Prior binding precedent controlled jurisdictional objections, assessment directions, and capital gains treatment of standing trees

A prior binding decision on the same assessee's case was treated as controlling, so directions issued under section 144B(4) were regarded as having no continuing effect after the assessment was set aside under section 263. The court also applied the same precedent to hold that section 144B(7) did not protect the assessee on a jurisdictional change occurring otherwise than under sections 125 and 125A. On the factual findings, the Tribunal's view that standing trees formed part of the purchase price, with no perversity in the evidence, was accepted, supporting capital gains liability on their sale and sustaining the assessment.

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Issues: (i) whether the directions issued under section 144B(4) of the Income-tax Act, 1961 became non est after the assessment order was set aside under section 263; (ii) whether section 144B(7) applied on a change of jurisdiction over the assessment otherwise than under sections 125 and 125A; and (iii) whether the Tribunal's findings on the existence and taxability of standing trees and the validity of the assessment order were sustainable.

Issue (i): whether the directions issued under section 144B(4) of the Income-tax Act, 1961 became non est after the assessment order was set aside under section 263.

Analysis: The reference was answered by following the earlier binding decision on the same assessee's case. On that basis, the directions issued under section 144B(4) were treated as having no subsisting effect after the order of assessment was set aside under section 263.

Conclusion: The issue was answered in the affirmative, against the assessee and in favour of the Revenue.

Issue (ii): whether section 144B(7) applied on a change of jurisdiction over the assessment otherwise than under sections 125 and 125A.

Analysis: The same precedent was applied to hold that the protective operation of section 144B(7) was not attracted on the facts where jurisdiction shifted in the manner noticed by the Tribunal and the court.

Conclusion: The issue was answered in the negative, against the assessee and in favour of the Revenue.

Issue (iii): whether the Tribunal's findings on the existence and taxability of standing trees and the validity of the assessment order were sustainable.

Analysis: The court, again following the earlier decision, accepted the Tribunal's approach on the factual findings relating to the cost of the land, the inclusion of trees in the purchase price, the absence of perversity, and the resultant liability to capital gains on the sale of standing trees.

Conclusion: The issue was answered in the affirmative, against the assessee and in favour of the Revenue.

Final Conclusion: All referred questions were decided in a manner that sustained the Revenue's case and upheld the Tribunal's order.

Ratio Decidendi: Where a reference is covered by an earlier binding decision on the same assessee's case, the court will answer the referred questions consistently with that precedent, including on jurisdictional objections, procedural directions, and capital gains liability arising from the sale of standing trees.

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