2018 (2) TMI 2005 - AT - Income Tax

Re-opening of assessment u/s 147 - land sold was not agricultural land - HELD THAT - A perusal of the letter of the assessee filed during the course of the original assessment dated 23.12.2011 shows that the assessee has claimed the land is purely agricultural in nature. The proceedings of the Commissioner, Kundrathur, dated 27.03.2007 shows otherwise. In fact, this is an order issued by the Commissioner, to the assessee himself. The assessee has also paid the development charges in respect of the said development. This being so, we are of the view that this is a fresh evidence available to the AO which clearly shows that the re-opening is not on the basis of a change of opinion. This being so, we are of the view that re-opening is valid and uphold the same. It would also be worthwhile to mention that the assessee has not challenged the additions on merits neither before the CIT(A) nor before us. The assessee has only challenged the issue of re-opening as also the levy of interest u/s.234B - In respect of the issue of the levy of interest u/s.234B, it is found that the levy is compensatory in nature, the same is mandatory and we find no error in the levy. - Decided against assessee.

Summary

Issues:
1. Validity of reopening of assessment under Section 147 of the Income Tax Act, 1961.
2. Levy of interest under Section 234B of the Income Tax Act, 1961.

Issue 1: Validity of reopening of assessment under Section 147:
The appellant contested the Commissioner of Income Tax (Appeals)'s decision to uphold the reopening of assessment, arguing that the Assessing Officer had already verified all details during the original assessment. The appellant claimed that the re-opening was solely based on a change of opinion, which is impermissible under the law. The appellant provided a detailed reply highlighting that all relevant information had been disclosed during the original assessment. However, the Departmental Representative argued that fresh evidence showed that the land sold was not agricultural, contradicting the appellant's claim. The Tribunal noted that the Commissioner's order from 2007 and the payment of development charges by the appellant indicated that the land was not purely agricultural. Consequently, the Tribunal deemed this fresh evidence as valid grounds for reopening the assessment under Section 147, rejecting the appellant's challenge.

Issue 2: Levy of interest under Section 234B:
Regarding the levy of interest under Section 234B, the appellant contended that they had not defaulted in paying Advance Tax, which was accepted by the Assessing Officer during the original assessment under Section 143(3). The appellant argued that the reassessment under Section 147 should not be considered as a regular assessment since the original assessment was already completed without charging interest under Section 234B. The appellant claimed that they were not liable to pay interest under Section 234B in the original assessment, making the levy in the reassessment proceedings invalid. However, the Tribunal found the levy of interest under Section 234B to be compensatory and mandatory, upholding its validity. The Tribunal dismissed the appeal filed by the assessee, affirming the Commissioner of Income Tax (Appeals)'s decision.

In conclusion, the Tribunal upheld the validity of the reopening of assessment under Section 147 based on fresh evidence and confirmed the levy of interest under Section 234B as compensatory and mandatory. The appellant's appeal was dismissed, and the order was pronounced in open court on February 27, 2018, at Chennai.