TaxTMI 
TaxTMI 
2015 (9) TMI 267
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....ng chargeability of capital gain on the date of handing over of possession is not acceptable because the conditions of charging of capital gain as discussed above were fulfilled only on the date of completion. Accordingly, capital gain of Rs. 1,96,63,161/- was assessed in A.Y. 2006-07. However, to protect the interest of the revenue, this capital gain of Rs. 1,96,63,161/- may be assessed in F.Y. 2002-03 relevant to A.Y. 2003-04 also on protective basis i.e. the period/date (possession was handed over on 01.05.2002 as per agreement dated 29.04.2002) on which the possession of land was handed over to the developer. Accordingly, in terms of the provisions of section 147 of the Income Tax Act, 1961, I have reasons to believe that the assessee has understated his income for the A. Y. 2003-04. In order to bring this income, which is chargeable to tax and has escaped assessment, action under section 147 of the Income Tax Act, 1961 is being taken." he could not have simultaneously entertained the "reasons to believe" in "good faith" that income by way of capital gain (in relation to the same very property) was chargeable to tax in the assessment year 2003-04, and initiate proceedings un....
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.... the decision of Hon'ble Supreme Court. He submitted that when the Tribunal has already decided that the transfer took place on the date of execution of agreement on 24/06/99, then there is no escapement of income in the present year and therefore, reopening is not valid. He also submitted that although supplementary agreement is dated 29/04/2002 but the transfer had already taken place on the date of original agreement on 24/06/99 relevant to assessment year 2000-2001. 4. As against this, it was submitted by Learned D.R. of the Revenue that the assessee has not offered capital gain on the transfer of this property in any of the assessment years and therefore, the reassessment proceedings is justified in view of the reasons recorded by the Assessing Officer. 5. We have considered the rival submissions. First of all we reproduce the reasons recorded by the Assessing Officer for reopening, which is available on page 104 of the paper book: "The perusal of agreement dated 24.06.1999, 29.04.2002 and 30/04/2005 makes it quite clear that the rights of ownership of the land was with the assessee only and both these agreements were subject to the completion of project. The proj....
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....i.e. the period/date [possession was handed over on 01.05.2002 as per agreement dated 29.04.2002] on which the possession of land was handed over to The developer. Accordingly, in terms of the provisions of section 147 of the Income Tax Act, 1961, I have reasons to believe that the assessee has understated his income for the A.Y. 2003-04. In order to bring this income, which is chargeable to tax and has escaped assessment, action under section 147 of the Income Tax Act, 1961 is being taken." 5.1 From the above reasons recorded by the Assessing Officer, it is seen that although the Assessing Officer has made the addition in assessment year 2006-07 on the basis of completion agreement dated 30/04/2005, he has reopened the assessment of this year also on the basis of supplementary agreement dated 29/04/2002 because it is noted by the Assessing Officer in the reasons recorded by the Assessing Officer that as per the arguments of the assessee, the transfer has taken place on 01/05/2002 when the possession of land was handed over to M/s Shilpi Builders as per agreement dated 29/04/2002. We feel that at this juncture, it is proper to reproduce clause no. 2 of the Supplementary Agreemen....
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....t that in spite of this material, it was held by Hon'ble Allahabad High Court on the basis of circumstantial evidence that possession was in fact handed over by the assessee in F.Y. 2001 - 02 relevant to A.Y. 2002 - 03. Be that as it may but in view of this cogent material available on record and also in view of this fact that even the judgment of Hon'ble High Court about handing over of the possession in F.Y. 2001 - 02 is on the basis of presumption after considering various circumstantial evidences, it cannot be said that there was no valid basis for reopening. In view of above discussion, we do not find any infirmity in the order of CIT (A) on this issue. Accordingly, these grounds of the assessee are rejected. 6. Ground Nos. 6 to 9 are in connection with validity of the present assessment order for the reason that no notice u/s 143(2) was allegedly issued by the Assessing Officer. These grounds are as under: "6. BECAUSE in any case and independent of the infirmities that have crept in, in the initiation of proceedings under section 147, the order dated 30.12.2009 as passed by the Assessing Officer is wholly illegal as no notice under section 143(2) had been issued by the ....
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....herefore, as per the provisions of section 292B, such notice cannot be considered as a defective notice and the consequent assessment cannot be considered as invalid assessment. 9. We have considered the rival submissions. We find that admittedly, the return of income was filed by the assessee on 13/04/2009 by way of filing letter of that date stating therein that the original return of income was filed on 04/08/2003 and copy is enclosed with this letter dated 13/04/2009 as required by notice u/s 148 dated 30/03/2009. We find force in the contention of the Learned D.R. of the Revenue that the date mentioned in the notice issued by the Assessing Officer u/s 143(2) is typographical mistake because no A.O. will issue a notice u/s 143 (2) on 06.07.2009 for a return filed by the assessee on 14.08.2003 as mentioned in the notice particularly when return u/s 148 was admittedly filed by the assessee on 13.04.2009. Therefore, we accept that as per the provisions of section 292B, the notice issued by Assessing Officer u/s 143(2) cannot be considered as invalid notice and therefore, this issue is also decided against the assessee. These grounds are also rejected. 10. Regarding the relia....
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....fer" as envisaged in section 2(47) of the "Act" in the year under appeal and the "CIT(A)" has erred in upholding an addition of Rs. 1,96,63,161/- on account of capital gain in the assessment year 2003-04, on substantive basis. 13. BECAUSE various case laws as have been referred to and relied upon by the "CIT(A)" on issues involved in the appeal are distinguishable on facts and consequently the impugned appellate order is wholly erroneous and the "appellant's" plea for quashing the assessment order dated 30.12.2009 deserves to be allowed. 14. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice." 12. On merit, various arguments were made by both the sides but later on, Learned A.R. of the assessee has submitted the copy of the judgment of Hon'ble Allahabad High Court rendered in assessee's own case for assessment year 2006-07 in Income Tax Appeal No. 467 of 2010 dated 18/12/2014 and pointed out that as per this judgment of Hon'ble Allahabad High Court, it was held that the assessee's plea that the possession of the land was handed over latest by 23/11/2001 is liable to be accepted. It was also held by Hon'ble Hig....
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....tion of the agreement for Plot No. 14/138. Thus, there was transfer of the capital assets. This transfer had taken place at the time of execution of the development agreement on 24.06.1999, whereby the builder had been vested with extensive powers by execution of power of attorney executed on same day i.e. on 24.06.1999 to deal with property for the purpose of development as stipulated by principal development agreement. So far as Plot No. 14/143 is concerned, it did not provide any transfer of land, but this plot was in the name of the brother of the assessee. This aspect is supported by the fact that the builder had launched its scheme of booking of flats by advertising in various well know newspaper on 20.04.2002 from 1.4.2002. This evidence has also remained uncontroverted by the Revenue before us and therefore, explanation of assessee being plausible, we are of the opinion that had the possession not been given prior to a reasonable period, then the date of launching of the scheme, the builder could not have been in a position to launch the scheme on 21.4.2002 and here we are further of the opinion that demolition of old building and acquiring of the land for construction b....
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.... above paras from the judgment of Hon'ble Allahabad High Court, we find that even before the Hon'ble Allahabad High Court, no clear cut evidence could be brought on record by the assessee to support his case that when possession was actually handed over. The issue was decided by Hon'ble High Court on the basis of surrounding circumstances as per which it is noted by Hon'ble High Court that since the builder had launched its scheme of booking of flats by advertising in various well known newspapers on 20/04/2002 from 01/04/2002, the assessee's plea that the possession of the land was handed over on 23/11/2001 is accepted because had the possession not been given prior to a reasonable period before the date of launch of the scheme, the builder could not have been in a position to launch the scheme on 21/04/2002. This finding of Hon'ble High Court is to be considered in the light of this fact that the assessee has not come out with declaring the capital gain in any of the years, be in assessment year 2000-01 when the original agreement was executed on 24/06/99 or in assessment year 2002-03 when as per the assessee's submissions before Hon'ble High Court, the po....