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TMI Blog2013 (7) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... idential premises, for examining the issue under section 2(22)(e) of the Act and for disallowance of interest, proceedings u/s 147 were initiated and a notice under section 148 was issued on 18.03.2005. In the reassessment proceedings, the AO not only examined the issue of deemed dividend but also working of capital gains on sale of property. The sale of property and subsequent capital gains were considered as the assessee was tenant in respect of premises 719, Prasad Chambers, Near Roxy Cinema, Opera House, Mumbai 400004. The tenancy was surrendered vide agreement dated 21.07.1984 for a consideration of Rs.4,75,000/- and assessee purchased a new premises at Sri Om Chambers, Kemps Corner, Mumbai 400036 for Rs.4,00,000/- as per agreement dated 23.07.1984. This premises was sold for a consideration of Rs.40,00,000/- as per sale deed dated 01.12.1999 in the impugned year. In the books of account assessee revalued the premises at Rs.38,00,000/- and the difference between the sale price and the revalued price has been credited to the P & L Account and offered an amount of Rs.2,00,000/- in the computation of income. In the assessment proceedings consequent to initiation under section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 143(1) and proviso to section 147 is not applicable in the present case. He also confirmed capital gains calculation. Hence, the assessee is aggrieved on this order and preferred the first appeal. 4. In the meantime, the AO received the valuation report under section 50C. Consequent to the noting in the assessment order, the AO modified the capital gains working by incorporating the revised value of sale price as given by the valuation officer under section 154, while at the same time giving benefit of setting off of losses, etc. This order was contested before the CIT(A), who rejected assessee's contentions on the reason that assessee did not raise the issue when the AO noted the same in the assessment order and having accepted the note, he cannot challenge the same again in an order under section 154. Therefore, assessee has preferred the second appeal in ITA No. 5639/Mum/2010 challenging the order of the CIT(A) dated 13.05.2010 and also raised additional grounds in the main appeal on the issue of power of AO to refer to the valuation officer as well as capital gain valuation under section 50C which was not applicable for the impugned assessment year. 5. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O and left a note in the order itself that the sale consideration will be revised after receipt of DVO's report. This order of the AO was, however, quashed by the CIT(A) on 07.02.2007 on the reason that there are no valid reasons for reopening the assessment. This order of the CIT(A) was not challenged and was accepted by the Revenue. Therefore reopening the assessment again on 13.03.2007 (within two months or so of CIT(A) order) and issuance of notice dated 26.03.2007, just before the limitation of time getting barred, is only to overcome the first proceedings which were not held to be valid. 10. Similar issue was considered in the case of Manoo Lal Kedarnath vs. Union of India 114 ITR 884 (All) wherein it was held as under: - "Held, that it was the common case of the parties that the grounds for believing that the said two items had escaped assessment were the same as in the previous reassessment proceedings. The settled rule of law is that a judicial determination which has become final between the parties is binding provided it is made by an authority having jurisdiction. It will have legal efficacy till set aside on an appeal or by any superior authority. In the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated August 29, 1973, was quashed." 11. In the case of CIT vs. V.R. Durgamba 223 ITR 96 (Mad) the Hon'ble Madras High Court held as under: - "Once a proceeding in respect of an item other than the one mentioned in the notice under section 148 of the Income-tax Act, 1961, has been taken into consideration and the same is subsequently not upheld in appeal, it is not possible to restart the proceedings in respect of the same item afresh. Held, that, in the instant case, the Tribunal found that the Income-tax Officer's action in reopening the assessment under section 147(b) of the Act earlier was to withdraw the standard deduction of Rs. 3,400 allowed by the Income-tax Officer in the original assessment on the basis that the remuneration received by the assessee from a company R was income under the head "Salary". While completing the reassessment on the basis of section 147(b) of the Act, the Income-tax Officer also included interest income of Rs. 3,423 under section 214 and thus, in the reassessment under section 147(b) made by the Income-tax Officer, the said income formed the subject-matter of assessment. The reassessment, however, was cancelled as without jurisdiction. Subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the principles laid down in the above judgements we have no hesitation in setting aside the order of the AO and CIT(A) on the issue of jurisdiction. 14. Since the proceeding initiated under section 147 are held to be bad in law on the second assessment proceedings, there is not need to adjudicate on merits the issue of capital gains and also the issue of reference to valuation officer, which have become academic in nature. However, there is merit in assessee's contention that the AO cannot refer the matter to substitute 'fair market value' for 'full value of consideration received' in the assessment order as provisions of section 50C are not applicable. Be that as it may, since the entire proceedings are considered to be bad in law, there is no need to adjudicate the grounds on merits and the additional grounds raised. Accordingly, ITA No. 6871/Mum/2008 is considered allowed. 15. The appeal in ITA No. 5639/Mum/2010 is consequential in nature as the AO rectified the order under section 154 to substitute valuation officer's fair market value determined. Since the second reassessment proceedings itself are held to be bad in law, the consequential order under section 154 also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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