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Facts
The Revenue appealed against the Commissioner (Appeals) order that held reassessment proceedings for AY 2003-04 to be barred by limitation. The reassessment was initiated based on an ITAT order for AY 2007-08, which indicated capital gains arose in AY 2003-04 from a development agreement. The original return for AY 2003-04 was filed on 31.03.2004.
Held
The Tribunal held that the reassessment notice under Section 148, issued on 30.03.2019 for AY 2003-04, was issued beyond the six-year limitation period prescribed by Section 149, expiring on 31.03.2010. Relying on Section 150(2), the Tribunal found that an appellate order cannot grant a direction for reassessment if the proceedings were already time-barred on the date of that order. The ITAT's finding for AY 2007-08 did not constitute a 'finding' or 'direction' for AY 2003-04 as per Section 150(1).
Key Issues
Whether reassessment proceedings initiated for AY 2003-04 were time-barred under Section 149, and if Section 150(1) overrides Section 149 when no specific finding or direction for the relevant year was made in a prior appellate order.
Sections Cited
143(3), 147, 148, 149, 150(1), 150(2)
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Before: SHRI ANIKESH BANERJEE & SHRI PRABHASH SHANKAR
आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The above captioned appeals preferred by the Revenue emanate from the orders passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2003-04. Since the issues are common and
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai interlinked and also the fact that the appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity. We take up appeal in first.
The grounds of appeal s are as under:-
1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that reassessment proceedings initiated for A.Y 2003-04 were barred by limitation under section 149 of the Income Tax Act, without appreciating that such reassessment was a direct consequence of the categorical finding of the Honorable ITAT in earlier proceedings that the transfer of capital asset had taken place in AY 2003-04, thereby attracting the overriding provisions of section 150(1) of the Income Tax Act, 1961.
2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the limitation prescribed under section 149 of the IT. Act, 1961 overrides the provisions of section 150(1) of the Act, despite the fact that section 150(1) of the Act is an explicit statutory exception allowing initiation of reassessment proceedings beyond the limitation period WHERE such action is required to give effect to a finding direction WHERE contained in an appellate order.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that its earlier finding, holding AY 2003 -04 as the correct year of chargeability of capital gains arising fromthe Development Agreement dated 09.10.2002, constituted a finding OR direction within the meaning of section 150(1) of the Act, binding on the Assessing Officer for reopening assessment in the correct year.
4. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the entire reassessment order solely on the ground of limitation, despite the admitted position that the Development Agreement was executed in AY 2003- 04 and taxable capital gains of nearly Rs.31 crore had escaped assessment in that year.
3. Brief facts of the case the assessee filed return of income for AY 2003-04 on 31.03.2004 declaring total income of Rs. 2,01,648/-. The P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai income was reassessed at Rs. 7,55,11,434/- vide order dated 29/12/2017 u/s 143(3) r.w.s. 147 of the Act. As per the given by Hon’ble ITAT vide order dated 02/03/2016, the case was reopened u/s 147 to bring the income escaped from assessment in the relevant AY2003-04as the AO had reasons to believe that the income assessed had escaped assessment on the basis of finding given by Hon’ble ITAT in assessee’s appeal for AY 2007-08.
4. The appellate order passed by the ld.CIT(A) has discussed in detail all the relevant facts of the case as also thepast litigation history of the entire matter. According to it, the assessee Sri Awadh Narayan Laxmi Singh along with other co-owners i.e. Sri Satya Prakash Singh, Sri Hari Narayan Laxmi Singh, Sri Jaiprakash Laxmi Singh, Sri Om Prakash Singh were owners of the land who entered into Development Agreement dated 09-10-2002 with M/s Brick Works Trading Pvt Ltd regarding the said land and as per the terms of the agreement, the developer would get 60% share and the co-owners including the assessee 40% share of the total sale consideration. Since the assessee had received sale proceeds qua his share in AY 2007-08, the same were reported in the Revised return of income filed for AY 2007-08. Further, the AO vide reassessment proceedings for A.Y 2007-08 made addition of capital gains in AY 2007-08. However, the same was challenged and P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai Hon’ble ITAT, “A” Bench Mumbai vide its order & 7518/Mum/2010 dated 02-03-2016 in the case of assessee and Sri Satya Prakash Singh, his brother and co-owner for A.Y 2007-08 and Hon’ble ITAT, “A” Bench Mumbai vide its order & CO No.238/Mum/2014 dated 31-07-2018 in the case of assessee for A.Y 2007-08, observed that since ‘Development Agreement’ was executed in AY 2003-04, the addition in AY 2007-08 were liable to be deleted. The AO, based upon the information/ observation of ITAT, initiated reassessment proceedings for the year under consideration i.e. A.Y 2003-04 by issue of notice u/s 148 dated 30-03-2019 and passed the assessment order u/s 143(3) r.w.s 147 of the Actdated 30-12-2019 determining the capital gain at Rs.30,99,88,067/.Aggrieved by the order of the AO, the assessee preferred appeal before him.
4.1 Further, it was noticed that Hon’ble ITAT, “F” Bench Mumbai vide its order dated 25-02-2025 in the case of Sri Jai Prakash Laxmi Singh, brother of assessee and co-owner for AY 2003-04 on identical facts and circumstances similar to the case of the assessee, had passed order allowing the appeal of the assessee Sri Jai Prakash Laxmi Singh. Since the facts and circumstances were also identical to the case of the assessee, reliance was placed on the said
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai order in the case of Sri Jai Prakash Laxmi Singh(supra)for adjudication of this appeal.
4.2 The ld.CIT(A) further observed that the AO based on the Hon’ble ITAT(supra)had issued notice u/s 148 dated 30-03-2019 for A.Y 2003-04, thereby initiating the proceedings for reopening after 15 years from the relevant assessment year (relevant AY 2003-04 i.e. 31-03-2004 to 31-03-2019 = 15 years).He observed that the assessee had filed his ROI for AY 2003-04 on 31-03- 2004 and per provisions of section 149, the notice under section 148 for the AY 2003-04 could be issued only up to six years i.e. by 31-03-2010. 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. Hence, the act of AO in initiating the reassessment proceedings for the AY 2003-04 after 15 years was time barred per provisions of section 149 and section 150(2). Further, the Hon’ble Jurisdictional Mumbai Tribunal in the case of Anil Suri Vs. ITO [2014] 46taxman.com8,Mumbai under somewhat similar facts and circumstances, had allowed the appeal in favour of the assessee. Hence, he concluded that the reopening the proceedings in case of the assessee for the AY 2003-04 by issue of notice u/s 148 dated 30-03-2019 after a gap of 15 years and thereafter passing the assessment order u/s 143(3)
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai r.w.s 147 of the Act dated 30-12-2019 was barred by limitations as per provisions of section 149 and section 150(2) of the Act.
Before us, the ld.DR has vehemently supported the order of the AO claiming that the reopening was based on correct appreciation of the directions of hon’ble ITAT.As such, the reassessment order was fully justified on the facts and the circumstances of the case. Per contra, the ld.AR has placed reliance on the above order. It is submitted that the AO has reproduced the Assessing officers order of AY 2007-08 in the assessment order and made addition of Rs. 30,99,88,067/- treating it as LTCG for the year under consideration and raised a whooping demand of Rs. 30,22,98,518/-.It was submitted that the ld.CIT(A) further held that the AO wrongly invoked section 150 of the Act by relying on the ITAT order for AY 2007-08, even though such order contained no “finding” or “direction” authorising reassessment for AY 2003-04. Relying on the Supreme Court ruling in CIT v. Green World Corporation and the Bombay High Court decision in Sabita Bhagwandas Shah, the CIT(A) held that section 150(1) could not be used to circumvent the statutory bar limitation where the earlier appellate order did not concern AY 2003-04. Since limitation under section 149(1)(b) expired on 31.03.2010, the reassessment initiated on 30.03.2019 was held to be invalid and void ab initio, and therefore, the additions were deleted.It
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai was stated that theassesse 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.The assessee’s mother and sisters relinquished their respective rights in favour of the sons and their brothers. Thus, each brother inherited 1/5th share in the land, assessee being one of them. On 09.10.2002 the assesse along with his brothers entered into an agreement with M/s Brickworks Trading Pvt. Ltd. for development of land. As per the agreement it was agreed that the developer shall get 60% share and the co-owners shall get 40%.The profit of 40% was distributed to co-owners during the AY 2007-08.The case was reopened and the assesse filed revised return for AY 2007-08 declaring total income of Rs. 16,14,460/- which included carried forward long term capital loss of Rs. 1,04,40,000/-.The AO varied the capital gains declared by assesse and computed LTCG at Rs. 7,55,11,434/- [1ST REOPENING]/ Rs. 30,99,88,067/-. [2nd REOPENING). The assessee filed appeal before CIT(A) who vide order dated 25/08/2010 and order dated 23.05.2013 [for 2ndreopening) gave partial relief to the assessee. Against the order of CIT(A), the assessee as well as department filed appeal before the Hon’ble Tribunal and tribunal vide Para 11 & 12 of the order dated 02.03.2016 held that capital gain was not taxable in AY 2007-08 but taxable in AY 2003-04. Further, for 2nd reopening too
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai tribunal vide order dated 31.07.2018 held that capital gain was not taxable in AY 2007-08 but taxable in AY 2003-04.Thus based on above the Ld. AO reopened the case for AY 2003-04 as per provision of section 150 of the Act.
5.1 It is contended that the matter under consideration in the present case is identical to the case of Jaiprakash L. Singh, the assessee’s brother, whose appeal was adjudicated by the ITAT, Mumbai, vide Appeal No. 1301/MUM/2024(supra).In the said case, the ITAT has ruled in favor of the assessee on the same issue. Since the facts and circumstances in both cases were identical, it was submitted that the decision of the Hon’ble ITAT in Jaiprakash L. Singh’s case should be applied in the present case as well. The Hon’ble Tribunal has examined the same development agreement, same chronology of events, and same basis of reopening as in the present case. After analysing the legal position in great detail, the Hon’ble Tribunal categorically held that the reopening of AY 2003-04 after nearly 15 years was wholly time. barred, since section 149 prohibited any reopening beyond six years and section 150(1) could not be invoked in the absence of a specific finding or direction for AY 2003-04.On pages 14 to 18 of the order, the Hon’ble ITAT expressly held that the earlier ITAT order dated 19.04.2018 for AYs 2007-08 and 2008-09 contained no finding direction for AY 2003-
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 04 and that the remark regarding year of taxability was only an incidental observation, which cannot confer jurisdiction to reopen under section 150(1) The Hon’ble Tribunal further held that section 150(2) expressly bars reopening when the relevant year had already become time-barred on the date of the earlier order, which is precisely the case here. The Tribunal noted that AY 2003-04 became time-barred on 31.03.2010, whereas the earlier ITAT order was passed years later, therefore, reopening in 2019 is strictly prohibited. The Hon’ble ITAT also relied extensively on multiple binding precedents including ITO v. Murlidhar Bhagwan Das, Rajinder Nath v. CIT, K.M. Sharma v. ITO, Anil Suri v. ITO etc., all of which hold that an incidental observation of a different year cannot be treated as a “finding or direction” for section 150(1). After analysing the law, the Tribunal concluded on pages 23-25 that the reopening of AY 2003-04 was void ab initio as being hopelessly time-barred and therefore quashed the entire reassessment, and as a consequence also deleted the addition in full. Since the assessee and Shri Jaiprakash L. Singh are co-owners of the same property, parties to the same development agreement, recipients of identical consideration, and were subjected to identical reopening, the above ITAT order constitutes a binding and conclusive precedent squarely applicable to the present assessee. Accordingly, it was submitted that the reassessment for AY P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 2003-04 is equally time-barred, invalid and deserves to be quashed, and the consequential addition must be deleted following judicial consistency.
We have carefully gone throughthe appellate order in the case of his brother and one of the co-owners Sri Jaiprakash L. Singh, Mumbai vs ACIT 31(2)(1), Mumbai on 25 February, 2025.Relevant parts of the order are extracted below:
“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.
8. Hon’ble ITAT has mentioned in its decisions that the taxability of capital gains did not arise in A.Ys. 2007-08 and 2008-09, but the same arose in the A.Y.2003-04 when the Appellant entered into development agreement with the developer.
Hon’ble Tribunal, therefore, gave relief to the Appellant in AY 2007- 08 and 2008-09 clearly mentioning that the capital gains mush be offered in A.Y.2003-04 10. Just based on the above information, Ld. AO, accordingly reopened the assessment for AY 2003-04 and passed the assessment order determining the capital gains at Rs. 47,29,87,427/-.Where he is not even authorised to reopen the case as reassessment proceedings were initiated after the expiry of 15 yearsfrom the end of the assessment year. reassessment proceedings are void and bad in law.
The Section 150 of the Act provides that notwithstanding the limitation prescribed under section 149, notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or re- computation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceedings under P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai the 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 which is absent in present case. Thus, the order of the Tribunal had not given any finding or direction enabling the AO to seek recourse to section150 for reopening beyond six years. II. THERE IS NO FINDING AND DIRECTION FOR ASSESSING INCOMEIN AY 2003-04:- The Hon’ble Tribunal while dealing with appeal for AY 2007- and others has given a finding that income is not taxable in AY 2007-08, because it falls in AY 2003-04. Finding and direction was given for AY 2007-08 that income is not taxable in AY 2007-08. With respect to AY 2003-04 it is just an incidental observation on year of income of taxability. It could not be taken as “Finding or Direction” enabling reassessment u/s150. The order of the Tribunal dated 19.04.2017 does not record any finding or direction to the effect of reopening and the hence the reopening of the assessment beyond six years is bad- in-law and the same is to be quashed. Apart from the above, section 150(1) of the Act provides that the power to issue notice under section 148 of the Act in consequence of or giving 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 P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 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 • The Hon’ble Bombay High Court in the case of Rakesh N. Dutt v. Asstt. CIT [2009] 311 ITR 247 has held that :- “once section 150 of the Act is not applicable to the case of the assessee, the reopening of the assessment beyond the period of six years from the end of the relevant assessment year would be time barred.” IV. ISSUE OF NOTICE WAS TIME BARRED The Ld. AO based on tribunals order dated 19.04.2018 had issued notice under section 148 in 31.03.2019. The assessees return for assessment year 2003-04 became barred by limitation on 31-3- 2010. The assessment for AY 2003-04 could not have been reopened beyond 31 s t March, 2010 in terms of provision of section 149 of the Income Tax Act, 1961 as limitation for reassessment for AY 2003-04 had expired on 31.03.2010 and therefore, reassessement was barred by limitation. As per the proviso of section 149 of Income Tax Act, 1961 notice u/s 148 could not have been issued after 6 years lapsed from end of the AY if property situated in India. The AY under consideration is 2003-04 and 16 years had already lapsed. Hence, the notice issued u/s 148 for The reopening in appellate’s case is based on tribunal’s order for AY 2007-08 and finding was given for AY 2007-08. The case for AY 2003- 04 was not before the Hon’ble tribunal. Thus, the tribunal does not have power to give any finding or direction in respect of another year which is not before the authority.The decision of the apex court in the case of CIT v/s. Green World Corporation 314 ITR 81 (106) SC.As the finding can only be given when case is pending before the tribunal. But, in present case AY 2003- 04 was not before the tribunal. Hence, there is no finding & direction. Hence, section 150 will not apply. VI. FINDING OR DIRECTION. (S.149.).SEC 148 R.W.S 150: REOPENING OF ASSESSMENT - BASED ON TRIBUNAL “FINDING OR DIRECTION “ IN RESPECT OF ANY OTHER YEAR OR PERIOD - BEYOND SIX YEARS - NOT VALID The Hon’ble Jurisdictional Mumbai Tribunal which is on similar facts ANILSURI V/S ITO [2014] 46 TAXMANN.COM 8 (MUMBAI - TRIB.) 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:-
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 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 section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order; or Because the findings related for disposal of AY 2007-08 is whether it is taxable in AY 2007-08 or not. Observation for AY 2003-04 is not relevant. RELIANCE PLACED ON:-The Hon’ble Jurisdictional Bombay High Court also in case of Kala Niketan v/s Union of India [2016] 76 taxmann.com 281 (Bombay),The Hon’ble Mumbai Tribunal in case of Sujeer Properties (AOP) [2011]10 taxmann.com 201 (Mumbai) The Supreme Court in the case of Rajinder Nath v. CIT [1979] 2Taxman 204 VIII. 6 YEARS FROM END OF ASSESSMENT YEAR WAS LAPSED WHEN APPEAL ORDER WAS PASSED Jaiprakash L Singh, Mumbai 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.
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. Accordingly, appeal in is allowed.”
12. Whereas on the contrary Ld. DR relied upon the orders passed by the revenue authorities. “13. We have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and the orders passed by the revenue authorities. From the records, we noticed that the assessee along with other co-owners being the owners of the land entered into ‘Development Agreement’ with M/s Brick Works Trading Ltd and received their part of sale proceeds in accordance with the terms and conditions of the development agreement in A.Y 2007-08 and 2008-09, therefore the AO made additions of capital gain in A.Y 2007-08 and 2008-09. Since the same were challenged and the ITAT observed that since development agreement was executed in A.Y 2003-04, therefore keeping in mind this fact the addition in A.Y 2007- 08 & 2008-09 were deleted.
Thereafter AO making the Tribunal order dated 19.04.2018, as basis issued notice u/s 148 of the Act on 31.03.2019, i.e. after a gap of approximately 15 P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai years. Whereas Return of Income for the year under consideration was filed on 31.03.2004 and consequently, order of assessment u/s 143(1) was passed on 21.04.2004 itself. In Jaiprakash L Singh, Mumbai this way, on the basis of notice u/s 148 of the Act dated 31.03.2019 AO initiated the proceedings of reopening after 15 years from the relevant assessment year. Which prima-facie goes to show that the proceedings initiated for reassessment are ‘time barred’. In this regard, let us examined and evaluate the legal proposition as put forth by the respective parties.
It is an admitted fact that the ‘only basis’ made for re- opening of assessment by the AO was ‘Tribunal order dated 19.04.20018’. In support of his argument Ld. DR relied upon the provisions of section 150(1) of the Act and tried to justify that the action of the Ld.AO is within limitation. However, before proceeding, further, we first of all refer to the provisions of section 149, wherein it has been specifically mentioned that notice under section 148 of the Act could not have been issued after ‘six years’ from the end of the assessment year. Admittedly, the assessment year under consideration is 2003-04 and 16 years have already been elapsed. And even otherwise the coordinate Bench of ITAT could not have given any finding in this regard in its order dated 19.04.2018, 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 Jaiprakash L Singh, Mumbai 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.
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 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.
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 16. Thus considering the above judgments we can safely conclude that the findings can only be given by an authority if, or when case of particular assessment year is pending before the said authority. But in the present case A.Y 2003- Jaiprakash L Singh, Mumbai 04 was not pending or subject matter before the Tribunal therefore no findings could have been given qua A.Y 2003- 04.
Now before proceedings further let us evaluate the provisions of Sec. 150 of the Act and the same is reproduced herein below: 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 90 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 91 [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.
After evaluating the entire provisions contained in section 150 of the Act, 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’.
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.
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.
The Hon’ble Jurisdictional Mumbai Tribunal under somewhat similar facts in the case of Anil Suri Vs. ITO [2014] 46 taxman.com 8 Mumbai has allowed the appeal in favour of the assessee P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 22. Considering the totality of the facts and circumstances of the present case and keeping view the provisions of sub Sec. (2) to Section 150, which restricted the applicability of the provision of Sec. 150 in a case where 6 years have already lapsed when appeal order was passed. Since in the present case the appeal order for 2007-08 & 2007-08 was admittedly passed on 19.04.2018, but till that time 6 years from the end of A.Y 2003-04 had already lapsed therefore in these circumstances reopening proceedings could not have been initiated against the assessee for the year under consideration after a gap of 16 years and similar issue has also come up before Hon’ble Chennai Tribunal in the Case of Emgeeyar Pictures (P) Ltd Vs. Ltd Vs. DCIT [2016] 70 taxmann.com 43.
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.”
The other grounds of appeal
relates to challenging the order of Ld. CIT(A) in upholding the additions on account of capital gain in the case of assessee.
26. After having heard the counsels for both the parties, we noticed that as per record the development agreement was entered into between the parties for the year under consideration and therefore considering the taxability of capital gain in the year in which contract was entered into, and taking into consideration the computation of capital gain calculated in the chart placed on record by the assessee we found that there is loss instead of capital gain to the assessee. In making the said calculation the assessee has rightly taken the value in accordance with the stamp duty valuation of development agreement for the entire land for the year under considering and while working 1/5 share of the assessee a sum of Rs. 3,51,33,600/- was taken as market value as determined by the stamp duty authority. And since the land was acquired by the assessee before 1.04.1981 and therefore as per the provisions of Sec. 48 of the Act, the cost of acquisition is considered as fair market value as on 01.04.1981. And hence as per the order of CIT(A) dated 28.05.2014 and valuation report the index cost of acquisition comes to Rs. 8,82,69,984/- as enumerated and detailed in the following chart. Total FMV of Land as on 01.04.1981 Rs.18,35,48,395/- Total land as per agreement 74,139.40sq.mtrs.(7,98,036.50sq.ft.) (7,98,036.50 sq.ft.*230/-) Value of 60% of land transferred Rs.11,01,29,037/-(Rs. 18,35,48,395*.060) Thereby Assessee’s Share (1/5) Rs2.20.25.80.Indexed Cost of Acquisition 1,97,47,200*4.47= 8,82,69,984/-
27. Therefore from the above computation as well it can be clearly observed that there is no capital gain and instead there is a capital loss so in these circumstances, there is no question of any tax to be paid on the same.
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 28. Therefore considering the entire facts and circumstances of the present case and also the judicial precedents as referred by us above we allow the grounds of appeal raised by the assessee regarding the additions made on account of capital gain and thus direct the AO to delete the same.
In the result, the appeal filed by the assessee stands allowed.”
We have carefully perused the facts of the above case and find that the issue is identical in the instant appeal which pertains to the brother of the assessee, being one of the co-owners. The addition has been made by the AO in the instant case on the same material facts as applicable to the other co-owners and discussed at length by the coordinate bench in the case of Sri Jay Prakash Singh(supra). Therefore, respectfully following the decision above, we hold that there is no infirmity in the appellate order which is therefore upheld. In the result, the grounds of appeal are dismissed.
In the result, appeal of the Revenue is dismissed.
9.ITA No. 6227/MUM/2025 (A.Y. 2003-04) 1) “On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that reassessment proceedings initiated for AY 2003-04 were barred by limitation under section 149 of the Income Tax Act, without appreciating that such reassessment was a direct consequence of the categorical finding of the Hon’ble ITAT in earlier proceedings that the transfer of capital asset had taken place in AY 2003-04, thereby attracting the overriding provisions of section 150(1) of the Income Tax Act, 1961.” 2) “On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the limitation prescribed under section 149 of the I.T. Act, 1961 overrides the provisions of P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai section 150(1) of the Act, despite the fact that section 150(1) of the Act is an explicit statutory exception allowing initiation of reassessment proceedings beyond the limitation period where such action is required to give effect to a finding or direction contained in an appellate order.” 3) “On the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that its earlier finding, holding AY 2003-04 as the correct year of chargeability of capital gains arising from the Development Agreement dated 09/10/2002, constituted a “finding” or “direction” within the meaning of section 150(1) of the Act, binding on the Assessing Officer for reopening assessment in the correct year.” 4) “On the facts and in the circumstances of the case, the Ld. CIT(A) erred in quashing the entire reassessment order solely on the ground of limitation, despite the admitted position that the Development Agreement was executed in AY 2003 -04 and taxable capital gains of nearly 17 crore had escaped assessment in that year.”
Brief facts of the case are that the assessee is an individual and is a partner in M/s. Hotel Laxmi International. The assessee filed original return of income on 31.03.2004 declaring total income at Rs. 2,01,648/-. The case was reopened by issuing notice u/s 148 dated 29.03.2017 .The AO has reproduced the Assessing officer’s order of AY 2007-08 in the assessment order and made addition of Rs. 7,55,11,434/- as LTCG for the year under consideration.
11. In the subsequent appeal, the ld.CIT(A) inter alia observed that in the case of the assessee, the relevant year under consideration was AY2003-04 and 13 years had elapsed from the date of issue of notice u/s 148 dated 29-03-2017. It is submitted by the ld.AR that the ld. CIT(A)
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai deleted the addition on the fundamental ground that the assessment was barred by limitation, even though the reopening was initiated under section 150. The AO issued notice u/s 148 on 29.03.2017, i.e., 13 years after the end of AY 2003-04, whereas the statutory period under section 149 had expired on 31.03.2010. The CIT(A) held that the ITAT’s order for AY 2007-08 relied upon by the AO did not constitute a valid “finding” or “direction” for reopening AY 2003-04.Since the appellate authority in AY 2007-08 was not dealing with AY 2003-04, section 150(1) of the Act could not extend the period of limitation.
On careful consideration of all relevant facts of the case, we find that there is no infirmity in the action of the ld.CIT(A).The instant appeal is squarely covered by the decision rendered in appeal in .Notice of reopening issued after 13 years from the end of the assessment year has been rightly held to be barred by time limitation,more so in the light of the facts that there was no specific direction by the hon’ble ITAT in the orders referred above. The grounds of appeal are thereby dismissed. In the result, appeal filed by the Revenue is dismissed.
P a g e | A.Y. 2003-04 Shri Awadhnarayan Laxminarayan Singh, Mumbai 13. Consequently, both the above appeals of the Revenue stand dismissed.
Order pronounced in the open court on 27.01.2026.