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TMI Blog2018 (12) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... n, therefore, is rendered invalid. In the result, the impugned notice is set aside. - decided in favour of assessee. - WRIT PETITION NO. 3548 OF 2018 - - - Dated:- 14-12-2018 - AKIL KURESHI M.S. SANKLECHA, JJ. Mr. Mihir Naniwadekar a/w Mr. Rohan Deshpande i/by Alisha Pinto for the Petitioner Mr. Sham Walve for the Respondents ORAL JUDGMENT (Per Akil Kureshi, J.):- 1. We have heard learned counsel for the parties for final disposal of the petition by consent. 2. Petitioner has challenged a notice of reopening of assessment dated 28.3.2018. The petition arises in following backgrounds:- The petitioner is an individual. For the assessment year 2013-14, the petitioner had filed return of income declaring total income of ₹ 65,51,360/-. The return was accepted by the assessing officer under Section 143(1) of the Income Tax Act, 1961 ( the Act for short). In order to reopen the assessment, impugned notice came to be issued. The assessing officer had recorded reasons for reopening of assessment. The reasons read as under:- The assessee has filed the return of income for A.Y. 2013-2014 on 27.07.2013, declaring total income at ₹ 65,51,362/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04.06.2017 issued by Division Bench of the Bombay High Court the said property was allowed and the said acquisition by the AA was set aside and assessee was directed to pay a sum of ₹ 56,13,227/- to AA being the amount of AA had paid to transferor on the said acquisition (copy of High Court order dated 04.06.2007 is enclosed). d. The assessee deposited the said sum of ₹ 56,13,227/- with the Prothonotary and Senior Master of the Bombay High Court as per the order dated 29.06.2007 issued by Justice S. Radhakrishnan of the Bombay High Court (copy of said order is enclosed) e. Against the order dated 04.06.2007 of the Division Bench, the ITD preferred a SLP to Supreme Court bearing CC No. 8872/2008. By an order dated 14.07.2008 issued by Justice S.H. Kapadia and Justice B. Sudershan Reddy of Hon'ble Supreme Court of India, the SLP filed by ITD was dismissed. (copy of the said order is enclosed). f. Hence the cost of house property is ₹ 62,63,227/(Rs. 6,50,500/- advance given as per purchase agreement dated 30.10.1992 + ₹ 56,13,227/- consideration as per order dated 04.06.2007 of the Bombay High Court. g. The Income Tax Department handed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Year of acquisition 2007 7 Cost inflation index for year of acquisition 551 8 Indexed cost of acquisition 86,79,617 9 Indexed cost of purchase 36,27,459 10 Total indexed cost 1,23,07,076 10 Capital gain 5,18,98,424 7. From the above working, it is clear that the assessee ought to have offered capital gains of ₹ 5,18,98,424/-, however in the return of income the assessee by making wrong claim of cost of indexation offered LTCG of ₹ 3,66,48,582/- only. Thus, the assessee has suppressed her LTCG by an amount of ₹ 1,52,49,842/-. 8. In view of the above facts, I have reason to believe that income chargeable to tax of ₹ 1,52,49,842/- has escaped assessment within the meaning of Section 147 of the I.T. Act, 1961 in the case of assessee for A.Y. 2013-14. Hence, it is a fit case for initiation of proceedings u/S. 147 of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this agreement, the petitioner had paid sum of ₹ 6,50,000/- towards earnest money. The balance amount of ₹ 57,50,000/- would be paid upon issuance of no objection certificate by the appropriate authority as referred to in Chapter XX-C of the Income Tax Act, 1961. The appropriate authority by an order dated 15.1.1993 refused to grant such NOC and ordered deemed purchase of the same by the Central Government. The petitioner challenged such order before the High Court by filing Writ Petition No. 289 of 1993. Interim orders were passed in favour of the petitioner. Eventually, this petition came to be disposed of by a judgment dated 4.6.2007. Operative portion of the judgment reads as under:- 33. In the circumstances, the impugned order passed by the Appropriate Authority is liable to be quashed and set aside holding it to be in breach of principles of natural justice and bad in law. The view taken by the Appropriate Authority is palpably erroneous and cannot stand to the scrutiny of law. 34. The Income Tax Department shall hand over the possession of the premises and also execute necessary Deed of Sale and convey the property and register the same immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an always be examined by the assessing officer during the assessment proceedings and further in the present case, the working out of the indexed cost of acquisition would create a problem if the petitioner's contentions were to be accepted. 11. If the issue is legally concluded, there would be no point in allowing the assessing officer to resort to full fledged reassessment since the reopening of assessment would suffer from the fundamental defect of the assessing officer in having the material to form a reasonable belief that income chargeable to tax had escaped assessment. In this context, we would examine the petitioner's contention of the transfer of the capital asset in her favour on 30.10.1992. Before we do that, we may dispose of Mr. Walve's second objection of difficulty in computing the indexed cost of acquisition. Apart from such an issue having answer in law, no such objection was raised by the assessing officer in the reasons recorded. In absence of any such reference in the reasons recorded, we cannot allow the assessing officer to improve upon the reasons in order to support the notice of reassessment. So much is all to well settled through series of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt by executing a sale deed in favour of a third party while being restrained from doing so. In the circumstances, for a justifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed had been registered only on 24-9-2004, after the suit filed by Shri Ranjeet Lal, challenging the validity of the Will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term transfer , one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to someone else in accordance with law. A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid ₹ 15 lakhs by way of earnest money. No doubt, such contractual right can be surrendered or neutralized by the parties through subsequent contract or conduct leading to no transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immovable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. 26. Thus, a right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vendee/transferee on 27-12-2002. The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. 27. In view of the aforestated peculiar facts of the case and looking at the defini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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