TMI Blog2020 (5) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court. Thus, we are satisfied that the reassessment proceedings initiated and completed on protective basis are null and void. - Decided in favour of assessee. - ITA No. 719/Hyd./2019 - - - Dated:- 1-5-2020 - Smt. P. Madhavi Devi, J. For Appellant: Shri P. Murali Mohana Rao, A.R. For Respondent: Sh. Nilanjan Dey, D.R. ORDER This is assessee s appeal for A.Y. 2007-08 against the order of Ld.CIT(A)-6, Hyderabad dated 25.03.2019. 2. Brief facts of the case are that the assessee, an individual, filed his return of income for A.Y. 2007-08 on 14.08.2008 admitting total income at ₹ 1,14,120/-. The case was selected for scrutiny and the assessment was completed u/s 143(3) of the Income Tax Act, 1961 (the Act) vide order dated 24.12.2009 by bringing to tax the capital gain which has arisen on account of the joint development agreement entered into by the assessee with a developer for development of his plot of land admeasuring 1184 sq.yards. The agreement was dated 24.07.2003 according to which, the assessee is eligible for 50% of the developed area which works out to 12,155 sq.feet consisting of 6 flats. The flats were handed over to the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and assessment was completed u/s 143(3) r.w.s. 147 of the Act on 24/12/2010 assessing the first stage of capital gain at ₹ 44,47,200/- Aggrieved, the assessee preferred an appeal before the CIT(A) who deleted the addition made by the AO by placing reliance on the decision of ITAT in the case of Smt. K. Radika and others in ITA 208/Hyd/2011 dt. 09.08.2011 and also directed that the addition is to be considered in the subsequent years. As per directions of the CIT(A), the AO reopened assessment for the AY 2007-08, by issuance of notices u/s 147 and 143(2) of the Act. In response to said notices, assessee submitted a reply stating that the issuance of notice u/s 148 of the Act is not correct as the first reassessment order dated 24.12.2010 on the same issue was already decided by CIT(A)-3 and thus the doctrine of merger applies and therefore, no reassessment proceedings can be initiated against the same. 2.2. The AO, however, did not accept this contention of the assessee and that while computing capital gain income, in the order passed on 24.10.2010 for A.Y. 2007-08, the AO has adopted the cost of acquisition on the basis of directions of the Tribunal in the case of Dr. Maya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. 8. Without prejudice to other grounds, the Ld. CIT (A) erred in upholding the addition of ₹ 8,63,463/- which has been made without referring the matter to the DVO as per the directions of the Hon'ble ITAT 9. Without prejudice to other grounds, the Ld. CIT (A) ought to have annulled the order u/s 143(3) r.w.s. 254 of the Act on the ground that it has not been passed as per the directions of the Hon'ble ITAT vide their order in ITA No.1356/H/2012 ITA No.896/Hyd/2013 dated 04.04.2014 r.w.s their order in MA Nos.89 90/Hyd/2014 dated 16.07.2014. 10. Without prejudice to other grounds, the Ld. CIT (A) ought to have appreciated that the assessee's request before the Assessing Officer to adopt the SRO value has no locus standee before the directions of the Hon'ble ITAT for referring the impugned property to the DVO. 11. The appellant may add, alter or modify any other points to the grounds of appeal at any time before or at the time of hearing of the appeal. 5. The Ld.Counsel for the assessee while reiterating the submissions made by the assessee before the authorities below, submitted that the first assessment order for the AY 2007-08 in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. He also placed reliance upon the judgment of Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.) wherein it was held that if the AO does not make any addition of income for which the assessment was reopened u/s 147 of the Act, he cannot assess any other income u/s 147. 6.2. Without prejudice to the above arguments, the Ld.Counsel for the assessee also submitted that the assessee, while filing income tax returns for AY 2007-08, has computed the capital gain by reducing only the land cost and has not taken any advantage towards cost of built up area incurred by developers for construction of flats, and, therefore there was no loss to the revenue on account of development agreement entered into by assessee. Thus, he prayed for relief as claimed in the grounds of appeal. 7. The Ld. DR, on the other hand, supported the orders of the authorities below and submitted that though the development agreement was entered into in the AY 2004-05, the assessee had not offered any capital gain to tax on 50% of right of land transferred to the developer and has offered capital gai to tax only for the flats sold during the relevant AY i.e. AY 2007-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gains in the year in which the land is given for development. On going the clauses of the development agreement, it is clear that the assessee has handed over the possession of the property within one week of the development agreement, the developer is authorised to construct and has got the right over to alienate the same to prospective purchasers. Considering all these terms of the development agreement, it is clear that the assessee has relinquished his right over the 50% of the area in exchange for the 50% built up area to be considered and given by the developer. Therefore, the first stage of capital gains in the case of the assessee arisen for the Asst. Year 2004-05 as the transfer was within the meaning of Sec. 2(47) during the previous year 2003-04 relevant to the AY 2004-05. In view of the assessment for the AY 2004-05 reopened U/s. 147 and assessment was completed U/s. 143(3) r.w.s 147 on 24/12/2010 assessing the first stage of capital gains at ₹ 44,47,200/-. Aggrieved by the order of the assessee filed an appeal before the CIT (A). The CIT (A) vide her order in ITA No. 0631/11-12, dated 29/06/2012 deleted the addition made by the AO and placing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e forms his reason to believe, that income has escaped assessment. Recourse to Section 148 cannot be founded in law on a hypothesis of what would be the position in future should an appeal before the appellate authority, being the Tribunal or the High Court, result in a particular outcome. The statute does not contemplate the reopening of an assessment under Section 148 on such a hypothesis or a contingency which may emerge in the future. 16. The basis on which the Assessing Officer has purported to reopen the assessment is placed beyond any doubt by the affidavit which has been filed in reply to the Petition. As we have noted, there is no ambiguity whatsoever in the reasons which have been communicated to the assessee in the order dated 18 May 2012, but in the affidavit in reply, it has been stated that the income of ₹ 32.83 Crores arising from the investment of contributions of the contributors to the Venture Capital Fund which has been claimed as exempt in the hands of the Petitioner should be assessed as income in the hands of the AOP of the contributors of the Petitioner on a protective basis . Again it has been stated that the issue of taxing the AOP of the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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