TaxTMI 
TaxTMI 
2025 (2) TMI 1550
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....n law, Opportunity of being heard was not taken before the CIT (A). 4. On the facts and in the circumstances of the case and in law the Learned A.O erred in determining the income at Rs. 47,31,73,860/-. and the learned C.I.T.(A) erred in upholding the same 5 On the facts and in the circumstances of the case and in law the learned A.O erred in adding an amount of Rs. 6,37,93,770/-as 'consideration received by the assessee in A.Y. 2007-08' and assessing the same as capital gains income for the A.Y. 2003-04, although the same income has been retuned and assessed as income in the A.Y. 2007-08 and the learned C.I.T.(A) erred in upholding the same. 6. On the facts and in the circumstances of the case and in law the Learned A.O erred in adding an amount of Rs. 3,14,91,030/- as consideration taken by the A.O. in A.Y. 2008-09 on sale of owned flats in Ozone and assessing the same as capital gains income for the A.Y. 2003-04, although the same income has been returned and assessed as income in the A.Y. 2008-09 and the learned C.I.T.(A) erred in uphelding the same. 7. On the facts and in the circumstances of the case and in law the Learned A.O erred....
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....tted against technicalities of none deliberate delay, then in that eventuality substantial justice is to be preferred. Therefore, keeping in view the above principles and the facts of the case we condoned the delay in filing the present appeal. Now the appeal is admitted to be heard. 5. The brief facts of the case are that the assessee along with other co-owners were owners of the land and thus entered into Development Agreement with M/s Brick Works Trading Pvt Ltd regarding the said land and as per the terms of the agreement, the developer shall get 60% share and the co-owners including the assessee shall get 40% share of the total sale consideration. 6. Since the assessee had received sale proceeds qua his share in A.Y 2007-08 & 2008-09, and the same were reported in the return of income therefore AO made addition of capital gains in A.Y: 2007-08 & 2008-09. However, the same were challenged and Hon'ble ITAT observed that since 'Development Agreement' was executed in A.Y: 2003-04 therefore, addition in AY 2007-08 & 2008-09 were deleted. 7. Thereafter, based upon the information / observation of Hon'ble ITAT, AO accordingly initiated process to reopen the assessment for th....
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....1-04-2004. 4. Thereafter, nothing was heard till 31-03-2019, on which day, the Learned A.O. issued a notice u/s. 148 of the act. In other words, the reassessment proceedings were initiated after the expiry of 15 years from the end of the assessment year. The notice issued was objected to, by the appellant vide letter dated 18-04- 2009 and the same was disposed off by the learned A.O. vide letter dated 06 11-2019. 5. Thereafter, the Learned A.O. issued a show cause notice dated 27-12-2019 calling for compliance on the very next day i.e. 28-12- 2019. The show cause notice could be answered only on 30-12- 2019 and was accordingly answered on-line on the 30-12-2019. A copy of the same was submitted in the office of the learned A.O. on 31-12-2019. 6. However, the learned A.O. without taking into consideration the submission completed the assessment by passing an order dated nil u/s. 143(3) r.w.s. 254 of the act. The taxable income was determined at Rs. 47,31,73,60/- and a huge demand of Rs. 46,11,25,960/- was raised. 7. Further, assessee preferred an appeal before the national faceless appeal centre / CIT(A) against the order passed by Ld. AO against ....
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....ted 17-02-2015 and the Hon'ble Tribunal confirmed the deletion by dismissing the appeal of the Revenue. 8. On the facts and in the circumstances of the case and in law, Condonation of Delay in filling of appeal is plead. 9. On the facts and in the circumstances of the case and in law, the interest charged of u/s. 234A, 234B, 234C of the I T Act is invalid and bad in law and the learned C.I.T.(A) erred in uphelding the same. 10. Appellant craves leave to add, alter, amend, delete and / or modify any or all of the aforesaid grounds of appeal either at the time of hearing or at any time before the date of hearing. • SUMMARY OF THE CASE 1. The assessee along with his 4 brothers i.e total 5 sons, had inherited a land on death of their father Shri Laxmi Singh Udit Singh in the year 1986. 2. The assessee's mother and sisters relinquished their respective rights in favour of the sons and their brothers. 3. Thus, each brother inherited 1/5th share in the land, assessee being one of them. 4. On 09.10.2002 the assessee along with his brothers entered into an agreement with M/s Brickworks Trading Pvt. Ltd. for development of land. ....
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....or cases where assessment is in pursuance of an order on appeal, etc.- (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. In the original assessment proceeding addition was made in AY 2007-08 which was later on deleted by Hon'ble tribunal from AY 2007-08 by holding that Income is not taxable in AY 2007-08 because possession was handed over in AY 2003-04. Thus, finding was given for AY 2007-08 that it is not taxable in AY 2007-08 because possession was given in AY 2003-04. But there is no direction or finding from tribunal for assessing income under AY 2003-04 or for reopening of the matter of AY 2003-04. Therefore, based on tribunal's order no additions can be made in AY 2003-04 by taking rescue of section 150. Section 150 applies when there should be any finding or direction for assessing income in that year....
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.... effect to any finding or direction of the appellate/revisional authority or the court is subject to the provision contained in section 150(2) of the Act. Section 150(2) provides that directions under section 150(1) of the Act cannot be given by the appellate/revisional authority or the court if on the date on which the order impugned in the appeal was passed, the reassessment proceedings had become time- barred. According to s. 150(2), the provisions of s. 150(1) shall not apply where, by virtue of any other provision limiting the time within which action for assessment, reassessment or recomputation may be taken, such assessment, reassessment or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference or revision in which the finding or direction is contained. Thus, s.150(2) enacts a well-settled principle of law that an appellate or revisional authority cannot give a direction which goes to the extent of conferring upon the AO if he is not lawfully seized of jurisdiction. Section 150 (2) of the Act reads as under :- 150. Provision for cases where assessment is in pursuance of an order on appeal, etc.- (2) The p....
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.... elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Thus, notice issued was time barred and the reassessment order needs to be quashed. RELIANCE PLACED ON:- SR. NO. CITATION OBSERVATION 1. K.M. Sharma v. ITO [2002] 122 Taxman 426 (SC) (Leg....
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.... proceedings in respect of which limitation had already expired/ lapsed before amendment became effective - Held, yes - Whether thus, impugned reassessment notice and all consequent proceedings were to be quashed and set aside - Held, yes [Paras 14, 15, 16 an 19][In favour of assessee] 3. Varkey Jacob Vs. CIT [2005] 146 TAXMAN 665 (KER.) Section 147, read with section 148, of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment years 197980 to 1984-85 - Whether proceedings for reopening assessment for assessment years which have attained finality under existing law due to bar of limitation can be revived by amendment of law which has no express provision of retrospective effect - Held, no 4. Smt. N. Illamathy v. ITO [2020] 120 taxmann.com 313(Legal PB Pg. No. 27-34) Where assessment of assessee for assessment year 1997-98 was completed under section 143(1), impugned reopening notice dated 2212-2005 issued by Assessing Officer on ground that a sum received by assessee from a firm in year 1996 was to be admitted to assessee's income as commission received, was barred by limitation in terms of provisions of section 149(1)(b) as applicable ....
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....s within its ambit only such cases where reopening of the proceedings may be necessary to comply with an order of the higher authority. For the said purpose, the records of the proceedings must be before the appropriate authority. It must examine the records of the proceedings. If there is no proceeding before it or if the assessment year in question is also not a matter which would fall for consideration before the higher authority, s. 150 will have no application. • The Hon'ble Jurisdictional Bombay High Court also in case of Smt. Sabita Bhagwandas Shah v. ITO [1966] 59 ITR 652, while interpreting the sections 31, 34 (1) & (2) of the Income Tax Act 1922, (corresponding to the provisions of sections 148, 153 and 253 of 1961 Act) has held that 'finding' means the finding necessary for giving relief in respect of the assessment year in question and the proviso to section 34(3) of the 1922 Act does not save time prescribed under section 34(1) in respect of escaped assessment of any year other than that which has been the subject matter of appeal or revision. As the finding can only be given when case is pending before the tribunal. But, in present case A....
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....gs may be necessary to comply with an order of the higher authority. Since the observation of the Tribunal that 'the case of the assessee is to be brought to tax for assessment year 2000- 01', does not require compliance by the authorities below so far as the assessment year 2000-01 is concerned, taking recourse to section 150 of the Act by holding the same as 'finding' of the Tribunal is not legally tenable." Thus based on above judicial precedent which is identical to appellant's case the reopening and reassessment order has to be quashed. VII. DEEMING EXPLANATION 2 TO SECTION 153 ALSO CANNOT RESCUE THE APPLICABILITY OF SECTION 150 The deeming explanation 2 to section 153 also cannot rescue the applicability of section 150 in present case. For ready ref. explanation 2 to section 153 is extracted below:- Explanation 2.-For the purposes of this section, where, by an order referred to in clause (i) of sub-section (6),- (a) any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this sect....
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....ations(Legal PB Pg. No. 7-8)- "the expressions "finding" and "direction" are limited in their meaning. A finding must be a finding necessary for the disposal of a particular case. It must directly be involved in the disposal of the case. A direction by a statutory authority is in the nature of an order requiring a positive compliance. When it is left to the option and discretion of the Assessing Officer whether or not to take action, it cannot be described as a direction. "Direction" in section 153(3)(ii) of the Act must be an express direction necessary for the disposal of the case. It must also be a direction which the authority or Court is empowered to give". VIII. 6 YEARS FROM END OF ASSESSMENT YEAR WAS LAPSED WHEN APPEAL ORDER WAS PASSED Sub-section (2) to section 150 restricted the applicability of provision of section 150 in a case where 6 years are already lapsed when appeal order was passed. In present case appeal order for AY 2007-08 was passed on 2.3.2016, but till that time 6 years from end of AY 2003-04 had already lapsed. Hence, this condition also does not get satisfied. • • The similar issue had come up before Hon....
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....f the re- computation itself could have been made at the time the order which was the subject to matter of the appeal by reason of any other provision limiting the time within which any action for reassessment is taken. In this respect, the Learned A. R. read the provisions of Section 150(1) and 150(2) of the Act. The Learned A.R. further submitted that the issue has now been settled by the third Member in the case of Emgeeyar Pictures (P.) Ltd. vs. DCIT, 70 taxmann.com 45 (Chennai- TM) and our attention was invited to Para 15 of the order. Our attention was further invited to an order of the I.T.A.T. Jaipur Bench in the case of Ramesh Chand Soni, HUF vs. Income Tax Officer, taxmann.com 71 (Jaipur- Trib.) wherein the Tribunal vide order dated 08.12.2017 has further passed the order in favour of the assessee. 9. In the present case, undoubtedly, the case was reopened in view of CIT(A)'s order dated 22.12.2015 and on that date the assessment order for 2003-04 were already barred by limitation by the provisions of Section 149 of the Act. Therefore, we accept the contentions of the Learned A.R. and following the above judicial precedent allow the appeal of the assessee. Accord....
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.... as the order of the Tribunal relates to A.Y 2007-08 & 2008-09 and the case of A.Y 2003-04 was not before the Tribunal, thus in these circumstances the Tribunal could not have given findings in respect of another year which is not before the authority, as has been held by Hon'ble Supreme Court in the case of CIT Vs. Green World Corpoation, 314 ITR 81 (106) SC, wherein it was observed . • The decision of the apex court in the case of CIT v/s. Green World Corporation 314 ITR 81 (106) SC(Legal PB Pg. No. 3-6) wherein it was observed that the provision of s. 150 although appears to be of a very wide amplitude, but would not mean that recourse to reopening of the proceedings in terms of s. 147 and 148 can be initiated at any point of time whatsoever. Such a proceeding can be initiated only within the period of limitation prescribed therefore as contained in s. 149. Sec. 150(1) is an exception to the aforementioned provision. It brings within its ambit only such cases where reopening of the proceedings may be necessary to comply with an order of the higher authority. For the said purpose, the records of the proceedings must be before the appropriate authority. It must examin....
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....ct, we are of the view that section 150(2) of the Act provides that direction under section 150(1) of the Act cannot be given by any authority or court, if on the date on which the order impugned in the appeal was passed, the reassessment proceedings had 'become time-barred'. 19. As noticed by us, from the facts of the case, that the assessee's return for A.Y 2003-04, became barred by limitation on 31.03.2010 itself. Therefore assessment for AY 2003-04 could not be reopened beyond 31.03.2010 as in terms of the provisions of section 149, the limitation for re- assessment had expired on 31.03.2010. Therefore on the day when ITAT passed orders dated 19.04.2018, even on that date itself the reassessment proceedings had become time-barred. 20. Thus, in this way, section 150(2) of the Act enacts a well settled principle of law that an Appellate Authority cannot give a direction which goes to the extent of conferring upon the AO, if he is not lawfully seized of jurisdiction. In this regard we find the reliance from the decision of SR. NO. CITATION OBSERVATION 1. K.M. Sharma v. ITO[2002] 122 Taxman 426 (SC) (Legal PB Pg. No. 1-2) Section 150, read with sections 148 ....
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....d/ lapsed before amendment became effective - Held, yes - Whether thus, impugned reassessment notice and all consequent proceedings were to be quashed and set aside - Held, yes [Paras 14, 15, 16 an 19][In favour of assessee] 3. Varkey Jacob Vs.CIT [2005] 146 TAXMAN 665 (KER.) Section 147, read with section 148, of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment years 197980 to 1984-85 - Whether proceedings for reopening assessment for assessment years which have attained finality under existing law due to bar of limitation can be revived by amendment of law which has no express provision of retrospective effect - Held, no 4. Smt. N. Illamathy v. ITO [2020] 120 taxmann.com 313(Legal PB Pg. No. 27-34) Where assessment of assessee for assessment year 1997-98 was completed under section 143(1), impugned reopening notice dated 2212-2005 issued by Assessing Officer on ground that a sum received by assessee from a firm in year 1996 was to be admitted to assessee's income as commission received, was barred by limitation in terms of provisions of section 149(1)(b) as applicable at relevant time It was held as follows :- "18. Admitt....
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....s case "After considering the legal position aforementioned, it is pertinent to mention that the decision of the Tribunal on the basis of which the assessment for year under consideration reopened is related to the assessment year 2002-03. The observation of the Tribunal for the purpose of deleting the addition in respect of the assessment year 2002-03 cannot be treated to be a 'finding' for reopening the AY 2001-02 as the appeal for said assessment year has not been before the Tribunal for adjudication. The observation of the Tribunal that 'the case of the assessee is to be brought to tax for assessment year 2000-01 and not assessment 2002-03 as done by the assessing officer' is incidental for holding the addition made in the year 2002-03 is not justifiable and the same cannot be the basis for having recourse to section 150 of the Act by holding it as 'finding or direction'. Section 150(1) is an exception which brings within its ambit only such cases where reopening of the proceedings may be necessary to comply with an order of the higher authority. Since the observation of the Tribunal that 'the case of the assessee is to be brought to tax for assessme....
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....tains a finding or direction, still reopening of assessment is bad in law because it is beyond the period of limitation, as held by the Hon'ble Madras High Court in the case of Goldmine Investments (supra)." 23. Therefore considering the totality of the facts, circumstances and legal propositions as discussed above, we hold that reassessment proceedings initiated for the year under consideration is 'barred by limitation' and thus stands quashed, consequently ground Nos. 1 to 3 raised by the assessee stands allowed. 4. On the facts and in the circumstances of the case and in law the Learned A.O erred in determining the income at Rs. 47,31,73,860/-. and the learned C.I.T.(A) erred in upholding the same 5 On the facts and in the circumstances of the case and in law the learned A.O erred in adding an amount of Rs. 6,37,93,770/-as 'consideration received by the assessee in A.Y. 2007-08' and assessing the same as capital gains income for the A.Y. 2003-04, although the same income has been retuned and assessed as income in the A.Y. 2007-08 and the learned C.I.T.(A) erred in upholding the same. 6. On the facts and in the circumstances of the case a....