2018 (7) TMI 1821 - HC - Income Tax

Reopening notice u/s 148 - applicability or otherwise of provisions of section 50C was not examined at all by the Assessing Officer in the assessment order passed u/s 143(3) - Held that - In this case it is not the case of the Revenue that the Assessing Officer was not aware of Section 50C of the Act at the time of passing the Assessement Order dated 26.12.2007 under Section 143. In this case the trigger to reopen assessment proceedings as recorded in the reasons is non-furnishing of copy of the sale deed by the Respondent. This has been found factually to be incorrect. Therefore once the sale deed was before Assessing Officer and enquiries were made during the assessment proceedings regarding the quantum of capital gains it must follow that the Assessing Officer had while passing the order dated 26.12.2007 under Section 143(3) of the Act had taken view on facts and in law as in force at the relevant time. Thus this is a case of change of opinion. One must not loose the sight that the reassessment proceedings are not proceedings to review of the order already been passed but only a power to reassess. As observed by the Supreme Court in CIT v. Kelvinator 2010 (1) TMI 11 - SUPREME COURT OF INDIA We must also keep in mind the conceptual difference between power to review and power to reassess .

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Section 260A of the Income Tax Act, 1961 for Assessment Year 2005-06. Question of law regarding validity of reopening notice under Section 148 of the Act based on change of opinion. Dispute over applicability of Section 50C for computation of capital gains on sale of land.

Analysis:

Issue 1: Validity of Reopening Notice
The Assessing Officer completed the regular assessment under Section 143(3) of the Act on 26.12.2007 for the subject Assessment Year. Subsequently, a notice under Section 148 of the Act was issued on 11.3.2010 seeking to reopen the assessment. The reason for reopening was the alleged escapement of income of capital gain due to the difference in valuation of land as per the sale deed and the valuation by the Stamp Duty Authority. The Respondent objected to the reopening notice as being without jurisdiction, citing it as a change of opinion since the issue was already considered in the regular assessment proceedings. The CIT(A) found merit in the objection and held the notice to be bad in law, annulling the reassessment order passed under Section 147 of the Act. The Tribunal upheld this view, emphasizing that the issue of capital gain computation was already part of the regular assessment proceedings, rendering the reopening notice invalid.

Issue 2: Applicability of Section 50C
The Revenue contended that the Assessing Officer failed to consider Section 50C of the Act while passing the original order under Section 143(3) of the Act, justifying the validity of the reopening notice. However, both the CIT(A) and the Tribunal found that the sale deed was produced during the regular assessment proceedings, and the issue of capital gains on the sale of land was subject to inquiry. The reasons for reopening did not mention the failure to consider Section 50C, but rather focused on the non-furnishing of the sale deed, which was factually incorrect. The Tribunal rejected the Revenue's argument, highlighting that the Assessing Officer had already taken a view on the matter during the original assessment, making it a case of change of opinion rather than a valid ground for reassessment.

Conclusion:
The Court dismissed the appeal, stating that the question of law proposed by the Revenue did not raise any substantial legal issue. The judgment emphasized the distinction between the power to review and the power to reassess, noting that reassessment is not meant for reviewing past orders but for addressing specific grounds. The decision underscored that in this case, the reassessment was based on a change of opinion rather than a valid reason, ultimately upholding the decisions of the CIT(A) and the Tribunal regarding the invalidity of the reopening notice and the annulment of the reassessment order.