TMI Blog2020 (8) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... is the nature of default or failure on the part of the assessee. As mentioned earlier, the Tribunal, in the instant case, while deciding the case of Smt. Ashrafi Devi, had merely directed the AO to verify as to whether the HUF has filed the return disclosing the capital gain arising from transfer of such land. However, in the instant case, the AO, instead of verifying the same, reopened the assessment on wrong appreciation of facts which is nothing, but, mere change of opinion. Original assessment was framed u/s 147/143(3) on 26th March, 2014 accepting the returned income at ₹ 3,580/- wherein the issue of capital gain on transfer of such land was duly considered and accepted on the basis of various supporting documents filed at the time of such reassessment proceedings and since there is no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, therefore, the notice issued u/s 148 after a period of four years from the end of the relevant assessment year in the instant case is illegal and invalid being without jurisdiction. - Decided in favour of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A), the revenue filed an appeal before the Hon ble ITAT, New Delhi. The Hon ble ITAT in ITA No. 1802/1801/1869/Del/2013 dated 26.09.2014 directed the AO to verify the claim of the assessee and in case it is found that HUF has been taxed for capital gain on the land in question, then AO shall delete the same levied on the Individual assessee. The order of the Ld. CIT(A) was set aside and the matter was remitted back to the file of AO with the direction to verify whether the HUF has been taxed on the capital gain on the land in question and if so the addition made in individual status needs to be deleted. 3. In the above background, the AO initiated reassessment proceedings u/s 147 of the Act by recording the following reasons:- Assessment u/s 147/143(3) of the Act was made vide order dated 26.03.2014 at an income of ₹ 3, 580/- + agriculture income of ₹ 5,000/- wherein the Capital Loss on sale of land was determined, at ₹ 3,489/- by adopting the cost of acquisition of land at ₹ 24,00,120/- as on 01.04.1981 as per calculation given below: Assessee s share in sale consideration of agricultural land. Rs: 1,39,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital Gain to the extent of ₹ 1,38,42,806/- has escaped assessment. I, therefore, have reason to believe that income of the assessee from Longterm Capital gains to the extent of ₹ 1,38,42,806/- as discussed above and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the Income tax Act, 1961 Sd/- (Pawan Kumar) Income tax Officer, Ward-2, Rewari 4. In response to the notice u/s 148, the assessee filed return of income on 27th April, 2015 declaring an income of ₹ 3,580/- under the head Income from other sources , and long-term capital loss at ₹ 4,32,239/-. The assessee filed certain objections against such reopening u/s 147/148 which the AO rejected by passing a speaking order on 4th February, 2016. 5. Subsequently, rejecting various explanations given by the assessee, the AO computed the long-term capital gain of the assessee at ₹ 1,38,39,317/- the computation of which is as under:- Sale consideration of11 Kanal 03 Marla (223 Marla) ₹ 1,39,65,209/- Less: Cost of acquisition 21,631x5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 of the Act in compliance of order of Hon ble Tribunal dated 26.9.2014 in ITA No. 1869/D/2013 is based on misinterpretation and misconstruction of the findings of the Hon ble Tribunal and hence the action is without jurisdiction. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an addition of ₹ 1,38,39,317/- representing alleged long term capital gain on sale of agricultural land located at village Kapriwas PO Dharuhera Distt. Rewari. 2.1. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the alleged long term capital gain was not taxable in the hands of the appellant since addition made in the hands of the individual had been though deleted by the Hon ble Income Tax Appellate Tribunal but since the aforesaid order was challenged in appeal before the Hon ble High Court by revenue and as such it is a case of double taxation which is not permissible. 2.2. That even otherwise that since the land sold was an agricultural land no addition was tenable in the hands of the appellant u/s 45 read with section 2(14) of the Act. 3. That without prejudice to the above, the learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claring an income of ₹ 3,580/- on 10th October, 2013 in response to such notice u/s 148 of the Act. Referring to page 39 and 40 of the paper book, the ld. Counsel for the assessee submitted that the AO passed the order u/s 143(3)/148 on 26th March, 2014 accepting the return of income of ₹ 3,580/-. Referring to page 44 of the paper book, the ld. Counsel drew the attention of the Bench to the notice issued by the AO u/s 148 of the Act on 25th May, 2015. He submitted that the assessee filed a letter in response to such notice u/s 148 on 27th April, 2015, copy of which is placed at pages 46-53 of the paper book. Referring to the reasons recorded for reopening of the assessment, he submitted that there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment u/s 147. Therefore, the notice issued u/s 148 after a period of four years from the end of the relevant assessment year in a case where original assessment has been framed u/s 143(3) is illegal and invalid. 9.1 Referring to the decision of the Hon ble Delhi High Court in the case of Haryana Acrylic Manufacturing Company Ltd. vs. CIT, 308 ITR 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n individual status for A.Y. 2009-10, vide ITA No.1869/Del/2013, order dated 26th September, 2014, he submitted that the Tribunal had only directed the AO to verify as to whether such long-term capital gain has been declared in the return of the HUF or not. However, in the instant case, the AO, instead of verifying that such long-term capital gain arisen on transfer of the land has already been disclosed, proceeded to reopen the assessment again on the same set of facts which is nothing, but, a mere change of opinion. 9.5 Referring to the decision of the Hon ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd., 320 ITR 561, he submitted that the Hon ble Supreme Court has dismissed the Civil Appeal filed by the Department against the Full Bench judgement of the Hon ble Delhi High Court in the case of CIT vs. Kelvinator India Ltd., 256 ITR 01 where it was held that the reassessment proceedings are not valid where the same is based on mere change of opinion. Referring to the recent decision of the Hon ble Supreme Court in the case of ACIT vs. Marico Ltd. in SLP (Civil) No.7367/2020, order dated 1st June, 2020, he submitted that the Hon ble Supreme Court has dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aints India Ltd. vs. ACIT, 322 ITR 369, he submitted that the Hon ble High Court has held that where rectification proceedings had been dropped, reassessment proceedings could not have been started on the basis of same materials. Further, it is the settled proposition of law that a particular case cannot be heard twice by the same authority on same facts and issue as it gets hit by the principle of res judicata. He submitted that in the instant case, the AO had conducted proper enquiries at the time of first round of assessment and had accepted the cost of acquisition of land sold during the period under consideration. Therefore, under no circumstances it could be alleged that the order of assessment dated 26th March, 2014 framed by the AO has escaped assessment to the extent of ₹ 1,95,29,511/- in respect of long-term capital gain on sale of land to initiate second round of proceedings for same reasons. He accordingly submitted that the proceedings initiated by the AO u/s 147/148 of the Act and the subsequent assessment framed u/s 147/143(3) are nonest in the eyes of the law and should be quashed. 11. So far as the computation of long-term capital gain at ₹ 1,38,39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y misinterpreted the directions of the Tribunal and grossly erred in once again reopening the assessment on the same set of facts which have already been considered while framing the assessment order dated 20th March, 2014 in the hands of the HUF. He accordingly submitted that the reassessment proceedings ought to be quashed and also the addition made by the AO on account of long-term capital gain has to be deleted. 12. The ld. DR, on the other hand, heavily relied on the order of the CIT(A). He submitted that the ld.CIT(A) has given justifiable reasons while upholding the validity of reassessment proceedings. He submitted that the CIT(A) has given a categorical finding that this is not a simple case of change of opinion by the AO as mentioned by the assessee. According to the CIT(A), if certain facts were ignored by the AO at the time of assessment, the AO is entitled to re-examine the issue afresh. Further, the AO has clearly and painstakingly brought out how the assessee HUF is liable to be taxed for long-term capital gain and the deduction u/s 54B/54F cannot be allowed. He accordingly submitted that the order of the CIT(A) be upheld and the grounds raised by the assessee sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. However, we find, the AO, in the instant case, issued notice u/s 148 to the assessee copy of which is placed at page 5 of the paper book. A perusal of the reasons recorded nowhere shows that there is any allegation by the AO of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. In the instant case, the assessment year involved is A.Y. 2009-10 and the second reassessment notice was issued on 25th March, 2015. Thus, the assessment has been reopened after a period of four years from the end of the relevant assessment year and the provisions of first proviso to section 147 is clearly applicable to the facts of the present case. Recently, the Hon ble Supreme Court in the case of NDTV vs. DCIT, vide Civil Appeal No.1008 of 2020, order dated 3rd April, 2020, has quashed the reassessment proceedings for not mentioning the first proviso neither in the reasons recorded nor in the notice issued u/s 148. In the instant case, we find the very same fact was examined by the AO in the first round of reassessment proceedings. Therefore, again issuing the notice u/s 148 of the Act by recording reasons for escape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment was completed under section 143(3) of the said Act. Condition (b) deals with a special kind of escapement of income chargeable to tax. The escapement must arise out of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148. This is clearly not the case here because the petitioner did file the return. Since there was no failure to make the return, the escapement of income cannot be attributed to such failure. This leaves us with the escapement of income chargeable to tax which arises out of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. If it is also found that the petitioner had disclosed fully and truly all material facts necessary for its assessment, then no action under section 147 could have been taken after the four year period indicated above. So, the key question is whether or not the petitioner had made a full and true disclosure of all material facts. 20. In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the returned income at ₹ 3,580/- wherein the issue of capital gain on transfer of such land was duly considered and accepted on the basis of various supporting documents filed at the time of such reassessment proceedings and since there is no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, therefore, the notice issued u/s 148 after a period of four years from the end of the relevant assessment year in the instant case is illegal and invalid being without jurisdiction. 17. We further find, identical issue had come up before the Tribunal in the case of Shri Narayan Singh, HUF (supra) and the Tribunal quashed the reassessment proceedings by observing as under:- 7. As mentioned elsewhere, earlier also, a notice u/s 148 was issued and served upon the assessee and assessment was completed vide order dated 26.03.2014. The order of the Tribunal is 26.09.2014 and the directions of the Tribunal are very clear that the Assessing Officer had to verify whether the capital gains have been taxed in the hands of the HUF or not and assessment order dated 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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