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TMI Blog2021 (6) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... e return u/s 143 (1) the learned assessing officer should have a tangible material necessarily to reopen the case of the assessee is wrong. We reject the argument of AR that even in the case where there is no assessment made by the AO or the return is processed merely u/s 143 (1) of the income tax act, there is a requirement of having any tangible material with the assessing officer to reopen the case of the assessee. We hold that in such cases, there is no requirement of tangible material for reopening of assessment. In view of this, we do not find any infirmity in the reasons recorded by the learned assessing officer for reopening of the assessment. Whether fair market value of the property sold during the year as on 1/4/1981 is required to be taken as per the report of the registered valuer produced by the assessee before the assessing officer or the value adopted by the learned assessing officer is required to be taken? - There is a stark difference between the facts before the coordinate bench as well as the facts before us. In the case before that bench, the valuation report by the registered valuer was also having the comparable sale instances. Further, in that parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Shailesh Gupta, Shri Mahur Agarwal, Advocates For the Revenue : Shri H. K. Choudhary, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are three appeals for two Assessment years pertaining to one assessee, Mr. Valmik Thapar, a resident, Individual [Assessee]. Assessee filed ITA number 5767/Del/2015 for assessment year 2007 08 and ITA number 6346/Del/2014 for A Y 2010-11. Ld AO filed ITA number 6726/Del/2014 for AY 2010-11. All these appeals are on common issue and therefore, those are heard together and disposed of by this common order. Assessment Year 2010-11 2. ITA number 6346/Del/2014 is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) XXVI , New Delhi dated 25th of September 2014 for assessment year 2010 11 raising following grounds of appeal:- i. on the facts and in the circumstances of the case, the appellate authority has erred in accepting the substituted fair market value of immovable property situated at 19, Kautilya Marg, New Delhi with ₹ 7,70,160/ as at 1 April 1981 instead of ₹ 7,710,000/ based on the valuation report by an approved valuer and relied upon by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of India Ltd versus CIT 187 ITR 688, it is held that the appellate authority has the jurisdiction to permit the appellant to raise an additional ground, which could not have been raised at the stage when the return was filed or when the assessment order was made and the ground became available on account of a change of circumstances of law. In view of this, the application of the assessee submits that the instant assessment framed is without jurisdiction and hence is unsustainable in law and therefore this ground should be admitted. 6. The learned authorised representative vehemently supported the application made by the assessee for admission of the additional ground reiterating the same arguments as raised in the application itself. 7. The learned CIT DR vehemently opposed the admission of the additional ground of appeal stating that assessee should not have raised this ground of appeal at this stage when neither before the learned assessing officer or before the learned CIT A, it has been raised. He further stated that it is not a legal ground and when there can be two views on a particular issue; such ground cannot be raised under the pretext of a legal ground. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and sale deed was executed for the same on 25th of March 2010. The consideration received by the assessee on various dates is as Under:- serial number Date of payment Amount of payment (in Rs ) 1 11/4/2007 1,25,00,000 2 9/8/2007 4,00,00,000 3 1/12/2008 3,00,00,000 4 13/1/2009 2,25,00,000 5 9/11/2009 1,50,00,000 6 25/3/2010 (date of sale deed) 50,00,000 11. This property was acquired by the grandmother of the assessee Mrs. Koshalya Thapar on 27/5/1957. The above property was gifted on 25 January 1980 to her son Shri Romesh Thapar. Shri Romesh Thapar passed away on 22 August 1987 and the property was transferred in the name of the assessee as per revenue records, on 24th of May 1990. Assessee treated the cost of acquisition of assets being fair Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the advanced received ₹ 50 ,00,000/- b) investment in NHAI bonds on 9/12/2009 out of advance ₹ 50,00,000/- Section 54EC reads as under:- (1) where the capital gain arises from transfer of a long-term capital asset and (2) proviso to Section 54EC reads as Under:- [Provided that the investment made on or after first day of April 2007 in the long-term specified assets by assessee during any financial year does not exceed Fifty lakh Rs.] In this case, the assessee has claimed deduction u/s 54EC for ₹ 1 crore. The assessee has invested in amount exceeding ₹ 50 lakhs in long-term capital assets out of sale proceeds; proviso to Section 54EC is clearly applicable in this case. Thus, the deduction u/s 54EC on LTCG amounting to ₹ 50 lakhs has been claimed in excess, which are required to be taxed. As assessee has made a wrong claim for deduction u/s 54 EC an income (LTCG) of ₹ 50 lakhs chargeable to income tax has escaped assessment. Apart from the above, the assessee has also claimed deduction u/s 54 amounting to ₹ 37,765,215 and ₹ 1,70,00,000/- by making investment in two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the provisions of Section 53A of The Transfer of Property Act 1882 and submitted that collaboration agreement executed on 29th of April 2006 for construction of built-up space was not a document of part performance in accordance with provisions of Section 53A of The Transfer of Property Act. Assessee further submitted that though capital gain accrued in assessment year 2008 09, would be chargeable only in the year when the actual sale deed is executed i.e. assessment year 2010 11. Assessee submitted a revised computation of total income for assessment year 2010 11 , whereby the indexed cost for assessment year 2008 09 has been adopted and the loss under Business head is claimed for set of against the recomputed capital gains. 18. The learned assessing officer considered the explanation of the assessee after considering the revised computation of total income submitted before him, holding that assessee has reduced the taxable long-term capital gain to ₹ 6,095,701/ whereas in the original computation assessee himself has disclosed the amount of capital gain of ₹ 25,036,358. He rejected the contention of the assessee that assessee has actually converted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 15,000 per square yards. Accordingly, the Authorised valuer valued the land as at 1/4/1981 at ₹ 143,499.81. So far as the construction cost is concerned, Authorised Valuer took average plinth area rate at ₹ 80 per square feet on total cost of construction was determined at ₹ 1,026,880. Accordingly, the total cost of land and cost of construction was considered at ₹ 1,54,20,379.81 for the whole property. 21. The learned assessing officer noted that there is a big flaw in the above valuation made by the learned valuer for the reason that Vasant Vihar rate, which has been compared by the assessee, is approximately 15 km away from the impugned property. He further noted that as on 1/4/1981 the LDO rates were applicable in Delhi, therefore, according to him the prevailing rates of the value of land, as on 01/04/1981, in the area where the property in question is situated, was ₹ 2000 per square meter. He supported it with the copy of the notification along with the chart of the rates prevailing in that area. It was also provided to the assessee. Assessee submitted that that such rate was applicable only up to 31st of March 1981 and not therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one property whereas the assessee has claimed with respect to two properties i.e. one at Mumbai and one at New Delhi. He also noted that the property at Mumbai was purchased on 6/9/2007, prior to the period of one year from the date of transfer of capital asset on 25th of March 2010, and further the assessee was also asked to justify the deduction of ₹ 1,70,00,000/- claimed on construction of new residential house though the construction was commenced in April 2006 and completed prior to the date of transfer of capital asset. The learned AO held that assessee has purchased a ready built flat in September 2007 whereas the capital asset in question is transferred on 25th of March 2010 therefore the assessee has purchased the above property even prior to 1 year before, and he does not allow deduction u/s 54 (1) of the income tax act on Mumbai property. 23. With respect to the claim of deduction of ₹ 1,70,00,000/- of construction cost of Kautilya Marg Property Delhi, he proposed to allow the claim of the assessee. 24. With respect to the claim of purchase / construction of house property for deduction u/s 54 of the income tax act, assessee submitted that the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is incorrect, and therefore he rejected. 26. Thus the learned assessing officer computed the capital gain on sale of house property by granting only the deduction of ₹ 1,70,00,000/- being the construction cost of the house property at Kautilya Marg and reduced it from the long-term capital gain arrived earlier of ₹ 117,311,789/- and thereby determined total taxable long-term capital gain of ₹ 100,311,789/ . Accordingly assessment order u/s 147 read with Section 143 (3) of The Income Tax Act was passed on 26th of March 2013 determining the total income of the assessee at ₹ 104,499,240/ . Appeal before CIT (A) 27. Assessee preferred an appeal before the learned CIT A. He passed an order on 25th of September 2014. With respect to the value of the property as on 1 April 1981, he held that appellant has failed to controvert the finding of the learned assessing officer by producing any comparable sale instances in 1981 in the nearby vicinity of the appellant s property under reference on leasehold land. Therefore, he upheld the action of the learned assessing officer holding that the fair market value of the property as on 1 April 1981 woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in two residential houses assets (new property) where as deduction u/s 54 is allowable only for one property. Against reopening his arguments are :- i. He submitted that deduction u/s 54EC of the act is squarely covered in favour of the assessee by the decision of Honourable Madras High Court in CIT versus C Jaichander 370 ITR 579, wherein it has been held that Where assessee invested a sum of ₹ 50 lakhs each in two different financial years, within a period of six months from date of transfer of capital asset, he was eligible for deduction under section 54EC. He submitted that for this reason, the claim of the assessee is correct, supported by the decision and therefore non-application of mind by the learned assessing officer. With respect to the claim of deduction u/s 54EC, he further relied upon circular number 3/2008, which provided that the deduction u/s 54EC shall not exceed 50 lakhs in a financial year. He submitted that when the assessee has invested ₹ 50 lakhs in two financial years, the circular does not prohibit the deduction. He further stated that the circular are binding on the revenue authorities. He further relied on the decision of the coordinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no reference by the learned AO on any of the tangible material. He therefore submitted that looking at the reasons recorded by the learned assessing officer there is no tangible material available with the learned assessing officer or there is no live link with the formation of the belief that income of the assessee has escaped assessment. He submitted that for that reason also the reopening of the assessment is invalid. Arguments of ld DR on Reopening 31. The learned departmental representative submitted that the original return filed by the assessee was not at all assessed but was merely processed and therefore there is no assessment. He further referred that date of recording of the reason is 01 March 2012 and therefore the proviso, which has been referred by the learned authorised representative u/s 54EC of the act, did not exist as on that date for the year. He further submitted that does not apply in the impugned assessment year, which is applicable from 1 April 2015. He further submitted that when there is no assessment made u/s 143 (3) of the act and when the return is merely processed, there is no requirement of any tangible material in that particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjab Haryana)which has been referred by the learned CIT A. He further submitted that in that particular decision the decision of the honourable Karnataka High Court relied upon by the learned authorised representative has also been considered. In view of this, he submitted that the reopening of the assessment made by the learned assessing officer could not be found fault with. 35. Learned authorised representative reiterated the original submission made by him with respect to the availability of deduction u/s 54EC of the act and for the purpose of deduction Under Section 54 of the income tax act, he relied on the decision of the honourable madras High Court. Queries by the Bench 36. Coordinate bench then raised the query to the learned authorised representative that honourable Supreme Court in case of Asst Commissioner of income tax versus Rajesh Jhaveri stockbrokers private limited (2007) 291 ITR 500 (SC) has held whether the reopening of the assessment is required to be upheld in view of the fact that the assessing officer must have reason to believe that income/profits or gains are chargeable to income tax have escaped assessment. It was further pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground number two of investment into house property eligible for deduction u/s 54 of the income tax act. He relied on the decision of the honourable Karnataka High Court in case of around in Arun K Thaigrajan versus Commissioner of income tax 427 ITR 190 wherein it has been held that for the purpose of allowing benefit of deduction u/s 54 (1) the expression residential house includes within its ambit numbers as well and it cannot be construed as one residential house only. He therefore submitted that issue is squarely covered in favour of the assessee. Arguments of Revenue on Merits of Addition/ Disallowances 40. The learned departmental representative vehemently supported the order of the learned assessing officer and the learned CIT A and stated that for rejecting the report of the learned authorised valuer, both the lower authorities have given their own reason that the land is not situated in the immediate vicinity of the impugned land involved in this appeal. He further stated that there are rates prescribed by the local body that are the fair market value as on 1 April 1981. 41. With respect to the ground number [2] of the appeal, he submitted that un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi. iv. Whether the assessee is entitled to deduction u/s 54EC of the act of ₹ 1 crore, he has invested ₹ 50 lakhs each into different financial years but within the time allowed. Decision and analysis on reopening of assessment 44. Coming to the first issue whether the reopening of the assessment is made by the learned assessing officer in accordance with the law or not, the reasons recorded by the learned assessing officer has already been reproduced above at the time of recording the facts of the present case. The learned assessing officer has recorded the reasons on 1 March 2012 stating that (1) assessee has made investment in REC capital gain bonds on 24th of February 2009 of ₹ 50 lakhs and further investment on 9/12/2009 of ₹ 50 lakhs in national highway authority of India Bonds. According to him, the assessee is eligible for deduction only with respect to an investment of ₹ 50 lakhs made in the financial year 2008 09 and thereby there is an escapement of income to the extent of ₹ 50 lakhs. (2) The assessee has claimed deduction u/s 54 of the income tax act of a flat purchased at Mumbai for ₹ 37,765,215/ an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable to tax has escaped assessment. Clause (b) of that explanation clearly provides that where the return of income has been furnished by the assessee but no assessment has been made and it is noticed by the assessing officer that assessee has understated the income or has claimed excessive loss, deduction, allowance on relief in the return, it shall be considered as deemed escapement. 47. On the first issue of reopening of the assessment that when the assessee has invested in capital gain bonds on 24th of February 2009 of ₹ 50 lakhs and further investment of ₹ 50 lakhs on 9 December 2009, whether the claim of the assessee has resulted into any escapement of income or the learned AO has any reason to believe that income of the assessee has escaped assessment. The learned assessing officer has noted that assessee has claimed deduction Under Section 54EC for ₹ 1 crore whereas according to the proviso the deduction is only available to the extent of ₹ 50 lakhs. Thus, the assessing officer had reason to believe that assessee has claimed excess deduction of ₹ 50 lakhs u/s 54EC of the act. Admittedly, in this case assessee has made investment of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the total income furnished by the assessee, the learned assessing officer is of prima facie of the view that assessee has claimed deduction u/s 54 of the act with respect to 2 properties situated at two different places, which is not permissible. Thus on this issue too, we find that ld AO did not err in reopening of assessment. 49. Now we come to the argument of the learned authorised representative that in absence of any tangible material, the reopening cannot be made by the learned assessing officer. Admittedly in this case the assessment was not made but the return was processed u/s 143 (1) of the act. Therefore, the question that the learned authorised representative is posing before us is whether in case of no assessment or merely processing of the return u/s 143 (1) of the act, the learned assessing officer should have a tangible material necessarily to reopen the case of the assessee. Identical issue has been dealt with the honourable Delhi High Court in Indu Lata Rangwala V DCIT [2017]80 taxmann.com 102(Delhi)/ [2016] 384 ITR 337 (Delhi)/ [2016] 286 CTR 474 (Delhi). The honourable High Court after considering all the judicial precedents available on the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifying if any tax or interest found is due on the basis of the return filed after adjustment of any tax deducted at source ('TDS'), any advance tax paid or any amount paid otherwise by way of tax or interest. Further, the first proviso to Section 143 (1) (a) permitted the Department to make adjustments on account of any arithmetical errors, any loss carried forward, deduction, etc. in the income or loss declared in the return. While the AO could pick up the return under this provision, he had no authority to make adjustments or adjudicate upon any issue arising from the return. The second point to be noted is that, notwithstanding the fact that an intimation to the Assessee which was deemed to be a notice of demand under Section 156 of the Act, the AO could proceed to issue notice under Section 143 of the Act. Thirdly, the sending of an intimation under Section 143 (1) (a) of the Act was mandatory. The legislature was careful not to use the word 'assessment' in the proviso to Section 143 (1) (a) of the Act. In other words, a distinction was made between making of an assessment by the AO after affording the Assessee an opportunity to explain the queries that arose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,285.72 lakhs as bad debts, the AO reopened the assessment on the ground that he had reason to believe that income assessable to tax had escaped assessment within the meaning of Section 147 of the Act. 24.2 In response to the notice, the Assessee filed its return of income on 31st May 2004 declaring the loss in the original income. The Assessee raised a protest on various grounds relating to jurisdiction and the merits of reopening the assessment. When the reopening was challenged by the Assessee by way of writ petition, the High Court of Gujarat relied on its decision in Adani Export v. Dy. CIT[1999] 240 ITR 224 (Guj.) and allowed the writ petition. 24.3 An appeal was filed before the Supreme Court in which the Revenue pointed out that the decision in Adani Export (supra) had no application since the return in that case had been final after an adjustment under Section 143 (3) of the Act whereas in the case before the Supreme Court the return had been accepted by processing it under Section 143 (1) of the Act. It is above in the background that the Supreme Court discussed the entire legislative history of Section 143 (1) of the Act. The Supreme Court ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inferred from the deeming provision. Therefore, there being no assessment under Section 143 (1) (a), the question of change of opinion, as contended, does not arise. 24.4 The Supreme Court in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) then discussed Sections 147 and 148 of the Act. It observed that Section 147 of the Act substituted with effect from 1st April 1989 empowered the AO to assess or reassess income chargeable to tax if the AO has reason to believe that income for any AY has escaped assessment. To confer the jurisdiction under Section 147 (a), the two conditions have to be fully satisfied: (i) the AO must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment and (ii) if the reopening of assessment was after four years from the end of the relevant assessment year, the AO must also have reason to believe that such escapement had occurred by reason of either omission or failure on the part of the Assessee to disclose fully or truly all material facts necessary for his assessment of that year. 24.5 It was concluded by the Supreme Court in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) that even where no steps we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even where proceedings under Section 147 are sought to be taken with reference to an intimation framed under Section 143 (1), the ingredients of Section 147 have to be fulfilled, the ingredient is that there should exist reason to believe‟ that income chargeable to tax has escaped assessment. This judgment, contrary to what the Revenue would have us believe, does not give a carte blanche to the Assessing Officer to disturb the finality of the intimation under Section 143 (1) at his whims and caprice; he must have reason to believe within the meaning of the Section. 26.3 The Court in Orient Craft Ltd. (supra) then discussed extensively the meaning and content of the expression 'reasons to believe' under Section 147 of the Act. The Court relied upon the earlier decisions of the Supreme Court in A.N. Lakshman Shenoy v. ITO [1958] 34 ITR 275 (SC), S. Narayanappa v. CIT(1967) 63 ITR 219 (SC), Sheo Nath Singh v. Appellate Asstt. CIT[1971] 82 ITR 147 (SC), ITO v. Lakhmani Mewal Das[1976] 103 ITR 437 (SC). The Court has also discussed the decision of the Supreme Court in CIT v. Kelvinator of India Ltd. (supra). It must be noted at this stage that the Kelvinator of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that the difference between an 'assessment' and an 'intimation' did not mean that the strict requirements of Section 147 could be compromised. It was pointed out in Orient Craft Ltd. (supra) that in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) the Court reiterated that so long as the ingredients of Section 147 are fulfilled an intimation issued under Section 143 (1) can be subjected to proceedings for reopening. The Court in Orient Craft Ltd. (supra) then reiterated that It is nobody's case that an 'intimation' cannot be subjected to Section 147 proceedings; all that is contended by the Assessee, and quite rightly, is that if the Revenue ants to invoke Section 147 it should play by the rules of that Section and cannot bog down. In other words, the expression 'reason to believe' cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under Section 143 (3) and another applicable where an intimation was earlier issued under Section 143 (1). It follows that it is open to the Assessee to contend that notwithstanding that the argument of change of opinion is not available to him, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the reassessment proceedings amount to a review or change of opinion carried out in the earlier AY 2005-06, which amounts to an abuse of power and is impermissible. It was further noted that even the order of the AO for the AY 2007-08, converting the STCG into business income, has been reversed by the CIT (A) and that order had been affirmed by the ITAT. 28. In Indo Arab Air Services (supra), the return filed was processed under Section 143(1) of the Act. Subsequently, on the basis of the information received from the Enforcement Directorate that in the books of the Assessee there were huge cash deposits, notice was issued by the AO to the Assessee under Section 148 of the Act. The Court relied on the decision in Orient Craft Ltd. (supra) and held that while the AO had in the reasons for reopening the assessment set out the information received from the ED, he had failed to examine if that information provided the vital link to form the 'reason to believe' that income of the Assessee had escaped assessment for the AY in question. The AO had not stated that he examined the returns filed by the Assessee for the said AY and detected that the said cash deposits were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (supra). The decision in Zuari Estate Development 32.1 The Supreme Court in Zuari Estate Development Investment Co. Ltd. (supra) was dealing with an appeal by the Revenue against the decision of the Bombay High Court in Zuari Estate Development Investment Co. (P.) Ltd. v. J.R. Kanekar, Dy. CIT[2004] 271 ITR 269/139 Taxman 209. 32.2 The facts in brief were that the Assessee filed its return for the AY 1991-92 which was accepted under Section 143 (1) of the Act. Subsequently, the AO came to learn that there was a sale agreement dated 19th June 1984 entered into between the Assessee and Bank of Maharashtra to sell a building on the condition that the sale would be completed only after the five years but before expiration of sixth year at the option of the purchaser, the purchaser could rescind the sale for a certain consideration. 32.3 The transaction could not be completed even after 30th September 1993. The Assessee's accounts for the AY 1991 had disclosed the amount of ₹ 84,47,112 received from the Bank by the Assessee way back on 20th June 1984 as a 'current liability' under the heading 'Advance against deferred sale of building& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with the issue of reason to believe that income chargeable to tax has escaped assessment on the part of the Assessing Officer in cases where regular assessment was completed by Intimation under Section 143 (1) of the Act . Therefore the court observed as under: it would not be wise for us to infer that the Supreme Court in Zuari Estate Development and Investment Co. Ltd. (supra) has held that the condition precedent for the issue of reopening notice namely, reason to believe that income chargeable to tax has escaped assessment, has no application where the assessment has been completed by intimation under Section 143 (1) of the Act. The law on this point has been expressly laid down by the Apex Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd. (supra) and the same would continue to apply and be binding upon us. Thus, even in cases where no assessment order is passed and assessment is completed by Intimation under Section 143 (1) of the Act, the sine qua non to issue a reopening notice is reason to believe that income chargeable to tax has escaped assessment. In the above view, it is open for the Petitioner to challenge a notice issued under Section 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143 (1) of the Act. 35.3 As explained in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) an intimation issued under Section 143 (1) can be subjected to proceedings for reopening , so long as the ingredients of Section 147 are fulfilled . 35.4 Explanation 2 (b) below Section 147 states that for the purposes of Section 147, where a return of income has been furnished by the Assessee but no assessment has been made and it is noticed by the AO that the Assessee has understated the income and claimed excessive loss, deduction, allowance and relief in the return then that shall also be deemed to be a case where the income chargeable to tax has escaped assessment . 35.5 As explained by the Supreme Court in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) and reiterated by it in Zuari Estate Development Investment Co. Ltd. (supra) an intimation under Section 143 (1) (a) cannot be treated to be an order of assessment. There being no assessment under Section 143 (1) (a), the question of change of opinion does not arise. 35.6 Whereas in a case where the initial assessment order is under Section 143 (3), and it is sought to be reopened within four years from the expi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir market value of the property sold during the year as on, 1/4/1981 is required to be taken as per the report of the registered valuer produced by the assessee before the assessing officer or the value adopted by the learned assessing officer is required to be taken. The facts even at the cost of reiteration and repetition, shows that assessee has claimed indexed cost of acquisition at ₹ 48,727,200 by adopting the rate of property as on 1/4/1981 at ₹ 7,710,000 based on the report of government approved valuer who has valued the entire property for a sum of ₹ 1,54,20,000 the assessee has sold half share of this property and therefore the above valuation has been taken. However, the learned assessing officer questioned the valuation report with respect to fair market value of the land. The land rate has been adopted by the registered valuer at ₹ 11,127.75 per square meter. To arrive at this value the learned valuer has stated that in vasant Vihar area the auction price in 1985 was approximately ₹ 8000 per square meter. He also considered increase at 10% per year increase in the land rate in 1985 and therefore approximately in 1981 the land rate adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to fair market value as on 1.4.1981 for the purpose of computing the capital gains. It is seen that the Assessing Officer while rejecting the registered valuer s estimate at ₹ 5800/- per sq mtr has noted that the average rate at which the sales deeds were being executed was ₹ 1160/- per sq mtr. However, it is our considered opinion that valuation done by the empanelled registered valuer of the Income Tax Department would certainly take precedence over a value, which the Assessing Officer might adopt on his own without referring to the DVO. The fact of the matter remains that the Assessing Officer, during the course of assessment proceedings, did not refer to the DVO even though he chose not to accept the rate adopted by the registered valuer. Therefore, in our considered opinion, the Assessing Officer exceeded the powers entrusted to him in this regard by undertaking to compute the fair market value on his own without being supported by the expert knowledge of the DVO. The law is fairly settled in this regard and coordinate benches of the Tribunal have time and again held that where the assessee had submitted valuation report of a registered valuer and the matter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land as on 1st April, 1981, estimated by a registered valuer being based on sound factual basis and the phenomenal development in that area could not be rejected by the AO without assigning any specific reasons. 5.1 Similarly, in the case of Pyare Mohan Mathur HUF Vs ITO (in ITA No. 471/Agra/2009 vide order dated 21/04/2011) the Agra Bench of the ITAT has held that in view of the provision of section 55A once the assessee has submitted the necessary evidence by way of the valuation report made by the registered valuer, the onus gets shifted on the AO to contradict the report of the registered valuer. The registered valuation officer is a technical expert and the opinion of an expert cannot be thrown out without bringing any material to the contrary on record. In case the AO was not agreeable with the report of the registered valuer, he was duty bound to refer the matter to the DVO for determining the fair market value of the land as on which he failed to do so. The tribunal held that the revenue has not discharged the onus but merely rejected the fair market value taken by the assessee. It set aside the order of the CIT (A) and directed the AO to recompute the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of the learned lower authorities directing the assessing officer to re-compute the fair market value of the land as on 1/4/1981 by taking into account the rate as adopted by the registered valuer. However, there is a stark difference between the facts before the coordinate bench as well as the facts before us. In the case before that bench, the valuation report by the registered valuer was also having the comparable sale instances. Further, in that particular case, the higher value as on 1/4/1981 was also supported by the fact that even at the time of sale, also, the property was sold at much higher rates than circle rates and the valuation as on 1/4/1981 was higher than the market rates. However, before us the learned assessing officer has given a specific instance about land rates prevailing as on 1/4/1981 which is far less then valuation rates adopted by the registered valuer and further there is no corroboration of the same with the rates at the time of sale. Further base of valuation of sale instances after four years were taken. The basis for land rates was taken on pin code Numbers. However, in principle we agree that assessing officer is not a valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to incometax as income of the Previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section. 11. From close scrutiny of the aforesaid provision, it is axiomatic that property sold is referred to as original asset and the original asset is prescribed as buildings and lands appurtenant thereto and being a residential house. The expression 'a residential house' therefore, includes building or lands appurtenant thereto. It cannot be construed as one residential house. 12. A Bench of this court in case of Smt. KG Rukminiamma (supra) dealt with the meaning of expression 'a residential house' used in Section 54(1) of the Act while taking into account Section 13(2) of the General Clauses Act, 1897 held that unless there is anything repugnant in the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of Section 54 of the Income-Tax Act has been amended to provide that the rollover relief under the said Section is available if the investment is made in one residential house situated in India. 20.5 Applicability:- These amendments take effect from 1st April, 2015 and will accordingly apply in relation to Assessment year 2015-16 and subsequent Assessment years. Thus it is axiomatic that the aforesaid amendment was specifically applied only prospectively with effect from Assessment year 2015-16. 14. The subsequent amendment of Section 54(1) also fortifies the fact that the legislature felt the need of amending the provisions of the Act with a view to give a definite meaning to the expression 'a residential house', which was interpreted as plural by various courts by taking into account the context in which the aforesaid expression was used. The subsequent amendment of the Act also fortifies the view taken by this court as well as Madras High Court and Delhi High Court. It is trite law that the principle underlying the decision would be binding as precedent in a case. In Halsbury Laws of England, Volume 22, Para 1682, Page 796, the relevant extract rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income tax act of ₹ 1 crore by investing ₹ 50 lakhs in financial year 2008 09 and further investing ₹ 50 lakhs in financial year 2009 2010. Decision and Analysis on deduction u/s 54EC 58. We have carefully considered the rival contention and find that the issue is squarely covered honourable madras High Court in case of Commissioner of income tax, Channing versus C Jaichander 370 ITR 579 (Madras) on the identical facts and circumstances where the assessee has made investment of ₹ 50 lakhs each into different financial year but within six months of the date of transfer of the capital asset and honourable High Court held as Under:- 5. The key issue that arises for consideration is whether the first proviso to Section 54EC(1) of the Act would restrict the benefit of investment of capital gains in bonds to that financial year during which the property was sold or it applies to any financial year during the six months period. 6. For better understanding of the issue, it would be apposite to refer to Section 54EC(1) of the Act, which reads as under: Section 54EC. Capital gain not to be charged on investment in certain bonds.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. 9. At this juncture, for better clarity, it would be appropriate to refer to the Notes on Clauses - Finance Bill 2014 and the Memorandum explaining the provisions in the Finance (No.2) Bill, 2014, which read as under: Notes on Clauses - Finance Bill 2014: Clause 23 of the Bill seeks to amend section 54EC of the Income-tax Act relating to capital gain not to be charged on investment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gain shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by inserting a second proviso with effect from 1.4.2015. The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from 1.4.2015 in relation to assessment year 2015-16 and the subsequent years. The intention of the legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to Section 54EC(1) of the Act, as it stood in relation to the assessees. 11. In any event, from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to ₹ 50,00,000/- is incorporated in Section 54EC(1) of the Act itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years. For the foregoing reasons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een quashed, as such. 3) That the learned Commissioner of income tax (appeals) has erred in law and on facts in sustaining an addition of a sum of ₹ 121,725,973/ Under the head capital gain on account of sale of property act 19, Kautilya Marg, Delhi and that too on protective basis against which, addition was already made by the learned assessing officer in assessment year 2000 11 and as such, the additions of sustained by the learned CIT (A) is misconceived in law and should be deleted, as such. 3.1) That the learned Commissioner of income tax (appeals) while sustaining the instant assessment has proceeded on only irrelevant and extraneous considerations, by Sri disregarding the submission/material/evidence furnished by the assessee, appellant in shape of detailed replies an information and as such, the additions of sustained, is wholly untenable on facts and also in law. 3.2) That the learned Commissioner of income tax (appeals) has further erred in law and on facts by ignoring the fact that there could be no double taxation of the said someone s on substantive basis in assessment year 2010 11 i.e. the year in which the sale deed was registered and sale ..... 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