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TMI Blog2017 (5) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment year under consideration is not correct. 2.1.3. The Commissioner of Income Tax (Appeals) ought to have appreciated that the Assessing Officer had no reason to believe that income had escaped assessment to exercise jurisdiction u/s. 147. 2.1.4. The Commissioner of Income Tax (Appeals) ought to have appreciated that the reopening of assessment was only on mere suspicion, which is against the mandate of the provisions of Income Tax Act, 1961. 2.1.5. The Commissioner of Income Tax (Appeals) ought to have exercised the power u/s. 251 and annulled the reassessment, which is passed by the Assessing Officer without having jurisdiction u/s. 147 of the Income Tax Act, 1961. 2.1.6. The Commissioner of Income Tax (Appeals) ought to have held that Assessing Officer has no jurisdiction to reopen the assessment u/s. 147 to assess the Capital Gains arising out of transfer of property held by the Appellant." In order to admit the additional ground the basic facts that are required to be presented would have to be gone into. The basic facts are as follows: The assessee did not file her original return of income for the assessment year 2007-08. Based on an information obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, the provisions of section 2(47)(v) r.w.s. 53A of the Transfer of Property Act would not come into play stating that the assessee had made transfer by way of part performance of the contract, thereby inviting him with the levy of capital gains. It was only in the assessment year 2008-09 and in 2009-10, the assessee through her POA agent had executed sale deeds and the capital gains, if any, would arose only in those two years and definitely not in assessment year 2007-08. He also referred to the reasons recorded by the Ld. AO wherein it has been stated that assessee has sold the subject mentioned property for Rs. 1,60,00,000/- on 15.12.2006 to M/s. K2 Engineers Private Ltd. He argued at the cost of repetition that the documents which were executed on 15.12.2006 was only POA which admittedly do not contain any consideration amount. Apart from this no other document was executed in the form of agreement of sale in writing and by handing over possession of the subject mentioned property so as to fall within the ambit of provisions of section 53A of Transfer of Property Act. He also placed reliance on the decision of the Hon'ble Supreme Court in the case of Suraj Lamp and I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and not justified, unintendedly misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law. 16. We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of 'GP A sales' or 'SA/GP A/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the returns, that alone would not enable the Ld. AO to take advantage of the ignorance of the assessee with regard to the provisions of law. He further argued that there is no estoppel against the statute. In support of this, he placed reliance on the decision of Hon'ble Calcutta High Court in the case of Maynak Poddar (HUF) Vs. Wealth Tax Officer reported in (2003) 262 ITR 633 (Cal). He further argued that it is the earnest duty of the Ld. AO to teach the assessee of his various tax obligations and the revenue should not get unjustly enriched by the ignorance of provisions of the Income Tax Act on the part of the assessee. Based on these arguments, the Ld. AR argued that the Ld. AO could not have had reason to believe by having tangible material representing some benefit in facts and figures in Asst Year 2007-08 stating that income had escaped assessment and accordingly, the re-opening of assessment is bad in law. 4. In response to this, the Ld. DR argued that admittedly the re-opening in this case had happened pursuant to the information received by the ld. AO from the Registration Department. In the instant case, both POA as well as the sale deeds were duly registered with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of capital asset within the provisions of section 2(47)(v) of the Act and accordingly no capital gains could arise for the assessee in assessment year 2007-08. Admittedly, the sale deeds were executed by the assessee in favour of four purchasers on 31.10.2007 and 30.05.2008 on which date only, the purchasers were placed in possession of the property by the assessee. In these facts and circumstances, the capital gains, if any, could arose only in assessment years 2008-09 and 2009-10 as the case may be and not in the year under appeal i.e., assessment year 2007-08. 5.1. Now let us go into the reasons recorded by the Ld. AO which are enclosed in page 133 of the paper book of the assessee. The reasons recorded by the Ld. AO for re-opening the assessment for the assessment year 2007-08 are as under:- "The assessee Mrs. Mithra Ram has sold property measuring about two grounds and 1412 sq.ft. at Sri Kapaleeswarar Nagar, No. 145, Shrotrium Neelankarai Village, Tambaram Taluk, Kancheepuram District, bearing survey No. 91/2A for a sale consideration of Rs. 1,60,00,000/- on 15.12.2006 to M/s. K2 Engineers P. Ltd., Chenna-41. The assessee has not disclosed the capital gains arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the effect that the investment made by the assessee at all times was within the limit for plant and machinery for the assessment years under consideration. A perusal of the table showing the calculation of plant and machinery as on the 31st March of each year which has been reproduced in the order of the Commissioner (Appeals) as well as the impugned order passed by the Tribunal, clearly shows that the investment made in plant and machinery was within the limit prescribed for an SSI unit. As pointed out by the learned counsel for the respondent assessee, certain assets are exempted from the computation of the exemption limit under the relevant notification. The Assessing Officer, however, had taken into consideration even the exempted assets and come to the conclusion that the assessee had crossed the limit. Moreover, the Assessing Officer has failed to take into consideration that as per notification No.857(E) the limit for investment in plant and machinery for SSI units manufacturing drugs and pharmaceutical products was Rs. 3.00 crore and as per notification No.655(E) with effect from 5th June, 2003 such limit has been increased to Rs. 5.00 crore. Therefore, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2. We also find that merely because the assessee had erroneously admitted the capital gains in Asst Year 2007-08 and had claimed exemption u/s 54F of the Act in respect of reinvestment in property at Kodaikanal and had filed a return in response to notice u/s 148 of the Act, this very action alone would not strengthen the reasons recorded by the ld AO and confer him power to frame the reassessment. We find that though the assessee based on mistaken understanding of provision of Income Tax Act had filed the return in response to notice u/s. 148 of the Act disclosing capital gains and claiming exemption us 54F of the Act for the assessment year 2007-08, that mere act alone could not be treated as a reason fastening unwarranted tax liability by the assessee for the year under appeal. It is well settled that there is no estoppel against the statute and reliance in this regard placed on the decision of the Hon'ble Calcutta High Court in the case of Maynak Poddar (HUF) Vs. WTO reported in 262 ITR 633 is very well founded. In view of the aforesaid findings, we deem it fit and appropriate to admit the additional grounds raised by the assessee as it goes into the root of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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