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
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