1. Petitioner is an assessee under the Income Tax Act (the Act) on the rolls of the first respondent. He received a sum of Rs.1,28,43,192/- in the year 2014-'15 by way of compensation for a land acquired from him for the Kochi Metro Rail Project. The petitioner, at the relevant time was under the impression that the capital gains resulting from the acquisition of the land is exigible to tax under the Act. Consequently, in the return filed by the petitioner under the Act for the assessment year 2015-'16, he has, disclosed the capital gains resulting from the acquisition of the said land and paid tax on that basis. For the said purpose, the petitioner has worked out the indexed cost of the land reckoning its fair market value as on 01.04.1981 at Rs.50,000/- per cent.

2. The first respondent issued Ext.P3 notice to the petitioner under Section 143(2) of the Act for scrutiny of the return filed by him. It is mentioned in Ext.P3 notice that the deduction claimed by the petitioner under the head 'capital gains' is the issue identified for examination. The petitioner sent a reply to Ext.P3 notice reiterating that the fair market value of the land as on 01.04.1981 was as disclosed