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Senitax Chemicals Ltd. Versus Income Tax Officer

2017 (10) TMI 382 - GUJARAT HIGH COURT

Reopening of assessment - computation of cost of acquisition of land for the purpose of computing long term capital gain or loss on sale of such land - Held that:- The petitioner never challenged the order of CIT(Appeals) which was in part against the petitioner. If the petitioner was aggrieved by the directions issued by the CIT(Appeals), it ought to have challenged the same before the appropriate forum. The petitioner having accepted and acquiesced in the order cannot question the wisdom or au .....

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he notice for reopening. His directions were based on the materials which came before him during the appellate proceedings. - By assessee's own account, correct valuation as on 1.4.1981 of the land in question would be ₹ 108.27 per sq mtr. This would have two elements. One, that the original scrutiny would no longer be valid since there was an outside alien material which had later on come on record and two, that the declaration made by the assessee in the return filed and during the .....

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ISHNAV, JJ. For The Petitioner : Mr SN Divatia, Advocate For The Respondent : Mr KM Parikh, Advocate ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 7.3.2017 issued by the respondent Assessing Officer for reopening the petitioner's assessment for the assessment year 2005-2006. 2. Brief facts are as under. The petitioner is a company registered under the Companies Act. For the assessment year 2005-2006, the petitioner had filed return o .....

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acquisition of land for the purpose of computing long term capital gain or loss on sale of such land. The assessee had shown the cost of acquisition as on 1.4.1981 at ₹ 135.84 per sq. mtr. as against the valuation of ₹ 80 per sq. mtr. shown by the registered valuer. According to the Assessing Officer, in the reasons recorded, instead of capital loss of ₹ 15.80 lacs, the assessee had made a long term capital gain of ₹ 1.11 crores through sale of land. The Assessing Officer .....

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al facts. Notice of reopening therefore, could not have been issued beyond a period of four years. 5. On the question of additions made by the Assessing Officer in the reassessment, in the appellate proceedings, the assessee presented additional materials suggesting that correct cost of acquisition of land should have been ₹ 108.27 per sq mtr. According to this valuation, the long term capital gain of the assessee would be ₹ 21.51 lacs, instead of ₹ 14.90 lacs shown in the retu .....

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referred to the assessee's further statement before him suggesting that the correct cost of acquisition of land would be ₹ 108.27 per sq mtr. He referred to the materials produced by the assessee in this respect and gave the following directions : 5.1 Thus, as admitted by the AR also, the correct cost of acquisition of saleable lans should have been ₹ 108.27 per sq.mtr and the long term capital gain in the present case should have been ₹ 21,51,968/in place of long term loss .....

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, the AO is directed to reopen the assessment for assessment year 2005-06 by issuing notice u/s 148 in pursuance of these findings as per the provisions of sec. 150 of the IT Act, 1961. 8. This order was challenged by the Revenue but not by the assessee. The Tribunal rejected the Revenue's appeal and confirmed the decision of the CIT(Appeals). Thereupon pursuant to abovenoted directions of CIT(Appeals), the Assessing Officer issued the impugned notice. 9. In the reasons recorded by the Asses .....

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al land of 59388 sq. mt. during the year to the different parties. The assessee has sold 7039 sq. ft of land in earlier years. The rest of land admeasuring 15506 sq mt. belongs to Road and Common areas. In order to worked out the Capital gain on sale of such plotted land the assessee got valuation report of land determining the value of land @ 80 per sq mt as on 01.04.1981 and after indexation of the value of land as on. 01.04. l981,the assessee had arrived the cost of acquisition. While working .....

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Cost per sq mt Total cost of 59388 sq mt Saleable land of 43882 sq mt ₹ 4751040/43882=108. 27 sq.mt Rate per sq mt ₹ 108.27 per sq mt. However, instead of taking rate of land per sq mt of ₹ 108.27 the assessee has taken rate of land at ₹ 135.84 sq.mt. Therefore the assessee has wrongly calculated the cost of acquisition for determining the capital gain. This means that the assessee has inflated the cost of acquisition which resultant into suppression of Long Term Capital .....

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at be so, there was no reason for him to make any further observations or give direction for reopening the assessment. The Tribunal also confirmed the decision of CIT(Appeals). Counsel further submitted that in any case, the directions issued by the Commissioner (Appeals) could at best save the limitation in terms of section 150 of the Act but would not form the basis for reopening the assessment which would depend solely on the jurisdictional requirements being satisfied. 11. On the other hand, .....

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The valuer had adopted ₹ 80 per sq. mtr as cost of acquisition of land on 1.4.1981. In the return, the assessee instead adopted the rate of ₹ 135.84 per sq. mtr. and claimed the long term capital loss of ₹ 15.80 lacs. During the first round of reopening of the assessment, the Assessing Officer had questioned this valuation and computed long term capital gain on the basis that the cost of acquisition of land as on 1.4.1981 would be ₹ 80 per sq. mtr. CIT(Appeals) struck do .....

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e had produced documents in support of such a stand and also presented the revised capital gain arising out of such valuation. It was in this background that CIT (Appeals) gave direction for reopening of the assessment. 13. For two reasons, the petitioner cannot succeed. Firstly, the petitioner never challenged the order of CIT(Appeals) which was in part against the petitioner. If the petitioner was aggrieved by the directions issued by the CIT(Appeals), it ought to have challenged the same befo .....

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