VIVEKANAND TULSIRAM KHARADE (HUF),THANE vs. ASST. COMMISSIONER OF INCOME-TAX, CIR-1, SOLAPUR

I find no representation on behalf of the assessee nor any application filed seeking adjournment. Thus, the assessee called absent and set ex-

The assessee raised nine grounds of appeal amongst which the only issue emanates for my consideration is as to whether the CIT(A), NFAC, Delhi justified in confirming the addition made by the AO on account of capital gain after lapse of six years without recording reasons for reopening in the absence of assessee.

The facts of the case emanating from record are that the land and property owned by the assessee (HUF) situated in Akkalkot, Dist. Solapur, Maharashtra was acquired compulsorily by the State Government The assessee received compensation of Rs.12,81,321/-. The AO charged the said compensation to tax in A.Y. 1995-96 under the head capital gain vide its order dated 10-03-1998. In first appeal, the CIT(A) vide its order dated 22-04-1998 held that the said compensation is not chargeable to tax in A.Y. 1995-96 for the reason, that the transfer of land and property had taken place by way of a compulsorily acquisition on 13-12-1993. The Tribunal confirmed the order of CIT(A) vide its order dated 15-06-2005 in ITA No. 38/PN/1999. The relevant portion of Tribunal’s order is reproduced at page No. 16 of the impugned order are as under : “In our considered opinion, the CIT(A) has rightly held that the capital gains cannot be assessed in the assessment year 1995-96. We accordingly uphold his order”

A plain reading of the above finding of Tribunal which clearly shows the order of CIT(A) in holding that the alleged capital gain is not chargeable

While matter stood thus, the AO reopened assessment for A.Y. 1994- 95 u/s. 147 of the Act, but however, dropped the said reopening vide its order dated 29-03-2001.

In the present proceedings, the assessee raised its objection before the CIT(A) vide its ground challenging reopening of assessment after lapse of 11 years from the end of the A.Y. 1994-95, violating the provisions of section 149 of the Act. The CIT(A) held that the AO reopened assessment for A.Y. 1994-95 only on the directions of the Tribunal. Admittedly, the notice dated 16-05-2019 u/s. 142(1) r.w.s. 150(1) of the Act was issued after 24 years from the end of A.Y. 1994-95. Therefore, the only contention before me is as to whether the AO is empowered to reopen the assessment after lapse of period of 24 years from the end of the A.Y. 1994-95 without there being any direction from ITAT. Admittedly, as has been examined from the relevant portion of Tribunal’s order which is reproduced at page 16 of the impugned order, there was no finding from the Tribunal that the capital gains should be taxed in the end of A.Y. 1994-95, but, only confirmed the order of CIT(A) in holding i.e. not chargeable to tax in A.Y. 1995-96. On perusal of the assessment order dated 27-12-2019 passed by the AO stated to be in pursuance of Tribunal’s order dated 11-12-2018, I note that the assessment order goes to show that the AO issued notice dated 16-05-2019 u/s. 142(1) r.w.s. 150(1) of the Act and completed reassessment.

The assessee raised its grounds of appeal primarily contending that the AO violated the provisions of the Act and the reassessment completed thereon is bad under law.

Further, for better understanding the provisions u/s. 150(1) of the Act is reproduced here-in-below : “Provision for cases where assessment is in pursuance of an order on appeal, etc. 150. (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]. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.”

A plain reading of provisions u/s. 150(1) of the Act provides provision for cases where assessment is in pursuance of an order on appeal, etc. On careful reading of the said provision, I note that the notice u/s. 148 of the Act may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence direction contained in an order passed by any authority in any proceeding under this Act by way of appeal reference or revision. Admittedly, there was no such direction by the Tribunal to AO that the capital gains is chargeable to A.Y. 1994-95 but however, it only upheld the order of CIT(A) in finding that the capital gains is not chargeable to tax for A.Y. 1995-96. Therefore, when there is no direction from the Tribunal, issuing a notice u/s. 150(1)

In the result, the appeal of assessee is allowed.