9911796707
TMI Blog2019 (2) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 28-03-2016 was well within the stipulated time and the earlier proceedings u/s.148 had been validly dropped, we hold that there can be no case to argue that the AO initiated re-assessment proceedings in a wrong manner by taking advantage of his own mistakes. This contention is, therefore, repelled. Provisional assessment order - AO recorded that he was adopting FMV of the property as on 01-04- 1981 @ ₹ 400/- per sq.mtr as against the FMV taken by the assessee at ₹ 700/- per sq.mtr and the same was subject to the FMV as on 01-04-1981 to be determined by the DVO - Held that:- We are not convinced with the argument tendered on behalf of the assessee. There is no doubt that the AO has recorded in his order that adoption of FMV of the property as on 01-04-1981 @ ₹ 400/- per sq. mtr shall be subject to the FMV as on 01-04-1981 to be determined by the DVO, but the fact of the matter is that the assessment got concluded with the adoption of FMV of the property as on 01-04-1981 @ ₹ 400/- per sq.mtr and the income was determined accordingly. Not only that, the AO also issued demand notice u/s.156. The issuance of demand notice coupled with the passing of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER R.S.SYAL, VP : This appeal filed by the assessee arises out of the order passed by the CIT(A)-4, Pune on 19-06-2017 in relation to the assessment year 2012-13. 2. The assessee has filed revised grounds of appeal, which read as under : - 1. The learned (ld) CIT(A) grossly erred in confirming the impugned reassessment order for the AY 2012-13, as the appellate order suffers from a number of fatal and vital defects and the same is also based on totally erroneous / false statements on a number of vital aspects. 2. The Id CIT(A) grossly erred in not appreciating that the second notice under section 148 of the Income-Tax: Act, 1961 (the Act), dt.28.3.2016, could not be issued on the basis of the same set of facts, after the ITO, Wd.5(3), Pune, had dropped the reassessment proceedings, initiated vide first notice under section 148 of the Act, dt.30.3.2015 3. The Id CIT(A) failed to appreciate that even on merits, the AO could not have adopted the fair market value (FMV) of the property as on 1.4.1981, at ₹ 400 per sq.mtr, as against ₹ 700 per sq.mtr, determined by the Government Registered Valuer appointed by the appellant, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 (hereinafter also called as the Act ) dated 30-03-2015. Proceedings pursuant to such notice were dropped vide order dated 16.03.2016. Thereafter, another notice dated 28-03-2016 was issued u/s.148 of the Act on the ground that the amount of long term capital gain declared by the assessee by taking indexed cost of acquisition at ₹ 17,41,01,150/-, being, 98% of the sale consideration, was exorbitantly excessive when considered in the light of a much lower indexed cost of acquisition shown by one Sh. Kundanmal Chunilal Khivansara, another co-owner of the same property. The assessee objected to the initiation of re-assessment proceedings by arguing that the AO could not have re-opened the assessment on the same reason for which the earlier notice dated 30-03-2015 was issued and the proceedings were dropped. The AO rejected such contention by noticing that there were certain typographical mistakes and other infirmities in such earlier notice of reassessment and that was the rationale for dropping proceedings out of such a notice followed by a fresh notice u/s.148 dated 28-03- 2016 recording proper reasons. During the course of assessment proceedings, the AO elaborated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded by the AO on 10-03-2015, copy of which is available on page 2 of the paper book as under :- In this case, information has been received from the DIT(Intel. Cr .Inv.) Pune, vide letter dtd.22.01.2015 that while verifying the high value transaction in the case of Shri Kundanmal Chimanlal Khinvasara, it was received that Smt. Sushilabai Ishwardas Bamb, one of the co-sellers has received sale consideration of ₹ 17,76,63,000/- during the F.Y. 2011-12. Though letter was issued by the DIT (Intel. Cr. Inv) Pune, to this assessee, no information was received by them in this respect. Therefore, the said information has been passed on to the jurisdictional AO. In order to verify the transaction and escapement of Capital Gain, reopening of assessment in the case of the assessee for A.Y.2012-13 is necessary. Notice issued u/s.148 of the I.T. Act, 1961. 6. Pursuant to such reasons, the AO issued notice dated 30-03-2015, a copy of which is available at page 1 of the paper book. The AO dropped these proceedings vide order dated 16-03-2016, a copy of which is available at page 12 of the paper book. It is two-lined order reading : Proceedings initiated u/s.147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % Share of the vendor towards payment received Amount received (Rs.) 1 Kundanmal Chunilal Khinvasara 1 22% 6,50,54,000 2 Shirish Kundanmal Khinvasara Meenal Kundanmal Khinvasara Madhur Kundanmal Khinvasara Yash Kundanmal Khinvasara 2 19% 5,66,42,000 3 Sushilabai Ishwardas Bamb 3 59% 17,76,63,000 Total 29,93,59,000 3. Shri Kundanmal Chinulal Khinvasara (Vendor 1) in his return of income filed for the A.Y. 2012-13, has taken the cost of acquisition in respect of his share in the land at ₹ 46,40,000/- with corresponding indexed cost of acquisition worked out at ₹ 3,64,24,000/- (55% of the sale consideration) with LTCG calculated at ₹ 2,86,30,000/- as against the sale consideration received at ₹ 6,50,54,000/-. 4. Smt. Sushilabai Ishwardas Bamb (Vendor 3), one the co-sellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a co-owner of the same property, Sh. Kundanlal Chunilal Khinvasara, being, Vendor No.1 with 22% share, adopted cost of acquisition at ₹ 46,40,000/- by considering fair market value of the property as on 1.4.1981 at the rate of ₹ 400 per sq.mtr, and the corresponding indexed cost of acquisition at ₹ 3.64 crore, thereby determining long term capital gain at ₹ 2.86 crore. As against that, the assessee, another co-seller of the same property with 59% share declared long term capital gain of ₹ 34.57 lakhs by considering indexed cost of acquisition at ₹ 17.41 as against the full value of consideration at ₹ 17.76 crore. Cost of acquisition at ₹ 17.41 crore was worked out by taking fair market value of the same property at ₹ 700 per sq.mt. This led to the formation of reasons to believe by the AO that there was escapement of capital gain in the hands of the assessee, necessitating the issuance of notice u/s 148 of the Act on 28.3.2016. 9. The argument of the ld. AR that such a second initiation of reassessment, leading to the passing of the instant order, is invalid, can be better appreciated in two steps, viz., one, whether a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -03-2015 and the second notice dated 28-03-2016 is same, but the fact that the AO had to drop the first set of reassessment proceedings without going into merits, in our considered opinion, properly clothed the AO with the power to issue second notice of reassessment on the same subject matter, this time de hors , any technical glitch. It is manifest that the reasons recorded by the AO in the first reassessment notice were vague and did not elaborate anything about the escapement of income in the hands of the assessee. They simply referred to verify the transaction , which is obviously not permissible within the scope of re-assessment proceedings since the proceedings cannot be initiated for making roving enquiries or attempting to find out if there is an escapement of income. In order to get jurisdiction u/s.147, it is sine qua non that the AO should have reason to believe that some income chargeable to tax escaped assessment which is obviously at a higher pedestal than an attempt to verify the escapement of income. 13. Reverting to the facts, we find that once the AO realized his mistake in recording the reasons, he swung into action and dropped the proceedings without adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew canvassed by us. In that case also, first notice issued u/s.148 was without any basis and the Department had to drop proceedings. The Hon ble High Court held that the second notice issued would not be quashed as the same was within the jurisdiction of the AO. 15. The ld. AR contended that the AO should suffer for the mistake committed by him at the time of recording reasons in the year 2015. To buttress such a contention, the ld. AR relied on certain decisions laying down the proposition that the AO cannot take benefit of his own errors. In our considered opinion, the proposition propounded by the ld. AR and those decisions are not germane in the present context. The question before us is not that the AO sought to take certain advantage out of the errors committed by him in issuing notice u/s.148 on 30-03-2015. Reliance on such decisions would have assumed significance if the AO had stuck to such reasons and tried to validate his action on the strength of actual facts urging that even if the reasons were not properly recorded, but in substance his action was justified. In that situation, it could have been contended on behalf of the assessee that the AO cannot take benefit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r amply proves that it was a final assessment order in all respects. On a pertinent query, the ld. AR fairly admitted that the AO did not revise this assessment order by any other order and further there was nothing to show that any adverse report of the DVO was received or considered. This shows that the assessment order passed by the AO, based on the cost of acquisition, being, FMV as on 01-04-1981 @ ₹ 400/- pre sq.mtr, derived from the same cost of acquisition as declared by another co-seller of the same property, cannot be considered as based on any report of the DVO etc. Reference made to DVO became academic because the AO never took cognizance of any report of the DVO, if at all received at any stage, after the conclusion of the assessment order. Thus, it is overt that the assessment order passed by the AO is final in all respects and the same cannot be characterized as provisional so as to claim its quashing on this very score. We, therefore, reject this contention raised by the ld. AR. 18. Now, we turn to the adoption of FMV at ₹ 400/- per sq. mtr being FMV as on 01-04-1981 of the property, on merits. It is noticed that the assessee declared cost of acquisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lability of basic civic amenities . . Thus, it is evident that the report of registered valuer is based on no evidence as he has himself admitted that there is no comparable sale instance as on 01-04-1981. When the sole instant report of the Registered valuer is pitted against the Ready reckoner rate, the value adopted by another co-seller of the property at the same time and the value given by the Town Planning Department, there can be no prize for guessing that the value of ₹ 400 per sq.mtr. is more authentic and reliable. We thus hold that the adoption of rate of ₹ 400/-per sq.mtr by the authorities below as cost of acquisition, being, FMV as on 01-04-1981, is proper. 19. Another argument advanced by the ld. AR that the AO could not have validly made a reference to the DVO for determining FMV of the property as cost of acquisition as on 01-04-1981 has paled into insignificance as the AO has not gone with the report of DVO determining cost of acquisition of property as on 01-04- 1981. Rather he took the value declared by another co-seller of the same property itself, based on the Ready reckoner rate. These submissions are, therefore, rejected. 20. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
