the assessee's appeal, ruling in favor of the assessee regarding the addition for Long Term Capital Gain.
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