ORAVANTHURUTHIL CHANDRAN JOJI, vs. INCOME TAX OFFICER,

It is further submitted that the reopening of the assessment for the assessment year 2013-14 had become time barred, in as much as the notice,

On the other hand, Sri.Jose Joseph, learned Senior Standing Counsel for the Income Tax Department, has submitted that the firm was a family partnership firm, consisting of five (5) partners. All the partners had undivided shares in the land, which was introduced as capital in the partnership firm. The partnership firm got dissolved on 15.7.2011 in terms of the dissolution deed of the same date, Ext.P1. As a result of the dissolution of the partnership firm, the land got vested with the petitioner and two other partners. Mr.Jose Joseph submits that this vesting of the land/capital asset in the hands of the petitioner and two other partners could have been taxed for capital gain, but it could not be taxed as it became time barred. However, the petitioner had transferred the land, which got vested in his name as a result of dissolution of the partnership firm, through registered sale deed dated 3.7.2012, and WP(C) NO. 28098 OF 2022 4 the sale proceeds were shown as capital gain treating it to be an agricultural land and claiming deductions under Sections 54B and 54F of the Act. Since the said land was not an agricultural land, as trees standing there were removed, and it was used for access and another facilities to the hospital building, the assessing authority was of the view that deduction claimed by the petitioner under Sections 54B and 54F of the Act were not eligible. Therefore, notice under Section 148 for reopening the assessment under Section 147 of the Act was issued on 28.6.2021. This was done within the time limit as per Section 149 of the Act and the various notification/ordinance extending the time limit from 31.3.2020 to 30.6.2021. The notice was well within the extended period up to 30.6.2021. The petitioner/assessee filed return of his income against the notice under Section 148 on 4.11.2021 declaring a total income of Rs.9,30,080/- and mentioning the sale consideration at Rs.2,36,64,300/- with the same cost of acquisition

The reasons for reopening the assessment were also provided along with notice under Section 148 of the Act, which would read as under: “Assessee has sold an immovable property for Rs.2,35,00,000/- vide document dated 03.07.2012 (1/3rd share of total sale consideration of Rs.7,05,00,000/-) and declared Rs.9,10,379/- as Short Term Capital Gain and Rs.Nil as Long Term Capital gain after claiming deductions u/s.54B and 54F. But the sale deed does not prove that it is an agricultural land. In the description of the property, it is shown as dry land with hospital building. As such the claim of deduction u/s.54B is not in order.”

Thereafter, considering the reply and giving an opportunity of hearing to the petitioner, Ext.P9 order impugned herein has been passed. Section 45(1) of the Act would read as under: “Capital gains : 45 (1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in Sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head

Therefore, what is to be considered is the point of sale of the capital asset, which is a taxable event for the purposes of capital gain. After vesting the property in the hands of the petitioner as a result of dissolution of the firm on 15.7.2011, the petitioner became the owner of the said asset, which he had sold on 3.7.2012 in favour of Catholic Syrian Bank. The petitioner's share would come to Rs.2,35,00,000/-. What is being shown to be taxed is sale by the petitioner and not the sale/vesting of the asset as a result of the dissolution of the firm. Therefore, I do find that the contention raised by Sri.Anil D.Nair, learned counsel for the petitioner, that since the dissolved partnership was not taxed when the asset came into the hands of the petitioner as a result of dissolution of the partnership firm, subsequent

It is also not in dispute that the notice dated 28.6.2021 under Section 148 of the Act for reopening the assessment was issued within the extended period up to 30.6.2021. Thus I find no substance in the present writ petition, which is hereby dismissed. The petitioner is permitted to file his return in response to final notice under Section 148 of the Act within a period of thirty (30) days from today. After the petitioner files the return in pursuance to the notice under Section 148 of the Act, the assessing authority will proceed to determine the tax liability, in accordance with law. Pending interlocutory application, if any, in the writ petition stands dismissed. DINESH KUMAR SINGH