HC : Debars AO from undertaking ‘full fledged’ re-assessment to work out ‘indexed cost

Bombay HC sets-aside re-assessment notice for AY 2013-14 in case of individual-assessee, upholds assessee’s computation of capital gain arising out of a sale of residential property; Notes that assessee’s original return was accepted without scrutiny, based on the  details submitted during the course of assessment proceedings for subsequent year, AO reopened assessee’s case and held that assessee had wrongly claimed benefit of indexed cost of acquisition from the date of sale agreement (1992-93) which could not be executed;  Though HC acknowledges that the AO would enjoy a greater latitude in reopening where return was accepted u/s. 143(1), HC clarifies that, “If the issue is legally concluded, there would be no point in allowing the AO to resort to full fledged reassessment since the reopening of assessment would suffer from the fundamental defect of the AO in having the material to form a reasonable belief that income chargeable to tax had escaped assessment.”; HC rejects Revenue’s  stand that the indexation benefit should be granted only from the date of HC order (2007-08) allowing execution of sale deed in favour of assessee, states that in view of SC ruling in Sanjeev Lal, the execution of sale deed by virtue of the HC judgment would relate back to the original agreement to sale; Accordingly, HC opines that, “the entire basis of the department in the reasons recorded in order to dispute the petitioner's computation of the capital gain, therefore, is rendered invalid.”  :HC