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TMI Blog2020 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... tice, which we cannot permit. The manner in which the various appeals and Miscellaneous Petition have been dealt with by the learned Tribunal for all the three Assessment years in question leaves much to be desired and the change of stand allowed by the Tribunal and later withdrawal of the appeals for AY 2003-04 and AY 2004-05 under the litigation policy of the CBDT Circular dated 28.01.2016, has resulted in all this goof up. Set aside all the orders passed by the learned Tribunal for all the three Assessment Years as also all the orders passed by Lower Authorities also for all these three Assessment Years viz., AY 2001-02, 2003-04 and 2004-05. We are dealing with the appeal for AY 2001-02 only but since the Tribunal's order dated 31.05.2010 for AY 2003-04 and AY 2004-05 is at the root of the order of Tribunal dated 18.03.2016, by majority of 2:1 for AY 2001-02 and Appeal under Section 260A against that order dated 31.05.2010 already stands withdrawn by Revenue, we deem it appropriate to set aside even the order dated 31.05.2010 in the present appeal in these peculiar circumstances. We restore the matter back to the Assessing Authority to re-examine the whole issue of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the learned Commissioner of Income Tax (Appeals), upholding the imposition of capital gains tax, the matter was taken up by the Assessee before the learned Income Tax Appellate Tribunal for these two Assessment Years, viz., AY 2003-04 and AY 2004-05, which came to be disposed of by the D Bench of the learned Income Tax Appellate Tribunal on 31 May 2010 . It appears that before the said Bench of learned Tribunal, the Assessee took a somersault and changed its stand and urged before the Tribunal that since J.D. Agreement was entered only on 25 December 2000 and possession of the property was also handed over to M/s.Doshi Builders, the 'Capital Gains' tax, if any, could be assessed only for the previous AY 2001-02 and not in the Assessment Years involved before the Tribunal viz., AY 2003-04 and AY 2004-05, even though no sale of flats had taken place in the year relevant to AY 2001-02. The challenge to levy of interest under section 234A, 234B and 234C of the Act was also raised but the learned Tribunal (per Sri Hari Om Maratha and Sri Abraham P. George) in its impugned order accepted the said change of stand of the Assessee and held that no 'Capital Gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporary lull in the business of the assessee and now the assessee has filed appeal by taking the following grounds in Assessment Year 2003-04. 1. The order of the Id. CIT(A) is contrary to law facts and circumstances of the case and opposed to princess of legitimate expectation. 2. Capital Gains: (a) The Id. CIT(A) fundamentally failed to appreciate that no capital gains is taxable in the year of account since the appellant had entered into a development agreement on 25th day of December 2000 and right accrues on that date without prejudice. (This ground was never raised before CIT (Appeals). (b) The Id. CIT(A) fixing the fair market value as at 1.4.1981 at ₹ 143/- per sq ft as against ₹ 217.80 per sq ft claimed by the appellant on scientific basis. (c) The Id. CIT(A) erred in confirming guideline value for the land and a building sold on the basis of guideline value in terms of section 50C of the Act. 3. Disallowance of business loss The Id. CIT(A) ought to have allowed the business loss claimed by the appellant since the business loss could be claimed interest even in a situation there exists lull in a business. 4. The Id. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady taken place in the year 2000, capital gains cannot be taxed in Assessment Year 2003-04 and 2004-05 . ( sic ! Tribunal wholly missed the point here that the Capital Gains Tax Liability on transfer/sale of flats was being considered by Tribunal and not transfer of land under J.D.Agreement). Therefore, we have to allow Ground No.2 first part and thereafter the adoption of fair market value as on 1.4.1981 either at ₹ 143/- per sq ft or ₹ 127.80 per sq ft remains only of academic interest. 7. A Miscellaneous Petition was immediately filed by the Revenue, before the learned Tribunal, inter alia contending that the learned Commissioner of Income Tax (Appeals), for AY 2003-04 did not deal with the said change of stand of the Assessee as only the question on ascertaining the Fair Market Value for computing Capital Gains Tax Liability was raised by the Assessee. Therefore, the matter ought to have been remanded back by the learned Tribunal instead of allowing the appeal of the Assessee vide order dated 31 May 2010 and since the Assessee had itself admitted 'Capital Gains Tax' liability for AY 2003-04 and AY 2004-05 , in the Return of Income file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the Hon'ble President for nominating a Third Member under section 255(4) of the Income Tax Act, 1961, to resolve the points of difference. It may be noted that even while framing the points of difference, there was a difference of opinion. According to the learned Judicial Member, (Sri. N.R.S.Ganesan ) the following questions need to be resolved: (1) 1n the facts and circumstances of the case, in the absence of any specific finding/ direction to assess the income for the Assessment Year 2001-02 in the order of this Tribunal dated 31 May 2010 , can there be an inference/ presumption, especially, when no proceeding for the Assessment Year 2001-02 was before the Tribunal, as held by Apex Court in CIT v. Green World Corporation (2009) 314 ITR 81? (2) In the facts and circumstances of the case, when admittedly, the assessment for the Assessment Year 2001-02 was not subject matter of appeal before this Tribunal can the observation, if any, made by the Tribunal, be considered as finding/ direction to assess the income for the Assessment Year 2001-02 in view of the decision of this Tribunal in Sun Metal Factor (I)(P.) Ltd. v. ACIT (2010) 124 ITD 14, especia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reassessment for AY 2001-02 to bring to tax the Capital Gains was barred by limitation. 14. Para 17 of the order passed by the Third Member (Vice President Shri D.Manmohan) is quoted below for ready reference :- 17. I have carefully considered the rival submissions and perused the record. As could be noticed from the observations made by the Tribunal, while disposing of the appeals for Assessment Years 2003-04 and 2004-05, a casual observation was made to deal with the issue before them as to whether the capital gains is attracted in assessment year 2003-04 and 2004 05; but there is no specific finding or direction that it is assessable to tax in assessment year 2001-02. Even if it is assumed that there is a finding or direction , in my humble opinion, the Hon'ble Madras High Court, in the case of M/s Goldmine Investments (supra), has considered an identical issue wherein it was held that in respect of any assessment year wherein further proceedings are barred by limitation, the same cannot be reopened merely by virtue of an opinion expressed by any higher forum at a later date i.e. subsequent to the date of limitation period. In fact, the judgments of the Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration. 1. Whether the notice issued u/s 148 r.w.s. 150(1) the Act dated 10.6.2011 for the assessment year 2001-02 is based on any finding or direction issued by the Income Tax Appellate Tribunal in ITA Nos.327 328/Mds/2010? 2. Whether on the facts and circumstances the case the Tribunal was right and justified in holding that the notice u/s 148 was barred by limitation without noting that the time limit was available to issue such notice in view of the provisions contained in section 150(2) of the Income Tax Act. 3. Whether on the facts and circumstances of the case the Tribunal erred in holding that notice issued u/s 148 is beyond the time limit specified in section 149 overlooking the provisions contained in section 150 which begins with non obstante clause? 4. Whether on the facts and in the circumstance of the case the Tribunal failed to note that the order which is the subject matter of appeal order dated 31.5.2010 was made on 30.3.2006 (AY 2003-04) and on 28.12.2006 (AY 2004-05) and at that point of time, time limit for reopening of AY 2001-02 was very much available that is up to 31.3.2008. 5. Whether on the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the reassessment proceedings, to bring to tax the said transactions in that year also, the Assessee succeeded before the learned Tribunal and despite the difference of opinion in the Members of Tribunal and therefore, the Revenue is constrained to argue the present appeal for AY 2001-02 on merits and submit before the Court that the Assessee, by this devious method can go Scot free or tax free on the taxable event which had admittedly had taken place in the present case and on the own admission of the Assessee itself in the Returns filed by it, the 'Capital Gains Liability' was admitted by the Assessee and the only issue was raised about Fair Market Value to be adopted for computing the capital gains tax liability for AY 2003-04 and AY 2004-05. 22. Per contra, the learned counsel for the Assessee Mr.Ashok Pathy submitted that the learned Tribunal was justified in holding that the reassessment could not be made for AY 2001-02, as there was no specific direction of the learned Tribunal in the order dated 31 May 2010, to levy Capital Gains Tax in AY 2001-02, while they dealt with the appeal for the AY 2003-04 and AY 2004-05 and therefore, subsequently, the learned Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , chose to grant the complete relief to the Assessee on this ground alone, and even dismissed the Miscellaneous Petition Nos.173 and 174/Mds/2010 filed by the Revenue on 27.10.2010 in a quick response, on 18.02.2011. The said order dated 18.02.2011 rejecting the Miscellaneous Petition filed by Revenue is quoted below :- PER HARI OM MARATHA, JUDICIAL MEMBER: These miscellaneous petitions have been filed by the Revenue in respect of the Tribunal order dated 31.5.2010 in S.P No 20/Mds/2010 ITANO 327 328/Mds/2010. for assessment years 2003-04 and 2004-05. 2. The Revenue seeks the recall of the entire order for fresh consideration. The reasons for filing these petitions u/s 254(2) have been mentioned by the Revenue as under: 1. From the order of the CIT(A) in Income-tax Act, 1961 No.226/06-07 dated 22.07.2008 it is seen that the issue of taxability of capital gain in the year of account was not adjudicated by the CIT(A). Hence, the Hon'ble Tribunal erred in admitting this issue instead of remanding it back to the CIT(A). 2. The assessee on its own admitted capital gains during the AY 2003-04 and 2004-05 in the return of income filed by it. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard: [Provided further that any application filed by the Assessee in this sub-section on or after the 1st day of October 1998, shall be accompanied by a fee of fifty rupees]. 27. The power under Section 254(2) also gives power to amend the order for rectification of mistake. The Proviso further provides for amendment to be made after giving opportunity of hearing to Assessee, in case the amendment of order will increase the tax liability of Assessee. Therefore, the scope of Sectio 254(2) is much wider and the learned Tribunal obviously fell in error in holding that it had no power to review or recall. If there is a mistake apparent, the Tribunal has the power to even recall and modify its previous order. To err is Human, and to forgive is Divine but in between these two, to correct the error is not only lawful and permissible but also the judicious approach, which all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessment orders. Section 150(1) of the Act is that provision under the Income Tax Act, 1961. 30. Section 147 of the Act is the enabling provision for reassessment, which provides for reassessment where the income escapes assessment and Section 148 prescribes for a Notice to be issued to the Assessee for such reassessment. Section 149 of the Act provides for time limit for giving such notice. Section 150 carves out an exception to Section 149 of the Act which provides for a limitation in issuing the notice under Section 148 of the Act, which gives power to reassess on the escapement of income given to the Assessing Authority. Section 150 also provides for aforesaid exception where such assessment is in pursuance of an order passed in appeal or by the court. The words or by a court in any proceeding under any other law were also added in the said provisions of Section 150 of the Act by Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 31. All the aforesaid relevant provisions from Sections 147 to 150, to the relevant extent are quoted below for ready reference:- 147. Income escaping assessment. If the Assessing Officer has reason to believe that any inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of said subsection by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, coupled with the provisions of limitation is thus clear. It is not intended to defeat the taxability but it is intended to provide a safeguard to the Assessee so that beyond the prescribed period of limitation, action of reassessment on the part of the Assessing Authority is not permitted unless the conditions for initiating such action beyond the prescribed limitations are satisfied. Like in Section 147 first Proviso, a limitation of four years is prescribed for reassessment, while the assessment is done upon scrutiny under Section 143(3) of the Act but beyond four years, after the end of the Assessment Year, such reassessment can be undertaken, if there is a failure on the part of the Assessee to make a return under Section 139 or failure to disclose fully and truly all material facts necessary for his assessment, for that Assessment Year. 33. Likewise, Section 149 provides for the limitation of four years for issuing notice under Section 148 of the Act. But Clause (b) provides for an extended limit of six years if the alleged escaped income is more than Rs.One lakh. Section 150 of the Act provides a non obstante clause to provide for reassessment, where such reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The order of Commissioner of Income Tax (Appeals) for these three years was passed on 22.07.2008, which was 'subject matter' of appeal before Income Tax Appellate Authority which held reassessment to be time barred by an obvious misreading of Section 150(2) of the Act. 36. By deciding the question of limitation of AY 2000-01 against Revenue, and by holding that there was no tax liability for AY 2003-04 and AY 2004-05, these two sets of orders passed by learned Income Tax Appellate Authority have resulted in a serious miscarriage of justice, which we cannot permit. The manner in which the various appeals and Miscellaneous Petition have been dealt with by the learned Tribunal for all the three Assessment years in question leaves much to be desired and the change of stand allowed by the Tribunal and later withdrawal of the appeals for AY 2003-04 and AY 2004-05 under the litigation policy of the CBDT Circular dated 28.01.2016, has resulted in all this goof up. Therefore, we are constrained to set aside all the orders passed by the learned Tribunal for all the three Assessment Years as also all the orders passed by Lower Authorities also for all these three Assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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