TMI Blog2022 (11) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... e. AO was not satisfied with the cost of acquisition of the Property and had undertaken a detailed investigation in that regard including by retrieving information from the Delhi archives. Given the nature of enquiry, it is difficult to accept that the AO had not considered the question of the fair market value. The cost of assets and expenses in connection with transfer of the Property and for perfecting title were also subject matter of a detailed scrutiny during the assessment proceedings. The assessee was specifically called upon to furnish the documentary evidence in support of cost of land, cost of construction and cost of improvement. The assessee had responded to the same by providing details and the manner in which costs of acquisition had been computed. AO had examined the statements and elaborately dealt with the question whether indexation was available in respect of the amount paid by the assessee to his sisters. AO had recomputed the capital gains by making an addition by reducing the costs of acquisition as claimed by the assessee. The question whether the AO was correct in accepting that the amount of ₹19,20,00,000/- paid by the assessee was required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duly disclosed the transaction regarding sale of property and the computation of capital gains resulting from the said transaction. The assessee s return was picked up for scrutiny and his income was assessed under Section 143(3) of Act. The AO did not accept the assessee s computation and recomputed the capital gains. The assessee, thus, claims that the impugned notice, in effect, seeks to re-examine the assessment, which is impermissible. 3. The only question that arises for consideration in this petition is whether the issue of the impugned notice is occasioned by a possible change of opinion and seeks to review the assessment order. 4. The controversy in the present case relates to the assessment of income by way of long-term capital gains arising from sale of immovable property bearing no. A-53, Vasant Marg, Vasant Vihar, New Delhi-110057 (hereafter the Property ). According to the assessee, the Property belonged to his parents in equal share. He acquired the Property by virtue of a will dated 17.06.1999 (hereafter the Will ) executed by his father, late Sh. B.S. Ramdas Kapoor and by virtue of a Gift Deed dated 10.02.2006 (hereafter the Gift Deed ) executed by his m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return of income. 11. Subsequently, on 06.09.2018, the AO issued another notice under Section 142(1) of the Act seeking further information, inter alia, regarding long-term capital gains (Schedule CG of ITR). This was followed by another notice dated 03.12.2018 under Section 142(1) of the Act, inter alia, calling upon the assessee to provide the following information: 1. Please provide the copy of valuation report showing the value (land cost, cost of construction and cost improvement) which was taken by you as on 01/04/1981 for the purpose of computation of capital gain. 2. Please provide the documentary evidence (in support of land cost, cost of construction and cost improvement) submitted by you before the registered valuer, who has under taken the valuation of the property. 12. The assessee responded to the aforesaid notice by a letter dated 12.09.2018, enclosing therewith the various documents including the Will dated 17.06.1999; the Gift Deed dated 10.02.2006; the order dated 25.02.2015 passed by this Court in CS(OS) No.1176/2007; Agreement to Sell dated 28.04.2015; calculation of capital gains; and Certificate under Section 197 of the Act. 13. Duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly settled / compromised between the assessee and his sisters wherein the sisters agreed to make the assessee absolute and exclusive owner of the said property against a consideration of Rs.6.40 cr. to each for three sisters namely Mrs. Meera Dhingra, Mrs. Vijay Girdhar and Mrs. Deepika Batra. As a result of the above settlement, the Hon ble Delhi High Court on 07.11.2014 passed order in which the injunction was vacated by the Court and the assessee was permitted to enter into an agreement to sell with any prospective buyer as a condition that assessee has to pay / deposit before Court, the total sum of Rs.19.20 crs. payable to three sisters on or before 28.02.2015. After the above Court order, the assessee entered into an agreement to sale with M/s Hind Samachar Ltd. for a consideration of Rs.60 crs. Out of the said consideration, the buyer i.e. M/s Hind Samachar Ltd. deposited three demand drafts for Rs.6.40 crs. each in favour of three sisters before the Court. Copy of letter from buyer, M/s The Hind Samachar Limited in enclosed. With regard to the above proceedings, the assessee has incurred legal expenses to get the property title free from all injunctions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another property in Vasant Vihar, New Delhi, which was sold in the year 1981-82. The AO did not accept the assessee s stand that he was entitled to the benefit of indexation in respect of the entire property. According to him, the benefit of indexation was allowable only on 68% value of the Property. The AO, accordingly, assessed that the capital gains were higher by ₹9,83,81,624/- as compared to the income declared by the assessee. Thus, the AO assessed the income chargeable to tax by making addition of ₹9,83,81,624/-. The operative part of the assessment order dated 30.12.2018 reads as under: 5.5. With the above remarks the capital gain is computed as under: (in Rs.) Sale Consideration 60,00,00,000/- Less Indexed cost of acquisition 1/3 rd share (land 1136460 x 1081/100 1,22,85,135/- Less: Expenditure wholly exclusively in connection with transfer 23,06,66,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould not have been allowed. He further contended that the amount of ₹19,20,00,000/- paid by the assessee to his sisters could not be claimed as expenses as the said payments were neither in the nature of costs for acquisition / improvement nor could be considered as transfer expenses. He also stated that since the circle rate of the Property was ₹68,08,00,000/-, the same was required to be taken as sale consideration in terms of Section 50C of the Act. Reasons Conclusions 22. At the outset, it is relevant to note that the proposed addition of ₹30,02,30,000/- is, mainly, on two counts. First, that the circle rate of the Property is ₹68,08,00,000/- and therefore, the said amount was required to be taken as sale consideration; and second, that the expenses claimed are not justifiable. 23. The issue regarding computation of capital gains arising from the sale of the Property was identified by the AO for a detailed examination. The notice dated 06.07.2017, issued under Section 143(2) of the Act, expressly stated that one of the two issues identified for examination was whether the capital gains/loss is genuine and had been correctly shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty and for perfecting title were also subject matter of a detailed scrutiny during the assessment proceedings. The assessee was specifically called upon to furnish the documentary evidence in support of cost of land, cost of construction and cost of improvement. The assessee had responded to the same by providing details and the manner in which costs of acquisition had been computed. He had also claimed the amount of ₹19,20,00,000/- paid by him to his sisters as expenses for perfecting the title and in connection with the transfer of the said Property. In addition, he had also deducted an amount of ₹2,74,30,000/-, being the legal expenses incurred in connection with the suit instituted by his sisters. 27. The AO had examined the statements and elaborately dealt with the question whether indexation was available in respect of the amount of ₹19,20,00,000/- paid by the assessee to his sisters. The AO had recomputed the capital gains by making an addition of an amount of ₹9,83,81,624/- by reducing the costs of acquisition as claimed by the assessee. The question whether the AO was correct in accepting that the amount of ₹19,20,00,000/- paid by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43 or subsection (3) of section 143. When a regular order of assessment is passed in terms of the said subsection (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong. 30. The said decision was upheld by the Supreme Court in CIT v. Kelvinator of India Ltd.: (2010) 320 ITR 561. Further, the Supreme Court observed as under: 5. ..However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of change of opinion . (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. 34. In the said decision, this Court had also observed that there may be cases where the AO did not raise the written query but he may have still examined the subject matter because the aspect and question may be too apparent and obvious. 35. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the provisions of Sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis to reopen the assessment under Section 147(b). Reliance is placed on Kalyanji Mavji Co. v. CIT [(1976) 1 SCC 985 : 1976 SCC (Tax) 111 : (1976) 102 ITR 287] where a Bench of two learned Judges of this Court observed that a case where income had escaped assessment due to the oversight, inadvertence or mistake of the Income Tax Officer must fall within Section 34(1)(b) of the Indian Income Tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants insofar as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Income Tax Officer discovers that he has committed an error in consequence of which income has escaped assessment it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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