Commissioner Of Income Tax Media Circle, Chennai v. M/S.emgeeyar Pictures P.ltd., Flat

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 18.09.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY T.C.A.No.788 of 2016 Commissioner of Income TaxMedia Circle, Chennai..Appellant/Respondentvs. M/s.Emgeeyar Pictures P.Ltd.,Flat No.3B, 'Doshi Residency' Complex,Old No.9, New No.17,Dhandapani Street,T.Nagar, Chennai 17 ...Respondent/Appellant Appeal filed against the order of the Income Tax AppellateTribunal Madras “C” Bench dated 18.03.2016 in ITANo.992/Mds/2015. Appeal against the order dated 10.03.2015 made in I.T.A.No.00CIT(A)-14/2013-2014, I.T.A. No. 96/2006-2007 on the file ofthe Commissioner of Income Tax (Appeals)-14, VI Chennai, PANNo. AABCE1440J Assessment Year 2000-2001, 2001-2002 order dated10.03.2015& 30.03.2006. Appeal against the order dated 25.03.2013 on the file of theDeputy Commissioner of Income Tax Media Circle-I Chennai-17 PANNo. AABCE1440J Assessment year 2001-2002. Appeal against the order dated 31.05.2010 made in I.T.A.Nos. 327 & 328/mds/2010 on the file of the Income Tax AppellateTribunal Chennai Bench 'D' Chennai PAN No. Assessmentyear 2003-2004 and 2004-2005 order dated 18.02.2011. Appeal against the order dated 31.05.2010 made in I.T.A. No.327 & 328/mds/2010 Assessment year 2003-2004 & 2004-2005 on thefile of the Income Tax Appellate Tribunal, Chennai Bench'D'Chennai PAN No. Appeal against the order dated 22.07.2008 made in I.T.A.No.226/2006-2007 on the file of the Commissioner of Income Tax https://hcservices.ecourts.gov.in/hcservices/ (Appeals)VI Chennai PAN No. Assessment year 2004-2005 Appeal against the order dated 22.07.2008 made in I.T.A. No.98/2006-2007 on the file of the Commissioner of Income Tax(Appeals)VI, Chennai order dated 30.03.2006. Appeals against the order dated 28.12.2006 on the file ofthe Assistant Commissioner of Income Tax Media Circle I, ChennaiPAN No. 10001-E/AABCE1440J Assessment year 2004-2005. Appeal against the order dated 30.03.2006 on the file of theAssistant Commissioner of Income Tax, Media Circle I, MediaRange, Chennai 34. Appeal against the order dated 30.03.2006 on the file of theDeputy Commissioner of Income Tax, Media Circle I, Chennai 34order dated 30.04.2006. For Appellant : M/s.V.Pushpa Junior Standing Counsel For respondent : Mr.Ashok Pathy For Pass AssociatesJUDGMENT(Delivered by DR.VINEET KOTHARI, J.)The present appeal filed by the Revenue for AY 2001-02presents a piquant and not a very happy dealing of appeals atthe level of Income Tax Appellate Tribunal, arising out of theorder of Tribunal dated 18.03.2016 by a majority of 2:1, upon adifference of opinion in the Judicial Member and the AccountantMember of the Tribunal. 2. The case has a little chequered history and it isbriefly stated as under. 3. The Assessee M/s.Emgeeyar Pictures Private Limitedentered into a Joint Development Agreement with another firmM/s.Doshi Builders in December 2000, for development of aproperty situated at No.9, Dhandapani Street, T.Nagar, Chennai,under which agreement, the Assessee got 60% of the constructedproperty viz., 9 flats amounting to 17442 sq.ft., each flatmeasuring 2010 sq.ft. inclusive of proportionate share in commonarea and the sale of such flats was effected by Assessee in themonth of March 2003, wherein two flats were transferred infavour of the company's Director viz., Mrs.Nirmala Ravindran andthe other flats were sold to other persons in the relevantfinancial years 2003-04 and relevant for AY 2003-04 and AY 2004-05. 4. Since apparently no taxable event for imposing capitalgains tax under the head 'Capital Gains' arose in the month of December 2000, when Joint Development Agreement was executed,the question of taxability on the 'Capital Gains' arose in theAY 2003-04 and AY 2004-05, when sale of flats took place. 4. Since apparently no taxable event for imposing capitalgains tax under the head 'Capital Gains' arose in the month of December 2000, when Joint Development Agreement was executed,the question of taxability on the 'Capital Gains' arose in theAY 2003-04 and AY 2004-05, when sale of flats took place. 5. Against the order of the learned Commissioner of IncomeTax (Appeals), upholding the imposition of capital gains tax,the matter was taken up by the Assessee before the learnedIncome Tax Appellate Tribunal for these two Assessment Years,viz., AY 2003-04 and AY 2004-05, which came to be disposed of bythe “D” Bench of the learned Income Tax Appellate Tribunal on 31May 2010. It appears that before the said Bench of learnedTribunal, the Assessee took a somersault and changed its standand urged before the Tribunal that since J.D. Agreement wasentered only on 25 December 2000 and possession of the propertywas also handed over to M/s.Doshi Builders, the 'Capital Gains'tax, if any, could be assessed only for the previous AY 2001-02and not in the Assessment Years involved before the Tribunalviz., AY 2003-04 and AY 2004-05, even though no sale of flatshad taken place in the year relevant to AY 2001-02. Thechallenge to levy of interest under section 234A, 234B and 234Cof the Act was also raised but the learned Tribunal (per SriHari Om Maratha and Sri Abraham P. George) in its impugned orderaccepted the said change of stand of the Assessee and held thatno 'Capital Gains Tax' was liable to be taxed at the hands ofthe Assessee in the Assessment Years AY 2003-04 and AY 2004-05on the sale of flats by the Assessee company and thus, theappeal of the Assessee came to be allowed. 6. The relevant portion of the order dated 31.05.2010 isquoted below for ready reference:-2. Briefly stated, the facts of thecase are that the assessee, for AssessmentYear 2003-04 did not file any return ofincome A search u/s 132 of the Income taxAct, 1961 (hereinafter referred to as theAct' for short) was conducted in the case ofDr. Rajdurai wherein it was found that hewas a tenant of Flat No.3A, DoshiApartments, No.9 Dhandapani Street, T.Nagar, Chennal-17, owned by the assessee.consequently, after recording reasons u/s148, notice was issued and the re-assessmentwas completed on 30.3.2006 at a total incomeof Rs. 27,00,190/-. Against this, theassessee preferred appeal. The assessee is alimited company and was owner of 72 grounds(18,000 sq ft) of land. It had entered intoa Development agreement on 25 December 2000with a builder. The assessee has sold partof the 3 built-up area together with proportionate undivided share of land duringthe relevant previous year. The assessee hasdeclared the consideration as declared underthe Deed of Sale and ConstructionAgreements. While computing capital gains,the assessee has adopted a value of Rs.217.80 per sq ft as the fair market value ason 1 April 1981 as against which theAssessing Officer has finalized theassessment fixing the consideration for saleof land u/s 50C by adopting the guidelinevalue and fixing the fair market value as on1.4.1981 based on guideline value at Rs. 25per sq ft. He has also disallowed thebusiness expenditure claimed by the assesseeduring the year with the observation that nobusiness was carried on by the assesseeduring the relevant year. Thus, two issueswere raised before the Id. CIT(A) - (1)challenged the computation of capital gains;(Not the levy of Capital Gains Tax itself)and(i)Disallowanceofbusiness expenditure. The Id. CIT(A) has directed toadopt a value of Rs. 143/- per sq ft as on1.4.1981 as against Rs. 217.80 adopted bythe assessee and Rs. 25/- per sq ft adoptedby the Assessing Officer. The Id. CIT(A) hasalso disallowed the claim of business lossby not accepting that there was a temporarylull in the business of the assessee and nowthe assessee has filed appeal by taking thefollowing grounds in Assessment Year2003-04. "1. The order of the Id. CIT(A) iscontrary to law facts andcircumstances of the case andopposed to princess of legitimateexpectation. 2. Capital Gains: (a) The Id. CIT(A) fundamentallyfailed to appreciate that nocapital gains is taxable in theyear of account since theappellant had entered into adevelopment agreement on 25th dayof December 2000 and right accrueson that date without prejudice.(This ground was never raisedbefore CIT (Appeals). (b) The Id. CIT(A) fixing the fairmarket value as at 1.4.1981 at Rs.143/- per sq ft as against Rs.217.80 per sq ft claimed by theappellant on scientific basis. (c)The Id. CIT(A) erred in confirmingguideline value for the land and abuilding sold on the basis ofguideline value in terms ofsection 50C of the Act.3. Disallowance of business loss The Id. CIT(A) ought to haveallowed the business loss claimedby the appellant since thebusiness loss could be claimedinterest even in a situation thereexists "lull" in a business.4. The Id. CIT(A) ought tohaveappreciatedthattheAssessingOfficererredincharging interest u/s 234A, 234Band 234C of the Act." 4. It was argued by the Id.AR that nocapital gains is taxable in the year ofaccount (sic) since the assessee had enteredinto a development agreement only on25.12.2000 and rights accrued on that dateonly. It was further argued that possessionhad already been handed over on that date.So, after relying on various decisions, itwas claimed that no capital gains wastaxable in Assessment Year 2003-04. TheId.AR has also disputed the adoption of fairmarket Value at Rs. 143/- per sq ft asagainst Rs. 217.80 per sq ft adopted by theassessee. With regard to disallowance ofbusiness loss, it was argued that there wasnot a permanent stoppage of business but itwas only a temporary lull whereby thebusiness could not be done during the yearunder consideration. With regard to the lastground i.e charging of interest u/s 234A, B& C, consequential relief was claimed. 5. On the other hand, the Id.DR hasheavily relied on the order of the Id. CIT(A) and has reiterated all the reasons givenby him in arriving at his conclusion.6. After hearing both sides, it wasfound for a fact with reference to copy of the agreement which was placed before us andthe same was also available before theAssessing Officer and from which it isestablished that the assessee had enteredinto a development agreement on 25.12.2000and had handed over the possession of theproperty to the builder on that very date.Reference was made to page 62 to 66 of thepaper book filed by the ld.AR to demonstratethat no such capital gains actually accruedto the assessee during the year. Reliancewas placed on various decisions includingthat of Chennai Bench and the Hon'ble MadrasHigh Court wherein it has been held that atthe time of delivery of possession to thevendorandhavingreceivedfullconsideration as per the terms of theagreement transfer was complete on deliveryof possession and capital gains arose inthat relevant year. We have gone through thedecision of Hon'ble Madras High Court in thecase of D Kasturi vs CIT, 251 ITR 532, andother decisions whose ratio are on the lineand the copies of the orders/judgments areannexed in the assessee's paper book. Havingestablished the fact that transfer of theasset has already taken place in the year2000, capital gains cannot be taxed inAssessment Year 2003-04 and 2004-05. (sic ! Tribunal wholly missed thepoint here that the Capital GainsTax Liability on transfer/sale offlats was being considered byTribunal and not transfer of landunder J.D.Agreement). Therefore, we have to allow Ground No.2first part and thereafter the adoption offair market value as on 1.4.1981 either atRs. 143/- per sq ft or Rs. 127.80 per sq ftremains only of academic interest. 7. A Miscellaneous Petition was immediately filed by theRevenue, before the learned Tribunal, inter alia contending thatthe learned Commissioner of Income Tax (Appeals), for AY 2003-04did not deal with the said change of stand of the Assessee asonly the question on ascertaining the Fair Market Value forcomputing Capital Gains Tax Liability was raised by theAssessee. Therefore, the matter ought to have been remanded backby the learned Tribunal instead of allowing the appeal of theAssessee vide order dated 31 May 2010 and since the Assessee had https://hcservices.ecourts.gov.in/hcservices/ itself admitted 'Capital Gains Tax' liability for AY 2003-04 andAY 2004-05, in the Return of Income filed by it and wasagitating only the question of its computation on the basis ofFair Market Value, the learned Tribunal could not have held thatno capital gains tax was attracted in these Assessment Years AY2003-04 and 2004-05. The said Miscellaneous Petition, however,came to be rejected by the learned Tribunal vide order dated 18February 2011 by a cursory order. 8. While the assessment for AY 2001-02 was taken up underSection 147 r/w 148, 150 and 254 of the Income Tax Act by noticeunder Section 148, dated 10.06.2011, an reassessment order waspassed by the Assessing Authority on 25 March 2013 for AY 2001-02, imposing the capital gains tax liability on the Assessee, onsuch sale of flats. However, the First Appeal was dismissed bythe Commissioner of Income Tax (Appeals) and the matter wastaken up by the Assessee before the learned Tribunal and it wascontended by the Assessee that reassessment for AY 2001-02 hadalready become time barred as per Section 149 of the Act andSection 150 of the Act did not save the limitation for theAssessing Authority for AY 2001-02. 8. While the assessment for AY 2001-02 was taken up underSection 147 r/w 148, 150 and 254 of the Income Tax Act by noticeunder Section 148, dated 10.06.2011, an reassessment order waspassed by the Assessing Authority on 25 March 2013 for AY 2001-02, imposing the capital gains tax liability on the Assessee, onsuch sale of flats. However, the First Appeal was dismissed bythe Commissioner of Income Tax (Appeals) and the matter wastaken up by the Assessee before the learned Tribunal and it wascontended by the Assessee that reassessment for AY 2001-02 hadalready become time barred as per Section 149 of the Act andSection 150 of the Act did not save the limitation for theAssessing Authority for AY 2001-02. 9. Vide order dated 21 July 2015, both the learned Membersof the Tribunal differed in their respective opinion on theissue of limitation for reassessment for AY 2001-02 to bring totax the said sale of flats by the Assessee and thus, on accountof such difference of opinion, the matter was referred to theThird Member viz., Vice President of the learned Income TaxAppellate Tribunal, on the issue of limitation in issuance ofreassessment notice. The Third Member came to dispose of thematter vide order dated 26.02.2010 and agreed with JudicialMember. While Vice President (Mr.D.Manmohan) and Judicial Member(Mr.N.R.S.Ganesan) held the reassessment for AY 2001-02 to betime barred, the Accountant Member (Mr.Chandra Poojari) held itto be within limitation. 10. We find from these orders that even in the questionsreferred to the learned Third Member, the two members(Mr.N.R.S.Ganesan, Judicial Member and Mr.Chandra Poojari,Accountant Member), differed and framed different questions. 11. The questions as referred by them and as noted by theThird Member, the Vice President (Sri.D.Manmohan), are quotedbelow for ready reference :- “On account of difference of opinionbetween the learned Accountant Member andthe learned Judicial Member, the matter wasreferred to the Hon'ble President fornominating a Third Member under section 255 (4) of the Income Tax Act, 1961, to resolvethe points of difference. It may be notedthat even while framing the points ofdifference, there was a difference ofopinion. According to the learned JudicialMember, (Sri. N.R.S.Ganesan) thefollowing questions need to be resolved:(1) 1n the facts andcircumstances of the case, in theabsence of any specific finding/direction to assess the income forthe Assessment Year 2001-02 in theorder of this Tribunal dated 31May 2010, can there be aninference/presumption,especially, when no proceeding forthe Assessment Year 2001-02 wasbefore the Tribunal, as held byApex Court in CIT v. Green WorldCorporation (2009) 314 ITR 81? (2) In the facts andcircumstances of the case, whenadmittedly, the assessment for theAssessment Year 2001-02 was notsubject matter of appeal beforethis Tribunal can the observation,if any, made by the Tribunal, beconsidered as finding/ directionto assess the income for theAssessment Year 2001-02 in view ofthe decision of this Tribunal inSun Metal Factor (I)(P.) Ltd. v.ACIT (2010) 124 ITD 14, especiallywhen this Bench of the Tribunal in‘Sriram Capital Ltd. V. DCIT inI.T.A.Nos.512 & 513/Mds/2015 dated26.06.2015 (the very same Ld.AccountantMemberisaparty/author) found that theAppellate authority cannot travelbeyond the Assessment Year inappeal and expunge the directions(to refer p.63 & 64 at para 19.3of the Tribunal order in I.T.A.Nos.512 & 513/Mds/2015 dated26.06.2015)?(3) In the facts andcircumstances of the case, whetherthe reopening made under Section147 of the Act and consequent order of assessment are barred bylimitation? order of assessment are barred bylimitation? 2. On the other hand, the learnedAccountant Member (Sri.Chandra Poojari),formulated the following three questionswhile referring the matter to the Hoh'blePresident u/s 255(4) of the Act:(1) Whether, on the facts andcircumstances of the case, thenotice issued is barred bylimitation as provided undersections 149(1)(b), 150(1) and 150(2) of the I.T. Act, 1961, as thesamehasbeenissuedinconsequence to the order passed bythe Tribunal for the AssessmentYears 2003-04 & 2004-05?(2) Whether, on the facts andcircumstances of the case, theratio laid down by the SupremeCourt in the case of CIT vs. GreenWorld Corporation (2009) 314 ITR81 is applicable to the presentcase which is delivered ondifferent context?(3) Whether, on the facts andcircumstances of the case, theratio laid down by the ChennaiBench of the Tribunal in the casesof Sun Metal Factor (I) (P.) Ltd.vs. ACIT (2010) 124 ITD 14 andSriram Capital Ltd. vs. DCIT inITA Nos.512 & 513/Mds/2015 dated26.6.2015 is applicable to thefacts of the present case, as theabove orders are delivered ondifferent context? 12. On account of such difference in the referred questionsthemselves, the learned Third Member reframed the following twofresh questions only after hearing the learned counsel for boththe parties, for the same. 1. Whether the notice issued underSection 148 r.w.s.150(1) of the Act dated10.06.2011 for the Assessment Year 2001-02is based on any finding or direction issuedby the ITAT In I T. A. Nos. 327 &328/Mds/20I0? (decided on 31.05.2010)2. In the event of holding that thereis a finding or direction, whether the https://hcservices.ecourts.gov.in/hcservices/ notice issued u/s 148 of the Act dated 10.6.2011 is barred by limitation or not? 13. The Third Member, however, agreed with the JudicialMember and held that the reassessment for AY 2001-02 to bring totax the Capital Gains was barred by limitation. 14. Para 17 of the order passed by the Third Member (VicePresident Shri D.Manmohan) is quoted below for ready reference :-17. I have carefully considered therival submissions and perused the record. As could be noticed from the observations madeby the Tribunal, while disposing of theappeals for Assessment Years 2003-04 and2004-05, a casual observation was made todeal with the issue before them as towhether the capital gains is attracted inassessment year 2003-04 and 2004 05; butthere is no specific finding or directionthat it is assessable to tax in assessmentyear 2001-02. Even if it is assumed thatthere is a finding or direction, in myhumble opinion, the Hon'ble Madras HighCourt, in the case of M/s GoldmineInvestments (supra), has considered anidentical issue wherein it was held that inrespect of any assessment year whereinfurtherproceedingsarebarredbylimitation, the same cannot be reopenedmerely by virtue of an opinion expressed byany higher forum at a later date i.e.subsequent to the date of limitation period.In fact, the judgments of the Apex Court arealso on the same lines. Having regard thecircumstances of the case, I am of the viewthat the reopening assessment is bad in lawsince the proceedings 148 the Act are soughtto be initiated by issuing a notice theperiod limitation. In the light of the abovefindings, the reframed questions areanswered as follows:(1)The notice issued u/s 148 r.w.s 150(1) of the cannot be said to be based on anyor direction issued by the ITAT in & by theITAT in I.T.A. Nos 327 & 328/Mds/2010.(2) Even otherwise the notice issuedu/s 148 of the Act is barred by limitation.18. Now, the case will be placed beforethe Regular Bench for passing a concludingorder in accordance with the majority view. 15. Accordingly, on the ground of limitation for AY 2001-02, the Tribunal held in favour of the Assessee by a majority of2:1 that the reassessment could not be made for this year tobring to tax, the said transaction of sale of flats by theAssessee. 16. It is also brought to our notice that the Tax Appealsfiled by the Revenue for the Assessment Years AY 2003-04 and AY2004-05 viz., T.C.A.Nos.1230 and 1231 of 2010, however, werewithdrawn by the Revenue on 28.01.2016 on account of low taxquantum below Rs.20 lakhs as per Central Board of Direct TaxesCircular No.21/2015 dated 10.12.2015, laying down litigationpolicy that if the Revenue stake is than the prescribed limit ofRs.20,00,000/-, vide order dated 28.01.2016, the appeals filedin High Court may be withdrawn, leaving the questions involvedopen for consideration. 17. Thus these appeals for AY 2003-04 and AY 2004-05 asdecided by the learned Tribunal holding that no capital gain taxwas leviable in these years became final with the withdrawal ofthe appeals by the Revenue in High Court under Section 260A,which were dismissed as withdrawn vide order dated 28.01.2016passed by this Court before the filing of the present appeal,TC.A.No.788 of 2016 for AY 2001-02, which was filed on26.08.2016. However, those orders of Tribunal could not be saidto have merged with the order of High Court dated 28.01.2016,permitting such withdrawal of appeal as per CBDT Circular andleaving the questions open for consideration. 18. The present appeal was thereafter filed before thisCourt on 26 August 2016, for AY 2001-02, raising the followingsubstantial questions of law, for our consideration.1. Whether the notice issued u/s 148r.w.s. 150(1) the Act dated 10.6.2011 forthe assessment year 2001-02 is based on anyfinding or direction issued by the IncomeTax Appellate Tribunal in ITA Nos.327 &328/Mds/2010? 2. Whether on the facts andcircumstances the case the Tribunal wasright and justified in holding that thenotice u/s 148 was barred by limitationwithout noting that the time limit wasavailable to issue such notice in view ofthe provisions contained in section 150(2)of the Income Tax Act.3. Whether on the facts andcircumstances of the case the Tribunal erredin holding that notice issued u/s 148 is beyond the time limit specified in section149 overlooking the provisions contained insection 150 which begins with non obstanteclause? 4. Whether on the facts and in thecircumstance of the case the Tribunal failedto note that the order which is the subjectmatter of appeal order dated 31.5.2010 wasmade on 30.3.2006 (AY 2003-04) and on28.12.2006 (AY 2004-05) and at that point oftime, time limit for re-opening of AY 2001-02 was very much available that is up to 31.3.2008. 5. Whether on the facts andcircumstances of the case the Tribunalfailed to see the applicability of section150(2) whereas the said sub-section speaksabout the order which is subject matter ofappeal that is the assessment orders dated30.3.2006 (AY 2003-04) and 28.12.2006 (AY2004-05) which were subject matter ofTribunal order and the Assessing Officer hadtime to issue notice u/s 148 of A.Y. 2001-02on such date? 19. When the present appeal was taken up today by us foradmission, the learned counsel for the Assessee, Mr.Ashok Pathy,submitted that even the present appeal is liable to be withdrawnby the Revenue, as the tax effect in the present case is alsoless than the prescribed limit which is now Rs.One Crore as perthe Central Board of Direct Taxes vide Circular No.17/2019 dated8 August 2019. However, Mr.Swaminathan, learned counsel for theRevenue submitted that he has instructions to argue the matteron merits and he is not instructed to withdraw the presentappeal and therefore, he may be permitted to make submissions onmerits. 19. When the present appeal was taken up today by us foradmission, the learned counsel for the Assessee, Mr.Ashok Pathy,submitted that even the present appeal is liable to be withdrawnby the Revenue, as the tax effect in the present case is alsoless than the prescribed limit which is now Rs.One Crore as perthe Central Board of Direct Taxes vide Circular No.17/2019 dated8 August 2019. However, Mr.Swaminathan, learned counsel for theRevenue submitted that he has instructions to argue the matteron merits and he is not instructed to withdraw the presentappeal and therefore, he may be permitted to make submissions onmerits. 20. Since withdrawal of the appeal is a matter to bedecided by the party itself, the Court cannot naturally insistupon the withdrawal of the appeal and therefore, we have allowedthe learned counsel for the Revenue and the learned counsel forthe Assessee to address the Court on the merits of the case also. 21. Mr.M.Swaminathan, learned Senior Standing Counsel forthe Revenue assailing the impugned orders of Tribunal both forAY 2001-02 and AY 2003-04 and AY 2004-05, urged that by the twosets of orders passed by the Tribunal for these years, theAssessee will go away Scot Free without any tax impositionunder the head 'Capital Gain' despite its own admission of such Capital Gains Tax Liability, in the return of income filed forAY 2003-04 and 2004-05. He submitted that by a change of standbefore the learned Income Tax Appellate Tribunal in the appealsfor AY 2003-04 and AY 2004-05, which was decided on 31 May 2010,though this issue raised was only of Fair Market Value and notof the Capital Gains Tax Liability itself, the Assessee got therelief on a wholly wrong premise before the learned Tribunal whoheld that no capital gain tax liability was attracted in AY2003-04 and AY 2004-05, whereas the sale of flats had takenplace only in March 2003 and thereafter, while on the otherhand, for AY 2001-02, by raising the ground of limitation forinvoking the reassessment proceedings, to bring to tax the saidtransactions in that year also, the Assessee succeeded beforethe learned Tribunal and despite the difference of opinion inthe Members of Tribunal and therefore, the Revenue isconstrained to argue the present appeal for AY 2001-02 on meritsand submit before the Court that the Assessee, by this deviousmethod can go Scot free or tax free on the taxable event whichhad admittedly had taken place in the present case and on theown admission of the Assessee itself in the Returns filed by it,the 'Capital Gains Liability' was admitted by the Assessee andthe only issue was raised about Fair Market Value to be adoptedfor computing the capital gains tax liability for AY 2003-04 andAY 2004-05. 22. Per contra, the learned counsel for the AssesseeMr.Ashok Pathy submitted that the learned Tribunal was justifiedin holding that the reassessment could not be made for AY 2001-02, as there was no specific direction of the learned Tribunalin the order dated 31 May 2010, to levy Capital Gains Tax in AY2001-02, while they dealt with the appeal for the AY 2003-04 andAY 2004-05 and therefore, subsequently, the learned Tribunal,including the Third Member opinion, had rightly held that theassessment was time barred for AY 2001-02, under the impugnedreassessment notice under Section 148 of the Act issued on10.06.2011. 22. Per contra, the learned counsel for the AssesseeMr.Ashok Pathy submitted that the learned Tribunal was justifiedin holding that the reassessment could not be made for AY 2001-02, as there was no specific direction of the learned Tribunalin the order dated 31 May 2010, to levy Capital Gains Tax in AY2001-02, while they dealt with the appeal for the AY 2003-04 andAY 2004-05 and therefore, subsequently, the learned Tribunal,including the Third Member opinion, had rightly held that theassessment was time barred for AY 2001-02, under the impugnedreassessment notice under Section 148 of the Act issued on10.06.2011. 23. This is how a Catch 22 situation has arisen in thepresent case and despite the admission of the capital gain taxliability by the Assessee before the Revenue authorities, whereit was raising the question only on the Fair Market Value to betaken as the sale value on the sale of flats by the Assessee,which the Assessee secured under the Joint Venture Agreementwith M/s.Doshi Builders, only on the technical ground oflimitation, the Assessee in the present AY 2001-02 seekswithdrawal of the present appeal by the Revenue on the ground ofRevenue stakes involved and put an end to the matter forAssessment Year, AY 2001-02 also. upon perusal of records, we are not inclined to accept thesubmissions made by the learned counsel for the Assessee,Mr.Ashok Pathy. On the contrary, we deprecate the change ofstand by a complete 'U' Turn taken by the Assessee before thelearned Tribunal while arguing the appeals for AY 2003-04 and AY2004-05, which resulted in a completely favourable order to themon 31 May 2010. In our considered opinion, the learned Tribunalcompletely fell into error in passing the order dated 31.05.2010and holding that no Capital Gains Tax was leviable in AY 2003-04and AY 2004-05 and missed the basic facts altogether that theywere dealing with Capital Gains Tax Liability in respect of saleof flats by Assessee Company and not on the transfer of land forJoint Development in December 2000. 25. We are rather pained by the manner in which the learnedTribunal dismissed even the Miscellaneous Petition also filed bythe Revenue, despite bringing the said mistake to the notice ofthe learned Tribunal, about the said illegal and mischievouschange of stand by the Assessee that sale of flats did notattract 'Capital Gains Tax Liability' for AY 2003-04 or AY 2004-05 but for AY 2001-02 only. Having not raised this issue beforethe learned CIT (Appeals) who passed the order dated 22.07.2008,for AY 2003-04 and AY 2004-05, the Assessee could not have takenthis stand before the Tribunal and the learned Tribunal insteadof remitting the matter back to learned CIT (Appeals), chose togrant the complete relief to the Assessee on this ground alone,and even dismissed the Miscellaneous Petition Nos.173 and174/Mds/2010 filed by the Revenue on 27.10.2010 in a quickresponse, on 18.02.2011. The said order dated 18.02.2011rejecting the Miscellaneous Petition filed by Revenue is quotedbelow :-PER HARI OM MARATHA, JUDICIAL MEMBER:These miscellaneous petitions have beenfiled by the Revenue in respect of theTribunal order dated 31.5.2010 in S.P No20/Mds/2010 & ITANO 327 & 328/Mds/2010. forassessment years 2003-04 and 2004-05. 2. The Revenue seeks the recall of theentire order for fresh consideration. Thereasons for filing these petitions u/s 254(2) have been mentioned by the Revenue asunder:"1. From the order of the CIT(A) in Income-tax Act, 1961No.226/06-07 dated 22.07.2008 itis seen that the issue oftaxability of capital gain in theyearofaccountwasnotadjudicated by the CIT(A). Hence, 2. The Revenue seeks the recall of theentire order for fresh consideration. Thereasons for filing these petitions u/s 254(2) have been mentioned by the Revenue asunder:"1. From the order of the CIT(A) in Income-tax Act, 1961No.226/06-07 dated 22.07.2008 itis seen that the issue oftaxability of capital gain in theyearofaccountwasnotadjudicated by the CIT(A). Hence, the Hon'ble Tribunal erred inadmitting this issue instead ofremanding it back to the CIT(A).2. The assessee on its ownadmitted capital gains during theAY 2003-04 and 2004-05 in thereturn of income filed by it. Theassessee has only challenged theadoption of guideline value asFair Market Value of the property@ Rs.85 per sq ft. decided by theHon'ble ITAT 'D' Bench vide orderin Income tax Act, 1961 No2196/Mds/08 dated 26.06.2009 andnot the taxability of capitalgains. Hence, the assessee cannotclaim any grievance against itsown admission.3. From the perusal of theassessment order it is seen thatthoughtheagreementfordevelopment of the property wasentered into with builders duringthe F.Y 2000-01 the undividedshareofland(USL)wastransferred to the purchaserduring the month of March 2003 andcapital gains arising out of itstransfer was assessed during theAY 2003-04." 3. We have heard the rival submissions.The Id DR has repeated the reasons taken inthe petition, but the Id AR has objected tothe recall of the order on the ground thatthese miscellaneous petitions, if allowed,would amount to review of the Tribunal orderwhich is not permissible in law. Afterconsidering the rival submissions in thelight of the record, we are also of theconsidered opinion that these petitionscannot be allowed because the sheer perusalof the grounds mentioned in these petitionsevince that the petitioner wants us to rewrite the order by way of review which isnot permissible uls 254(2) of the Act.Consequently, there being no merit in thesemiscellaneous petitions, the same standdismissed. 26. What was obviously an error in fact, was refused to becorrected by Tribunal, by holding it to be an impermissiblereview thus. We cannot find a better case in rectification ofmistake by Tribunal absolutely permissible under Section 254(2)of the Act. Section 254(1) and (2) of the Act is quoted below for readyreference :-Orders of Appellate Tribunal.254. (1) The Appellate Tribunal may, aftergiving both the parties to the appeal anopportunity of being heard, pass such ordersthereon as it thinks fit. (1A) ... (2) The Appellate Tribunal may, at anytime within [six months from the end of themonth in which the order was passed], with aview to rectifying any mistake apparent fromthe record, amend any order passed by itunder sub-section(1), and shall make suchamendment, if the mistake is brought to itsnotice by the Assessee or the (AssessingOfficer) :Provided that an amendment which has theeffect of enhancing an assessment orreducing a refund or otherwise increasingthe liability of the assessee, shall not bemade under this sub-section unless theAppellate Tribunal has given notice to theassessee of its intention to do so and hasallowedtheassesseeareasonableopportunity of being heard:[Provided further that any application filedby the Assessee in this sub-section on orafter the 1st day of October 1998, shall beaccompanied by a fee of fifty rupees]. 27. The power under Section 254(2) also gives power toamend the order for rectification of mistake. The Provisofurther provides for amendment to be made after givingopportunity of hearing to Assessee, in case the amendment oforder will increase the tax liability of Assessee. Therefore,the scope of Sectio 254(2) is much wider and the learnedTribunal obviously fell in error in holding that it had no powerto review or recall. If there is a mistake apparent, theTribunal has the power to even recall and modify its previousorder. To err is Human, and to forgive is Divine but in betweenthese two, to correct the error is not only lawful andpermissible but also the judicious approach, which all publicauthorities, Tribunal and Courts should have. 28. Obviously, when the Assessing Authority undertook thereassessment proceeding under Section 147/148 of the Act readwith the other relevant provisions of limitations Sections149/150 of the Income Tax Act, for giving effect to theobservation of Tribunal in its order dated 31.05.2010, that taxif any could be levied on the basis of transfer of flats inDecember 2000, regarding limitation for issuance of suchreassessment notices for AY 2001-02, these reassessments werefound to be time barred by the learned Tribunal. The learnedTribunal, with great respect, has erred, in our opinion, in notgoing to the root of the matter and taking the help of therelevant provisions, including Section 150 of the Act, thelearned Tribunal ought to have directed the Assessing Authorityto take the reassessment proceedings to bring to tax theadmitted tax liability, as the admitted taxable events had takenplace to fix the taxability in the hands of the Assessee in thecorrect Assessment Year. All this happened, because the learnedTribunal, in our opinion, superficially dealt with the matterwhile passing a wholly erroneous order dated 31.5.2010,resulting in a serious miscarriage of justice against theRevenue and allowing the taxability of an admittedly taxabletransaction to be buried by wrongly allowing Assessee to take achanged and wrong stand before it in the first instance, that nocapital gains tax was leviable for AY 2003-04 and AY 2004-05 butfor AY 2001-02 and then later on holding that reassessment forAY 2001-02 was time barred. 29. We may observe here that the limitation for takingparticular action for assessment/reassessment in law isprescribed even in the Taxation Laws to ensure timely action onthe part of the Assessing Authorities, so that beyond areasonable period, the Revenue Authorities do not rake up thedead issues or old issues and cause any prejudice to theAssessee. But there is a saving provision in the limitationprovisions prescribed in the Act as well, when such reassessmentare undertaken by the Authorities concerned under the directionsof superior Tribunals or Court. The Assessing Authority,naturally gets a fresh limitation and in compliance with thedirection of the higher Tribunal or Court, it is always open tothe Assessing Authority to pass fresh assessment / re-assessmentorders. Section 150(1) of the Act is that provision under theIncome Tax Act, 1961. 30. Section 147 of the Act is the enabling provision forreassessment, which provides for reassessment where the incomeescapes assessment and Section 148 prescribes for a Notice to beissued to the Assessee for such reassessment. Section 149 of theAct provides for time limit for giving such notice. Section 150carves out an exception to Section 149 of the Act which providesfor a limitation in issuing the notice under Section 148 of the 30. Section 147 of the Act is the enabling provision forreassessment, which provides for reassessment where the incomeescapes assessment and Section 148 prescribes for a Notice to beissued to the Assessee for such reassessment. Section 149 of theAct provides for time limit for giving such notice. Section 150carves out an exception to Section 149 of the Act which providesfor a limitation in issuing the notice under Section 148 of the Act, which gives power to reassess on the escapement of incomegiven to the Assessing Authority. Section 150 also provides foraforesaid exception where such assessment is in pursuance of anorder passed in appeal or by the court. The words “or by a courtin any proceeding under any other law” were also added in thesaid provisions of Section 150 of the Act by Direct Tax Laws(Amendment) Act, 1987, w.e.f. 1-4-1989. 31. All the aforesaid relevant provisions from Sections 147to 150, to the relevant extent are quoted below for readyreference:- 147. Income escaping assessment. If the Assessing Officer has reason tobelieve that any income chargeable to taxhas escaped assessment for any assessmentyear, he may, subject to the provisions ofsections 148 to 153, assess or reassess suchincome and also any other income chargeableto tax which has escaped assessment andwhich comes to his notice subsequently inthe course of the proceedings under thissection, or recompute the loss or thedepreciation allowance or any otherallowance, as the case may be, for theassessment year concerned (hereafter in thissection and in sections 148 to 153 referredto as the relevant assessment year) :Provided that where an assessment undersub-section (3) of section 143 or thissection has been made for the relevantassessment year, no action shall be takenunder this section after the expiry of fouryears from the end of the relevantassessmentyear,unlessanyincomechargeable to tax has escaped assessment forsuch assessment year by reason of thefailure on the part of the assessee to makea return under section 139 or in response toa notice issued under subsection (1) ofsection 142 or section 148 or to disclosefully and truly all material facts necessaryfor his assessment, for that assessment year:[Provided further that the AssessingOfficer may assess or reassess such income,other than the income involving matterswhich are the subject-matter of any appeal,reference or revision, which is chargeableto tax and has escaped assessment.] 148.Issue of notice where Income has escaped assessment :- [(1)] Before making the assessment,reassessment or recomputation under section147, the Assessing Officer shall serve onthe assessee a notice requiring him tofurnish within such period, [* * *] as maybe specified in the notice, a return of hisincome or the income of any other person inrespect of which he is assessable under thisAct during the previous year correspondingto the relevant assessment year, in theprescribed form and verified in theprescribed manner and setting forth suchother particulars as may be prescribed; andthe provisions of this Act shall, so far asmay be, apply accordingly as if such returnwere a return required to be furnished undersection 139 :] [Provided that in a case— (a) where areturn has been furnished during the periodcommencing on the 1st day of October, 1991and ending on the 30th day of September,2005 in response to a notice served underthis section, and(b) subsequently a notice has beenserved under sub-section (2) of section 143after the expiry of twelve months specifiedin the proviso to sub-section (2) of section143, as it stood immediately before theamendment of said sub-section by the FinanceAct, 2002 (20 of 2002) but before the expiryof the time limit for making the assessment,reassessment or recomputation as specifiedin sub-section (2) of section 153, everysuch notice referred to in this clause shallbe deemed to be a valid notice: [Provided that in a case— (a) where areturn has been furnished during the periodcommencing on the 1st day of October, 1991and ending on the 30th day of September,2005 in response to a notice served underthis section, and(b) subsequently a notice has beenserved under sub-section (2) of section 143after the expiry of twelve months specifiedin the proviso to sub-section (2) of section143, as it stood immediately before theamendment of said sub-section by the FinanceAct, 2002 (20 of 2002) but before the expiryof the time limit for making the assessment,reassessment or recomputation as specifiedin sub-section (2) of section 153, everysuch notice referred to in this clause shallbe deemed to be a valid notice: Provided further that in a case—(a) where a return has been furnishedduring the period commencing on the 1st dayof October, 1991 and ending on the 30th dayof September, 2005, in response to a noticeserved under this section, and(b) subsequently a notice has beenserved under clause (ii) of sub-section (2)of section 143 after the expiry of twelvemonths specified in the proviso to clause(ii) of sub-section (2) of section 143, butbefore the expiry of the time limit formaking the assessment, reassessment orrecomputation as specified in sub-section (2) of section 153, every such noticereferred to in this clause shall be deemedto be a valid notice.] 149. Time limit for notice:- (1) No notice under section 148 shall beissued for the relevant assessment year,— [(a) if four years have elapsed from theend of the relevant