ORDER
Prashant Maharishi, Vice President. – This appeal has been filed by the Income Tax Officer, Ward 6(2)(1), Bangalore (the learned AO), in the case of Shri Maddila Ramakrishna, Bangalore (the assessee), for Assessment Year 2015-16. It arises from the appellate order dated 3 April 2025 passed by the National Faceless Appeal Centre, Delhi (the learned CIT(A), by which the Assessee’s appeal against the reassessment order dated 19 May 2023 passed u/s 147 of the act, was allowed. Aggrieved by that decision, the Revenue has filed the present appeal before us.
2. The learned assessing officer has raised the following grounds of appeal.
| (i) |
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Whether on the facts and in the circumstances of the case, the learned CIT(4) erred in holding that the reassessment notice issued on 29.06.2021 is barred by limitation, without appreciating that by virtue of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 (“TOLA”), the limitation period stood validly extended up to 30.09.2021. Accordingly, the notice issued is well within the statutory period. |
| (ii) |
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Whether on the facts and in the circumstances of the case, the learned CIT(A) has failed to appreciate that the Hon’ble Supreme Court in UOI v. Rajeev Bansal (SC) upheld the validity of notices issued during 01.04.2021 to 30.06.2021 under the old regime, by deeming them as notices under Section 148A(b). The order does not render such notices invalid for AY 2015-16; reliance on a concession made by the Revenue ‘s counsel cannot override the statutory provisions or binding ratio. |
| (iii) |
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Whether on the facts and circumstances of the case, the learned CIT(A) erred in ignoring that the Assessing Officer duly complied with the procedure mandated by Section 148A, as directed by the Hon ‘ble Supreme Court in UOI v. Ashish Agarwal 444 ITR 1 (SC), by supplying information, granting opportunity, passing a speaking order ws 148A(d), and thereafter issuing notice w’s 148 on 29.07.2022. |
3. The brief facts are that the assessee filed the return of income for Assessment Year 2015-16 on 28.09.2015, declaring total income of Rs.66,49,470/-. Based on available information, the assessee had sold immovable properties during the relevant year for an aggregate consideration of Rs.1,88,55,000/-, whereas the stamp duty value of those properties was Rs.16,08,30,001/-, resulting in a difference of Rs.14,19,75,001/-. Accordingly, the case was reopened under section 147 of the Act after obtaining prior approval from the competent authority.
4. In response, the assessee submitted that an MOU had been executed with M/s Hotel Rama Pvt. Ltd. on 05.08.2004 at Bangalore. Under the MOU, Hotel Rama Pvt. Ltd. intended to acquire land in and around Bangalore for development of hotels, resorts, residential schools, and residential layouts, as required, and the assessee, Shri M. Ramakrishna, agreed to make available such non-agricultural land as and when required. Thereafter, a sale agreement was entered into between Shri M. Ramakrishna, as seller, and M/s Hotel Rama Pvt. Ltd., as purchaser, on 02.12.2004. The agreement was not registered. Under the MOU and sale agreement, the purchaser paid Rs.15,00,000/- as advance and a further sum of Rs.46,00,000/- by cheque No. 786204 dated 21.09.2004 in favour of the seller. As recorded in clause 4 at page 3 of the sale agreement, the agreement came into effect from the date of execution and was to remain valid for two years, extendable by mutual consent. The sale agreement was ultimately culminated in sale deeds executed on 21.04.2014, and the total sale consideration was taken at Rs.1,88,55,000/- instead of the SRO value of Rs.16,08,30,001/-prevailing on the date of execution of the sale deeds.
5. The assessee submitted that he had entered into an MOU dated 05.08.2004 with Hotel Rama Pvt. Ltd. for purchase of agricultural land, its conversion into non-agricultural land, and its subsequent sale, followed by an unregistered sale agreement dated 02.12.2004, for which registration was optional. Under the agreement, the sale price was fixed at Rs.9,00,000/- per acre, while the SRO value on that date was Rs.1,87,500/- per acre. During the relevant year, 20.38 guntas were sold for Rs.1,88,55,000/-, whereas the SRO value at the time of registration was Rs.16,08,30,001/-. Since the agreement was in writing and part consideration of Rs.61,00,000/- had been received by cheque— Rs.15,00,000/- by cheque No.239812 dated 06.08.2004 and Rs.46,00,000/- by cheque No.786204 dated 21.09.2004—the assessee contended that section 43CA(2), (3), and (4) applied, and that the declared sale consideration of Rs.1,88,55,000/- should therefore be adopted instead of the SRO value. The investment of Rs.1,20,00,000/-was stated to have been financed through a loan from Indira Hotel Pvt. Ltd. The property was held as stock-in-trade, and the profit on sale was offered under the head “Income from business and profession.” The assessee also stated that conversion charges of Rs.5,86,920/- on 11.03.2005 and Rs.5,54,340/- on 18.02.2006, aggregating to Rs.11,41,260/-, were incurred as cost of improvement. No cash consideration was received. Since the property was stock-in-trade, the assessee contended that no capital gains arose. He further submitted that purchase and sale of property was his business, and that the agreed price of Rs.9 lakh per acre reflected anticipated demand, conversion efforts, and expected profit. Although the agreement was executed when the SRO value was Rs.1,87,500/- per acre, the sale was delayed due to legal hitches and was completed only during the relevant year, by which time Bangalore had developed considerably, the area had come under BBMP, and the SRO value had increased. The assessee also filed Annexure-17 showing year-wise receipts of sale consideration, details of final payments received in respect of Sy. No. 17/1 aggregating Rs.57,88,500/- with TDS of Rs.57,885/-, along with copies of bank statements, payment details, loan details, and land-wise records of legal hitches.
6. The learned AO held that section 43CA(2), (3), and (4) of the Act did not apply to the Assessee’s case, as the amounts received from M/s Hotel Rama Pvt. Ltd. were only advances for acquiring agricultural land on its behalf, converting it into non-agricultural land for residential use, and thereafter selling it to the same company. The funds for these transactions were also stated to have been provided by its sister concern, M/s Indira Hotels (Mysore) Pvt. Ltd., whose board members and directors were common. According to the AO, the assessee was therefore liable to capital gains tax on the sale of the immovable property by adopting the value of Rs.16,08,30,001/-. The AO further held that the net profit of Rs.67,77,527/- shown in the profit and loss account was merely commission earned by the assessee for purchasing and selling the land on behalf of M/s Hotel Rama Pvt. Ltd., using funds arranged by that group. On this basis and having regard to the documents and material on record, the AO concluded that the assessee had failed to satisfactorily explain the transactions and the income arising therefrom during the relevant year. Accordingly, the entire fair market value of the property, namely Rs.16,08,30,001/-, was treated as long-term capital gains and added to the Assessee’s total income.
7. The learned Assessing Officer passed the assessment order determining the Assessee’s total income at Rs.16,74,79,471/-, including an addition of Rs.16,08,30,001/-.
8. Aggrieved, the assessee appealed before the learned CIT(A), who allowed the appeal on the technical ground that the reopening for AY 2015-16 was barred by limitation. The original notice under section 148 was issued on 29.06.2021 under the unamended provisions of the Act. Pursuant to the judgment of the Hon’ble Supreme Court in Ashish Agrawal, that notice was treated as one under section 148A, the assessee was given an opportunity to respond, and thereafter an order under section 148A(d) and a fresh notice under section 148 were issued on 29.07.2022. Before the CIT(A), the assessee relied on the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra) and contended that all notices issued for AY 2015-16 on or after 01.04.2021 were time-barred, regardless of the quantum of escaped income, as recorded in paragraph 19(f) of that decision. It was further submitted that TOLA applied only where the limitation period fell between 20.03.2020 and 31.03.2021, whereas AY 2015-16 fell outside that period. Accepting this contention, the learned CIT(A) held that the reopening was invalid and quashed the assessment.
9. The Assessing Officer is in appeal before us. The learned CIT-DR supported the order of the Assessing Officer, while the learned authorized representative submitted that, for AY 2015-16, the learned CIT(A) had rightly quashed the reopening proceedings by relying on the decision of the Hon’ble Supreme Court.
10. We have considered the rival submissions and perused the orders of the lower authorities. The reassessment in the present case pertains to AY 2015-16. The learned CIT(A), following the decision of the Hon’ble Supreme Court in Rajeev Bansal (supra), held that the reopening proceedings for AY 2015-16 were barred by limitation, particularly in view of the specific concession recorded on behalf of the Revenue. The learned CIT(A) has given detailed reasons for that conclusion, and the learned CIT-DR was unable to point out any infirmity in the impugned order. Accordingly, all three grounds raised by the Revenue are dismissed.
11. In the result appeal of the learned assessing officer is dismissed.
