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2019 (1) TMI 395 - AT - Income TaxReopening of assessment - AO adopted the market value of the assets of EHIRC at ₹ 1,49,08,971/- and worked out the 80% value at ₹ 119,27,17,721/- - AO proposed replace book value of the assets of EHIRC with the market value of the assets of EHIRC - enhanced the value of the addition which was made in the original assessment proceeding - Held that - On perusal of the facts of the case, we note that in the reassessment proceeding the Assessing Officer has simply enhanced the value of the addition which was made in the original assessment proceeding. We find that the addition made in the original assessment proceeding has been deleted by the Tribunal. Tribunal observed that the lower authorities did not hold the assessee as engaged in the business of holding investment and the purchase of the share by it at a price less than the book value was in the course of such business giving rise to income chargeable either under section 2(24)(vi) or section 28(iv) of the Act. Tribunal has held the amount of difference of book value of the shares and the actual amount paid as non-taxable. In such circumstances, the Assessing Officer is not justified in reopening the assessment and substituting the book value by way of market value of the shares based on valuation report. The Revenue if, aggrieved can prefer appeal against the order of the Tribunal, but cannot nullify the order of the Tribunal in this manner without challenging the order before the Hon ble High Court. In our opinion, this reason itself is sufficient to hold the reassessment proceeding as invalid and, thus, we are not adjudicating the other grounds or the arguments of the parties challenging the validity of the reassessment proceeding. The ground of the appeal of the Revenue is accordingly dismissed.
Issues Involved:
1. Validity of the reassessment proceedings under section 148/143(3) of the Income-tax Act. 2. Whether the valuation report constitutes sufficient information to justify the reopening of the assessment. Issue-wise Detailed Analysis: 1. Validity of the Reassessment Proceedings Under Section 148/143(3) of the Income-tax Act: The primary issue is whether the reassessment proceedings initiated by the Assessing Officer (AO) were valid. The original assessment order dated 31/03/2004 under section 143(3) added the difference in the actual cost of acquisition of shares and their intrinsic value based on the book value of EHIRC's assets. The AO reopened the assessment on 10/01/2006, citing a valuation report determining the market value of EHIRC's assets. The reassessment proceedings led to an additional income of ?31,15,87,372/-. The Ld. CIT(A) quashed the reassessment proceedings, stating they were based on a mere change of opinion and thus without jurisdiction. The CIT(A) noted that the original assessment had already considered the book value of the assets and that reopening the assessment to consider the market value was not justified. The Tribunal upheld the CIT(A)'s decision, emphasizing that the reassessment was invalid as it was merely an attempt to enhance the assessment already nullified by the ITAT. The Tribunal noted that the original assessment had been detailed, with the AO considering the book value and the intrinsic value of the shares. The Tribunal also highlighted that the reassessment was based solely on the valuation report, which was not new information but rather an opinion. 2. Whether the Valuation Report Constitutes Sufficient Information to Justify the Reopening of the Assessment: The AO argued that the valuation report from the Department's Valuation Cell constituted new information justifying the reopening of the assessment. However, the Ld. CIT(A) and the Tribunal disagreed, stating that the valuation report was merely an opinion and not sufficient to constitute "reason to believe" for reopening the assessment. The Tribunal cited various judicial precedents, including the Hon'ble Supreme Court's decision in the case of Kelvinator of India Ltd., which held that a mere change of opinion does not justify reopening an assessment. The Tribunal also referred to the Full Bench Judgment of the Delhi High Court in CIT vs. Usha International Ltd., reaffirming that reassessment proceedings based on a change of opinion are invalid. The Tribunal concluded that the reassessment proceedings were invalid as they were based on a mere change of opinion and not on any new material facts. The Tribunal emphasized that the AO could not use section 148 to revisit or revise the original assessment, especially when the original addition had already been deleted by the Tribunal. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the reassessment proceedings. The Tribunal found that the reassessment was invalid as it was based on a mere change of opinion and not on any new material facts. The Tribunal emphasized that the AO could not use section 148 to enhance or nullify an assessment already decided by a higher appellate authority. The Tribunal also noted that the valuation report alone did not constitute sufficient information to justify reopening the assessment.
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