Relief granted by CIT(A) accepted in one case in one year can not be challenged in other year

When relief granted by CIT(A) is accepted in one case in one year, it is not open to revenue authorities to challenge identical relief in other year

ABCAUS Case Law Citation:
ABCAUS 2997 (2019) (06) ITAT

Important Case Laws Cited/relied upon by the parties:
Union of India v. Kaumudini Narayan Dalal [2001] 249 ITR 219
CWT v. R.K.K.R. International (P.) Ltd. [2005] 198 CTR 567
Radhasoami Satsang Vs CIT [(1992) 192 ITR 321 (SC)

In the instant case, the Assessing Officer (AO) had challenged correctness of the order passed by the CIT(A) in taxing the amount under the head ‘long term capital gain’ and not under the head ‘income from other sources’  

During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee had shown long term capital gains, in respect of sale of three properties.

It was explained by the assessee that under a common memorandum of understanding, the assessee had entered into agreement with respect to 6 pieces of land, including pieces of land under consideration. The capital gain was on account of the rights so earned in respect of a part of these six properties. The requisite details in support of this stand were also furnished.

However, the Assessing Officer was of the view that the assessee did not have sufficient evidence of ownership of properties or of rights in these properties. He was of the view that since purchase deed was not shown by the assessee, the assessee could not be treated as owner of the properties in question.

The evidences given by the assesseewere rejected as unacceptable. It was also noted that the payment under the Memorandum of Understanding, which was said to reflect and evidence the rights of the assessee, were in cash and that the MoU was unregistered.

Thus rejecting the bonafides of the asset in respect of which capital gains were shown, the Assessing Officer proceeded to treat the entire amount as income from other sources.

Aggrieved, assessee carried the matter in appeal before the CIT(A). The CIT(A) noted that on common set of facts, in the immediately preceding assessment year, the AO had held that the gains on the sale of remaining three pieces of land were to be treated as capital gains, and the matter rested there.

Following his own order in assessee’s own case for the immediately preceding assessment year, the CIT(A) rejected the stand of the Assessing Officer for treating the gains in question as ‘income from other sources’, the CIT(A) held that the amount was required to be taxed as capital gains.

The Tribunal noticed that CIT(A), had merely followed his own order in assessee’s own case for the immediately preceding assessment year. The order so followed by the CIT(A) had reached finality inasmuch as the revenue authorities had not challenged this order before the Tribunal, or, for that purpose, before any other authority.

In view of the above position, the Tribunal opined that the gains on sale of properties covered by the same MoU, and extinguishment of rights coming into existence by the same MoU, had been held to be capital gains by an appellate order passed by the CIT(A), and, the matter reached finality at that.

The Tribunal noted that the Hon’ble Supreme Court had observed that that res judicata does not apply to income-tax proceedings and each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.

The Tribunal opined that the grievance of the Assessing Officer was devoid of any legally sustainable merits. Once a factual aspect of the matter is settled in one way in one particular year by way of an appellate order, and the parties have sustained that position by not challenging that order, it could not be open to the parties to challenge the same in a subsequent year. The rule of consistency holds good in this context, and the same issue cannot be reagitated.

The Tribunal also observed that the Hon’ble Supreme Court had an occasion to consider whether it is open to revenue to accept a judgment in the case of one assessee, and appeal, against the identical judgment in the case of another. Their Lordships held that such a differential treatment on the same set of facts was not permissible in law.

The Tribunal opined that it cannot be open to revenue authorities to challenge the relief granted by the CIT(A) in one case, when on identical issue the order has not been challenged in the other case, it is only elementary that when the relief granted by the CIT(A) was accepted in one case in one year, it cannot be open to the revenue authorities to challenge identical relief in the other year.

The Tribunal approved the stand of the CIT(A) and decline to interfere in the matter.

Download Full Judgment Click Here >>

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