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TMI Blog2021 (12) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... g term capital gain the same cannot be reopened under the Explanation 2 of Section 263 declaring the order passed by the Ld. AO erroneous and prejudicial to the interest of the Revenue on the plea of no enquiry and/or verification done by the AO We are fortified by the order passed by the Hon ble High Court at Calcutta in the case of PCIT vs. Infinity Infotech Parks Ltd. [ 2018 (9) TMI 111 - CALCUTTA HIGH COURT] on this issue that has already discussed hereinabove which further approves the order passed by the Ld. AO on the count that there can be no tax payable unless there is any profit or gain has arisen. Hence, we do not support the order passed by the Ld. PCIT under Section 263 of the Act for reopening of assessment for the reason already discussed hereinabove and, thus, the same is hereby quashed. Appeal filed by the assessee is allowed. - I.T.A. Nos.127/ Ind/2020 (Assessment Years: 2012-13) - - - Dated:- 30-9-2021 - SHRI MANISH BORAD, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER Appellant by: Shri Ashish Goyal Shri N. D. Patwa, Advocates Respondent by: Shri Harshit Bari, Sr. DR ORDER PER MS. MADHUMITA ROY - JM: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Name Address of the Assessee Smt. Alpana Verma 2, Chuna Bhatti Bhopal 2. PAN Non PAN 3. Asst. Year 2012-13 As per the report of the ITO (I CI), Bhopal, vide his office letter F. No. ITO(I CI)/Bpl/Non PAN/2011-12/E-19204 dated 02.03.2016, Smt. Alpana Verma 2, Chuna Bhatti, Bhopal has sold immovable property worth ₹ 1,26,90,000/- without quoting PAN. It is seen from the report that escapement of long term capital gain in the case of the assessee comes to ₹ 1,26,90,000/-. The assessee has not filed return for the A.Yr. 2012-13. In view of the above facts, I have a reason to believe that income to the tune of ₹ 1,26,90,000/- chargeable to tax has escaped assessment within the meaning of section 147 of the Income tax Act, 1961 by reason of the failure on the part of the assessee to file his return of income u/s 139 for the relevant assessment year 2012-13 and to disclose fully and truly all the material facts. 4. The assessment under Section 143(3) r.w.s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 were duly placed before the Ld. AO during the re-assessment proceeding under Section 143(3) r.w.s. 147 of the Act. The issue relating to capital gain on the Joint Venture agreement executed on 02.09.2011 with the land value was of ₹ 1,26,90,000/- has been well considered by the Ld. AO while passing order under Section 143(3) r.w.s. 147 of the Act. Further that the provision of Section 263 of the Act Explanation 2A clearly specifies that the order passed by the Ld. AO shall be deemed to be erroneous in so far as it is prejudicial to the interest of the Revenue if according to the Ld. PCIT the order of assessment is passed without making enquiries or verification which ought to have been made by the Ld. AO. In this regard, we need to re-consider the order passed by the Ld. AO under Section 143(3) r.w.s. 147 of the Act which reads as follows:- In the case information has been received that the assessee has sold an immovable property worth ₹ 1,26,90,000/- without quoting PAN during the financial year 2011-12 relevant to A.Y. 2012-13. Information has been called from Sub-registrar u/s 133(6) of the Act to provide a copy of registry of the property sold by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under: The assessee is an individual doing service with Barkatullah University, Bhopal as professor having income from salary, income from business and income from other sources like bank interest etc. During the year under consideration, the assesses filed regular return of total income on 29/03/2013 showing total income of ₹ 4,16,050/-. The assesses has filed return of total income with ITO-l(l). Bhopal. During the year under consideration, the assessee has not sold any property. However, the assessee is having 21834 sq. ft. land at Bawadia Kalan which was purchased m the year 2002 and 2005. The copy of registered sale deed of the above land is enclosed herewith. The working fight of the above land was given to M/s Ample Builders and Colonisers under Joint venture Agreement which was executed on 02/09/2011. The copy of Joint Venture Agreement is enclosed herewith. This Joint Venture Agreement registered during the year only. Further it is submitted that against the Joint Venture Agreement the assessee will be received 11 flats as per this Joint Venture Agreement in the coming year. It is submitted that during the year 2014-15 i.e. A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apart from that we have considered the judgment passed by the Hon ble High Court at Calcutta in the case of PCIT vs. Infinity Infotech Parks Ltd. in Tax Appeal No. [2018] 96 taxmann.com 272 (Calcutta), wherein it was held that transfer in terms of Sec. 2(47)(v) could not be made until construction comes up. In that case 39% of constructed land was given to the assessee in terms of the development agreement entered into by and between the assessee and the developer. The relevant portion whereof is as follows:- 17. When the owner of a land enters into an agreement with a developer for the purpose of developing the land, the terms of the contract would indicate when the transfer would take place. There could be rare situations where the transfer may be simultaneous with the execution of the agreement, but where the owner retains any right in the constructed area that may come up in future, it would scarcely be a case of a transfer taking place at the time of the execution of the agreement. The matter may be viewed from another perspective. Merely because de facto possession of the land is made over to a mason or a civil engineer for the purpose of making a construction thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the opening words of Section 45 of the Act of 1961 being given some effect while reading such provision. In terms of Section 45(1) of the Act, the expression chargeable to income tax under the head 'Capital gains' , operates on Any profits or gains arising from the transfer of a capital asset . There can be no tax payable unless there is any profit or gain that has arisen. It could never have been the Revenue's case that there was any monitory profit or gain that accrued to the assessee at the time of the execution of the agreement of February 7, 2007. 21. In the light of the discussion above, the first ground urged by the Revenue does not appeal and the order of the Appellate Tribunal does not call for any interference as it set aside the erroneous view taken by the Commissioner in the order passed under Section 263 of the Act. 8. It appears from the records that the reason for re-opening of assessment under Section 147 of the Act was this that the assessee has escaped the long term capital gain on sale of immovable property whereas the assessee only entered into Joint Venture Agreement with a developer. In response to the issue of sale of immo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening proceeding under Section 143(3) r.w.s. 147 concluded the proceeding on the premise that the long term capital gain does not arise in the year under consideration i.e. when the agreement was executed but it arose later on when the assessee took possession of two flats against Joint Venture Agreement and sold the same to the third party in A.Y. 2015-16. This particular fact was ascertained from the return of income filed by the assessee for A.Y. 2015-16. Therefore, when the issue has already been decided by the Ld. AO in the previous occasion upon making enquiry and/or verification of the relevant documents in support of the submissions made by the assessee as regards the benefit of long term capital gain the same cannot be reopened under the Explanation 2 of Section 263 declaring the order passed by the Ld. AO erroneous and prejudicial to the interest of the Revenue on the plea of no enquiry and/or verification done by the AO. We have further considered the said judgment passed in the case of PCIT vs. Infinity Infotech Parks Ltd. reported in, (2018) 96 taxmann.com 274 (Calcutta), the relevant portion whereof is as follows:- Section 2(47), read with sections 45 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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