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2015 (9) TMI 267 - ITAT LUCKNOW

2015 (9) TMI 267 - ITAT LUCKNOW - TMI - Reopening of assessment - Held that:- In the present case, on the basis of the clause no. 2 of the Supplementary Agreement dated 29.04.2002, cogent material was available before the A.O. to form prima facie belief about escapement of income in the present year. It is not relevant that in spite of this material, it was held by Hon’ble Allahabad High Court in assessee’s own case for assessment year 2006-07 [2014 (12) TMI 686 - ALLAHABAD HIGH COURT ] on the b .....

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discussion, we do not find any infirmity in the order of CIT (A) on this issue. Accordingly, these grounds of the assessee are rejected.

Capital gain accrue or arise or not in the present AY or not - Transfer u/s 2(47) - Held that:- In the present case, the assessee has not offered the capital gain in any year i.e. A.Y. 2000 – 01 being the year of initial agreement or in A.Y. 2002 – 03 being the year in which possession was given as per the assessee and transfer has taken place as pe .....

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High Court on the basis of surrounding circumstances. In view of these facts, we feel it proper to give consequential direction to the A.O. to tax this capital Gain in A.Y. 2002 – 03 being the year in which the transfer has taken place as per the judgment of High Court. Accordingly Assessing Officer is directed to compute the capital gain in assessment year 2002-03 in accordance with law and tax the same. - Decided in favour of assessee. - ITA No.117/LKW/2011 - Dated:- 24-4-2015 - SUNIL KUMAR YA .....

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p; 31.3.2009 under section 148 have neither been validly initiated nor concluded in accordance with the provisions of law and assessment order dated 30.12.2009 as passed by ITO-6(1), Kanpur in pursuance thereof is void-abinitio. 2. BECAUSE the Assessing Officer himself having categorically asset" had taken place in the assessment year 2006-07, as per following narration as appearing therein:- "Though, the argument of the assessee regarding chargeability of capital gain on the date of h .....

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d 29.04.2002) on which the possession of land was handed over to the developer. Accordingly, in terms of the provisions of section 147 of the Income Tax Act, 1961, I have reasons to believe that the assessee has understated his income for the A. Y. 2003-04. In order to bring this income, which is chargeable to tax and has escaped assessment, action under section 147 of the Income Tax Act, 1961 is being taken. he could not have simultaneously entertained the "reasons to believe" in &quo .....

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en filed before the Hon'ble High Court, initiation of proceedings under section 147 for the assessment year 2003-04 was not valid and the same could not have been upheld by the "CIT(A)". 4. BECAUSE event of "transfer" as envisaged in section 2(47) of the "capital asset" as belonging to the "appellant" did not take place in the year under appeal and accordingly no income chargeable to tax had escaped assessment so as to confer upon the Assessing Officer .....

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order is dated 22/12/2008 whereas the reasons recorded by Assessing Officer for reopening are dated 27/03/2009. He further submitted that when in the reasons recorded by Assessing Officer, the Assessing Officer has stated that the transfer has taken place in assessment year 2006-07, the reopening in the present year is not valid because there is no escapement of income and therefore, reopening proceedings are not valid. He also submitted that in assessment year 2006-07 also, the assessment was .....

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assessee to C. P. Builders Ltd. executed on 24/06/99 meaning thereby the assessee s case is fully covered by the decision of Hon'ble Supreme Court. He submitted that when the Tribunal has already decided that the transfer took place on the date of execution of agreement on 24/06/99, then there is no escapement of income in the present year and therefore, reopening is not valid. He also submitted that although supplementary agreement is dated 29/04/2002 but the transfer had already taken plac .....

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r reopening, which is available on page 104 of the paper book: The perusal of agreement dated 24.06.1999, 29.04.2002 and 30/04/2005 makes it quite clear that the rights of ownership of the land was with the assessee only and both these agreements were subject to the completion of project. The project was completed and an agreement of completion of project was signed by the two parties on 30.4.2005, when the respective shares were also handed over and taken over by M/s. Shilpi Builders and the as .....

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mpletion agreement discussed above. The condition of chargeability of capital gain tax were satisfied as on 30.04.2005 only i.e. in the F.Y. 2005-06 relevant to A.Y. 2006-07. Accordingly, the capital gain was assessed in the A.Y. 2006-07 only. The assessee argued that he had transferred land on 24.06.1999, which is not tenable in any way because on 24.06.1999, the assessee has simply given a license to the developer i.e. M/s. Shilpi Builders for development of a residential cum commercial comple .....

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essee is to be taken then at best it can be said that transfer has taken place on 01.05.2002 when the possession of land was handed over to M/s. Shilpi Builders as per agreement dated 29.04.2002. Though, the argument of the assessee regarding chargeability of capital gain on the date of handing over of possession is not acceptable because the conditions of charging of capital gain as discussed above were fulfilled only on the date of completion. Accordingly, capital gain of ₹ 1,96,63,161/- .....

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understated his income for the A.Y. 2003-04. In order to bring this income, which is chargeable to tax and has escaped assessment, action under section 147 of the Income Tax Act, 1961 is being taken. 5.1 From the above reasons recorded by the Assessing Officer, it is seen that although the Assessing Officer has made the addition in assessment year 2006-07 on the basis of completion agreement dated 30/04/2005, he has reopened the assessment of this year also on the basis of supplementary agreeme .....

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and vacant possession of the Premises No. 14/143 Chunniganj, Kanpur to the second party on 01.05.2002 except one shop to the second party who hereby acknowledge and confirm that the possession of the premises has been delivered to him and he shall be entitled to act in accordance of the Principal Agreement as well as this Supplementary Agreement. The first party also confirm that he shall take action to get the shops vacated from the occupiers at his own risk and cost. 5.2 Hence, it is seen that .....

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6-07, protective addition in present year can be made to protect the interest of the Revenue because the same is on the basis of cogent material on record in the form of supplementary agreement dated 29/04/2002, as per which possession was given in F.Y. 2002 - 03 relevant to the present assessment year 2003 - 04. As per clause (v) of sub section (47) of section 2, transfer is complete on partial performance of the contract and this is settled position of law that handing over of possession along .....

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ired and conclusive evidence is not called for. In the present case, on the basis of the clause no. 2 of the Supplementary Agreement dated 29.04.2002, cogent material was available before the A.O. to form prima facie belief about escapement of income in the present year. It is not relevant that in spite of this material, it was held by Hon ble Allahabad High Court on the basis of circumstantial evidence that possession was in fact handed over by the assessee in F.Y. 2001 - 02 relevant to A.Y. 20 .....

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re rejected. 6. Ground Nos. 6 to 9 are in connection with validity of the present assessment order for the reason that no notice u/s 143(2) was allegedly issued by the Assessing Officer. These grounds are as under: 6. BECAUSE in any case and independent of the infirmities that have crept in, in the initiation of proceedings under section 147, the order dated 30.12.2009 as passed by the Assessing Officer is wholly illegal as no notice under section 143(2) had been issued by the Assessing Officer, .....

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compliance with the notices dated 30.03.2009 and 31.03.2009 under section 148) the assessment order dated 30.12.2009 was liable to be declared as void ab-initio. 8. BECAUSE the "CIT(A)" has erred in holding that there was merely a typographical error in noting down the date of "return" in the notice under section 143(2), as has been referred to in the assessment order and such a typographical error being of curable nature under section 292B, there was no infirmity in issuance .....

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rder dated 30.12.2009 is liable to be declared as nonest. 7. It was submitted by Learned A.R. of the assessee that the notice issued by the Assessing Officer u/s 143(2) is available on page No. 108 of the paper book. He submitted that this notice is dated 06/07/2009 and in this notice, the Assessing Officer has referred to the return of income submitted by the assessee on 14/08/2003 and not to the return of income filed by the assessee on 13/04/2009 in compliance to notice u/s 148 dated 30/03/20 .....

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s of section 292B, such notice cannot be considered as a defective notice and the consequent assessment cannot be considered as invalid assessment. 9. We have considered the rival submissions. We find that admittedly, the return of income was filed by the assessee on 13/04/2009 by way of filing letter of that date stating therein that the original return of income was filed on 04/08/2003 and copy is enclosed with this letter dated 13/04/2009 as required by notice u/s 148 dated 30/03/2009. We fin .....

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3(2) cannot be considered as invalid notice and therefore, this issue is also decided against the assessee. These grounds are also rejected. 10. Regarding the reliance placed by the assessee in the case of Lalji Haridas (supra), we find that in this case, it was held by Hon'ble Apex Court that in case, where it appears to the income tax authorities that certain income has been received during the relevant year but it is not clear who has received that income and, prima facie, it appears that .....

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ence, this judgment is of no help to the assessee. As per the above discussion, we reject these grounds also. 11. The remaining grounds being ground No. 10 to 14 on the merit of the issue are as under: 10. BECAUSE the issue of "transfer" of "Capital Assets" stood compressively decided by the Hon'ble ITAT from all angles, in terms of its order dated 5.3.2010 as passed in the "appellant's" own case in ITA No.499/LUC/09 relevant to the assessment year 2006-07 a .....

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"CIT(A)" has committed grave judicial improprietary, by holding that transfer of capital asset had taken place on 1.5.2002, "which falls in the F.Y. 02-03, corresponding to the A.Y.03-04 which is the assessment order under consideration", in view of clause (v) of section 2(47) of the "Act" read with section 53A of the TP Act, and liability for capital gain had arisen in this year. 12. BECAUSE in any case and on a due consideration of substance of various agreements .....

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n issues involved in the appeal are distinguishable on facts and consequently the impugned appellate order is wholly erroneous and the "appellant's" plea for quashing the assessment order dated 30.12.2009 deserves to be allowed. 14. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice. 12. On merit, various arguments were made by both the sides but later on, Learned A.R. of the assessee has submitted the copy of the judgment of Hon' .....

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ing these observations, it was held by Hon'ble High Court that capital gain tax is not chargeable in assessment year 2006-07. He further submitted that since Hon'ble High Court has decided that the possession was handed over in assessment year 2001-02 and capital tax is chargeable in the year of handing over possession, no capital gain tax is chargeable in the present year. 13. As against this, Learned D.R. of the Revenue submitted that when it is held that no capital gain tax is chargea .....

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s that there was a succession on death of assessee's father Late Khaliiuddin Ahmad thereafter by partition with his brother became the owner of following two immovable properties 14/138 and 14/143 Chunniganj, Kanpur, having land area 3569 sq. yard and 277 sq. yard respectively. Both the lands are adjoining and situated within prime location of city. Two separate development agreements were executed with builder for the development of the above land and to gain the maximize its economic retur .....

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0% land to the builder. On remaining 40% shares of land to be retained for the construction of Nursing Home and three residential flats had to be made by builder at his cost. Thus, there was the transfer of land to the builder in lieu of cost of construction as per specification of the agreement for Plot No. 14/138. Thus, there was transfer of the capital assets. This transfer had taken place at the time of execution of the development agreement on 24.06.1999, whereby the builder had been vested .....

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from 1.4.2002. This evidence has also remained uncontroverted by the Revenue before us and therefore, explanation of assessee being plausible, we are of the opinion that had the possession not been given prior to a reasonable period, then the date of launching of the scheme, the builder could not have been in a position to launch the scheme on 21.4.2002 and here we are further of the opinion that demolition of old building and acquiring of the land for construction being not a childish job, was .....

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ed that "transfer" includes (i) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. The Tribunal in its impugned order has observed that as per terms and conditions of the agreement date 24.06.1999 the transfer was effective from that very day and not in the year of 2005 as wrongly observed by the A.O. We are of the view that the capital gain is applicable in the y .....

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he revenue. In view of the above, we are of the view that the transfer of the land under reference did not take place on 30.04.2005 as claimed by the A.O. or arose during the assessment year 2006- 07. Hence, we find no reason to interfere with the order passed by the Tribunal, the same is hereby sustained along with the reasons mentioned therein. Thus, the answer to the substantial question of law (No. 2) is in favour of the assessee and against the revenue. When we have decided the matter stric .....

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rt, no clear cut evidence could be brought on record by the assessee to support his case that when possession was actually handed over. The issue was decided by Hon'ble High Court on the basis of surrounding circumstances as per which it is noted by Hon'ble High Court that since the builder had launched its scheme of booking of flats by advertising in various well known newspapers on 20/04/2002 from 01/04/2002, the assessee s plea that the possession of the land was handed over on 23/11/ .....

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n as per the assessee s submissions before Hon'ble High Court, the possession was handed over by the assessee to the builder on 23/11/2001 or in the present year on the basis of supplementary agreement dated 29/04/2002 or in the assessment year 2006-07 on the basis of completion agreement dated 30/04/2005. Now we find that this aspect of the matter has attained finality as per the judgment of Hon'ble High Court as per which it is held that the possession is accepted to have been handed o .....

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should bring this income to tax in assessment year 2002-03 when the transfer has taken place as per the judgment of Hon'ble High Court. The issue regarding the year of transfer has now attained finality, as per this judgment of Hon'ble Allahabad High Court, as per which it is held that the transfer has taken place in financial year 2001-2002. The Assessing Officer is directed accordingly. Regarding this aspect that whether the tribunal can give a direction for a different assessment year .....

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