2012 (7) TMI 93 - AT - Income Tax

Validity of second reopening of assessment - capital gain on sale of two plots of land - assessment reopened firstly on 27.9.2002 on the ground that the assessee has made certain deposits which comes from sale proceeds of plots, but while completing the reassessment, no addition is made either under the head capital gain or u/s 68 - Held that - In present case, after almost 1 years, AO intended to reopen the assessment again for the same transaction after having recorded reasons that the assessee has earned capital gain on transfer of two plots of land. When the Assessing Officer has already applied his mind while framing the reassessment consequent to the first reopening and did not make addition under the relevant head. Therefore, he cannot reopen the assessment again for the same reason by simply making changes in the format of the reasons recorded without looking to the fact that the transaction for which he wants to form a belief is the same. Therefore, second reopening was done only on account of change of opinion which is not permissible under the law. Accordingly, the reassessment orders framed consequent to issuance of notice u/s 148 are hereby annulled and additions made therein are also deleted - Decided in favor of assessee

Summary

Issues:
Valuation of land in Civil Lines area as on 1.4.1981, Fair market value consideration, Applicability of relevant cases, Acceptance of valuation report, Validity of reopening u/s. 147/148, Addition under section 2(22)(e) of the Income Tax Act, 1961.

Valuation of Land in Civil Lines Area:
The appeal raised concerns about the valuation of land in the Civil Lines area on 1.4.1981. The appellant argued that the valuation at Rs. 0.25 per square meter was incorrect, emphasizing the location on the main highway and the fair market value concept. Additionally, the appellant highlighted the relevance of similar cases in the same locality and the applicability of principles from a specific case, Dr. Milan Mukherjee. The appellant also contested the failure to adopt the valuation report submitted by an approved valuer, asserting that the report should have been used for calculating capital gains.

Validity of Reopening u/s. 147/148:
The judgment addressed the validity of reopening the assessment under section 147/148 of the Income Tax Act, 1961. The appellant challenged the second reopening, arguing that it amounted to a change of opinion by the Assessing Officer. The court considered the grounds for the initial reopening and subsequent reassessment, noting that no additions were made for capital gains in the first reassessment. The court concluded that the second reopening was based on the same transaction and, therefore, constituted a change of opinion, which is impermissible under the law. Consequently, the court annulled the entire assessment as the second reopening was deemed invalid.

Addition under Section 2(22)(e) of the Income Tax Act, 1961:
The judgment also dealt with the addition of Rs. 7,50,000 under section 2(22)(e) of the Income Tax Act, 1961. The appellant contested this addition, which was confirmed by the CIT(A). However, the court found the order of the CIT(A) to be flawed both in facts and in law. Ultimately, the court annulled the reassessment orders and deleted the additions made, thereby allowing the appeals of the assessees.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented, and the court's findings regarding the valuation of land, the validity of reopening the assessment, and the addition under section 2(22)(e) of the Income Tax Act, 1961.