TMI Blog2015 (1) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... priate to allow the position to be changed in the subsequent years. FAA was not justified in confirming the order of the AO and holding that the incoming arising out of sale of plot of land was to not be assessed as LTCG - Decided in favour of assessee - IT Appeal Nos. 17 to 21 (Gau.) of 2010 - - - Dated:- 27-1-2015 - H.L. Karwa, President And Rajendra, Accountant Member R.P. Agarwala, Ramesh Goenka and Amit Goenka, AR for the Appellant. I. Kitto Zhimomi, DR for the Respondent. ORDER Rajendra, Accountant Member Challenging the order dated 12-01-2013 of the Commissioner of Income Tax (Appeals), Shillong, the assessee has filed appeals for the above referred five assessment years (AY.s). The assessee has raised almost similar grounds of appeal for the above-referred A.Ys. ITA No. 17/Gau/2010 (A.Y. 2002-03): The grounds of appeal filed by the assessee read as under: 1. For that the Hon'ble CIT(Appeals) has erred in upholding the view of the A.O. that there existed reason to believe to re-open the assessment. 2. For that the Hon'ble CIT (Appeals) has erred in confirming the assessment of Income from Capital Gain as business income by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act should be treated as return filed in compliance of notice u/s. 148 of the Act. On a request made by the assessee, the AO supplied the assessee copy of the reasons recorded. Before him, it was submitted that reopening was bad in law as the notice u/s 148 of the Act was issued because of change of opinion, that there was no material available with the AO to arrive at the conclusion that income has escaped assessment. The AO observed that assessment in the case of the assessee was completed u/s 143(1) of the Act for the year under appeal, that there was no scope of verifying the nature of the business while issuing the intimation to the assessee as per the provisions of section 143(1) of the Act. Regarding the reason for iterating the profit on sale of land as business income instead of treating it as capital gain, the AO observed that the assessee had entered into an agreement on 05-09-1954 with Jalannagar South Estates Ltd. for purchase of land in the town of Dibrugarh, that the intention of the assessee could be gauged from the conveyance deed, that the plots of land were purchased to develop the same into colony, residential/commercial purposes with a view of selling it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears the AO had allowed profit on sale of land to be treated as LTCG, that sale of land in the year under consideration had to be treated as LTCG, in the return of income the assessee had shown the income from sale of plots of land as LTCG only, that there was change of opinion and on that basis the AO should not have issued notice u/s. 148 of the Act. After considering the submission of the assessee and the assessment order, the FAA referred to the decisions of Sheo Nath Singh v. AAC [1971] 82 ITR 147 (SC), ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) and Babu Ram Nagar Mal v. ITO [1996] 222 ITR 450/[1997] 93 Taxman 537 (Punj. Har.) and held that the AO had recorded the reasons for the reopening of the assessment in the order sheet, that he had obtained approval of the higher authority before issuing notice u/s. 148 of the Act, that in the Auditors Report it was mentioned that the business of the assessee constituted of land trading and investment, that he was justified in taking consideration such materials available from the original return of income, that proceedings u/s. 143(1) of the Act were completed by the Auditor before the AO initiated proceedings u/s. 147 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection between reasons recorded and reopening of the assessment, that income had escaped, that notice u/s. 148 of the act was issued without application of mind, that plot of land was purchased in the year 1954, that it had sold part of the plot of land on the assessment year 1982-83. 1983-84 and 1985-86, the transaction was accepted as lteg by the then ao u/s. 143(3) of the act. that the assessee did not purchase any plot of land since 1954. that the plot of land was always shown in the assets side of the assessee from the very beginning, that it had not retained the land as stock-in-trade, that the intention of the assessee to hold the plot of land and not to do business, that law of consistency demanded that the ao should not have assessed the income under the head income from business instead of LTCG. He referred to the case of Deep Chandra Co. v. CIT [1977] 107 ITR 716 delivered by the Hon'ble Allahabad High Court. Departmental Representative (DR) supported the order of the FAA. He relied upon the cases of Raja J. Rajeshwar Rao v. CIT [1961] 42 ITR 179 (SC) and P.M. Mohammed Meera Khan v. CIT [1969] 73 ITR 735 (SC), relied upon by the FAA. 5. We have heard the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for that year and the decisions given in an assessment for an earlier year are not binding either on the assessee or the Department in a subsequent year. But this rule is subject to limitations, for there should be finality and certainty in all litigations including litigation arising out of the Income-tax Act and an earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before the Tribunal giving the later decision, and if the Tribunal giving the earlier decision has taken into consideration all material evidence. A Tribunal like the Appellate Tribunal, should be extremely slow to depart from a finding given by an earlier Tribunal. . . . . There is also a further limitation, namely, that the effect of revising a decision in a subsequent year should not lead to injustice and the court must always be anxious to avoid injustice to the assessee. For instance, if the court is satisfied that by depriving the assessee of his rights under the later decision, in an earlier year, the assessee lost an important advantage or lost some benefit which he could have got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no change in factual or legal position. The assessee was showing the plot of land as investment as it was showing in the earlier years-rather from the beginning it was not the part of stock in trade. In the earlier years when parts of land were sold the AO had accepted that profit arising out of the transaction had to be assessed under the head LTCG. It is not that the earlier AO.s. had not applied their minds to arrive at the conclusion of taxing the income under as LTCG. After considering the facts and circumstances of the case the then AO.s. had for three AY.s. had reached to the conclusion that income accrued to the assessee was not income from business. While deciding the issue for the year under consideration the AO has not mentioned that there was material change in the facts or legal position as far as selling of portion of plot of land is concerned. In absence of such categorical finding, he should not have disturbed the finding given by his predecessors. In other words, where a fundamental aspect continuing during the different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly assessed the income from sale of plot of land as LTCG. Similar is the position of P.M. Mohammed Meera Khan's case (supra). In that case also it was found that the assessee had purchased a plot of land and after dividing in smaller plots sold it within one year. Considering the peculiar facts, the Hon'ble Apex Court held it that it was an adventure in nature of business. In the case before us, the facts are totally different. Here the question is whether the AO was justified in holding that sale of part of land was a business transaction or not. Considering the above discussion, we are of the opinion that the FAA was not justified in confirming the order of the AO and holding that the incoming arising out of sale of plot of land was to not be assessed as LTCG. Reversing his order, we decide effective ground of appeal in favour of the assessee. 6. Facts of the remaining appeals are same except that the amounts involved are different. Following our order for the AY.2002-03,we decide the effective grounds of appeal in favour of the assessee for all the four AY.s.. As a result, appeals filed by the assessee for all the AY.s. stand allowed. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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