2017 (1) TMI 1376 - HC - Income Tax

Reopening of assessment - addition on LTCG - Held that - Considering the material produced by the petitioner assessee, the Assessing Officer framed the assessment under Section 143(1) read with Section 147 of the Act and it appears that addition of ₹ 1,66,997/- was made to the total income of the petitioner assessee towards long term capital gain. Thereafter, again reassessment proceedings have been initiated on the very ground doubting the genuineness of the bills, vouchers etc. for cost of improvement and doubting the long term capital gain claimed by the petitioner assessee. It does not appear that there is any further material collected by the Assessing Officer after the assessment under Section 143(3) read with Section 147 of the Act was framed, and therefore, the impugned reopening is nothing but change of opinion by the successor Assessing Officer - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment under Section 148 of the Income Tax Act, 1961 for Assessment Year 2011-12 based on alleged escapement of income chargeable to tax.

Analysis:
The judgment involves two petitions (Special Civil Application No.13995/2016 and Special Civil Application No.13997/2016) heard together concerning the reopening of assessments for the Assessment Year 2011-12 under Section 148 of the Income Tax Act, 1961. The petitioner, an assessee, challenged the impugned notices dated 18/01/2016 and 14/12/2015 seeking to quash and set aside the notices alleging that the income chargeable to tax had escaped assessment. The petitioner declared income from capital gains and other sources, specifically related to the sale of ancestral land. The original return of income was revised, and the assessment was completed under Section 143(3) read with Section 147 of the Act after scrutiny. Subsequently, the Assessing Officer issued notices under Section 148 to reopen the assessments based on doubts regarding expenses incurred and long-term capital gains claimed by the petitioner.

The petitioner contended that the reassessment was impermissible as the Assessing Officer was merely changing opinion without any new material. The petitioner argued that the original assessment already considered the expenses and capital gains in detail, and no additional information was gathered post that assessment. The petitioner relied on previous court decisions to support the claim that reassessment solely based on the same material is not allowable under law. The revenue, represented by an advocate, opposed the petitions, asserting that the reassessment was justified due to doubts regarding the genuineness of expenses and within the statutory period of four years.

After considering the arguments and the material on record, the Court found that the reassessment was indeed a change of opinion by the Assessing Officer without any new material to support the reopening. The Court noted that the original assessment and subsequent reassessment were based on the same information, leading to the conclusion that the reassessment was impermissible. Consequently, the Court quashed and set aside the impugned notices and reopening of assessments for the Assessment Year 2011-12. The Court ruled in favor of the petitioner, stating that the reassessment was unjustified solely on the grounds of change of opinion without fresh material, as established by legal precedents.