Tribunal quashes reassessment order, directs accurate capital gain computation. Lack of evidence for income escapement.

The Tribunal allowed the appeal, quashing the reassessment order and directing the AO to re-compute the capital gain based on the assessee's declared cost of acquisition. The reassessment was deemed invalid due to lack of concrete evidence for income escapement. The Tribunal emphasized that the AO's reliance on suspicion was insufficient for reopening the assessment. Additionally, the reference to the DVO was found invalid as it was made before the amendment to Section 55A took effect. The appeal outcome favored the assessee.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Legitimacy of reopening the assessment under Section 147.
3. Validity of the reference to the DVO under Section 55A.
4. Determination of long-term capital gain and the cost of acquisition.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The Tribunal noted that the appeal filed by the assessee was time-barred by three days. The assessee submitted an application for condonation of delay, citing medical reasons and attaching a certificate from Samata Hospital. After reviewing the application, the Tribunal was satisfied that the delay was due to reasonable cause and thus condoned the delay, allowing the appeal to proceed on its merits.

2. Legitimacy of Reopening the Assessment under Section 147:
The assessee challenged the reopening of the assessment. The facts revealed that the assessee filed a return of income declaring a total income of Rs. 11,93,640, which was processed under Section 143(1). The AO reopened the assessment based on information from the DIT(Investigation) indicating that the assessee sold land for Rs. 9.57 crores and received Rs. 1.59 crore but disclosed only Rs. 2,54,566 as capital gain. The Tribunal found that the AO did not verify the records or form a concrete opinion demonstrating the escapement of income. The AO's belief was based on mere suspicion and apprehension, which is not sufficient for reopening an assessment. Thus, the Tribunal quashed the reassessment, stating it was not in accordance with the law.

3. Validity of the Reference to the DVO under Section 55A:
The AO referred the matter to the DVO, who determined the cost of acquisition at a lower value than claimed by the assessee. The Tribunal referenced the Gujarat High Court's decision in CIT Vs. Gauranginiben S. Shodhan, which held that if the value declared by the assessee as on 1.4.1981 is more than the fair market value assumed by the AO, a reference under Section 55A cannot be made. The Tribunal also noted that the amendment to Section 55A effective from 1.7.2012 does not apply retrospectively. Since the assessee's transaction occurred before this date, the AO's reference to the DVO was invalid.

4. Determination of Long-Term Capital Gain and the Cost of Acquisition:
The assessee calculated the long-term capital gain by adopting the cost of acquisition based on a registered valuer’s report. The Tribunal noted that the AO's attempt to reduce the cost of acquisition using the DVO’s report was not permissible. The Tribunal directed the AO to re-compute the capital gain using the fair market value as declared by the assessee based on the registered valuer’s report. The Tribunal cited the ITAT Ahmedabad Bench decision in Shri Babulal S. Solanki Vs. ITO, which reinforced that the amended provisions of Section 55A do not apply to transactions before 1.7.2012.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the reassessment order and directing the AO to re-compute the capital gain in accordance with the assessee's declared cost of acquisition. The appeal was thus decided in favor of the assessee.

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