2021 (2) TMI 885 - AT - Income Tax

Reopening of assessment u/s 147 - non disclosure of Capital gain on sale of land - HELD THAT - In the original assessment framed under section 143(3) of the Act by the then Assessing Office categorically stated that assessee s representative submitted details, as called for and the same are tallied with the AIR information, whereas in the reason for reopening of the assessment simply stated that as per the information gathered, the assessee has sold the land of Block No.212 of Shela village for the consideration. In the original assessment framed under section 143(3) by the then Assessing Office categorically stated that assessee s representative submitted details, as called for and the same are tallied with the AIR information, whereas in the reason for reopening of the assessment dated 14.08.2015 simply stated that as per the information gathered, the assessee has sold the land of Block No.212 of Shela village for the consideration of ₹ 71,38,845/- on 14.3.2014 (This is a typographical error in the reason. The correct date is 14.3.2008. We have verified it from sale deed no.1763. It is dated 14.3.2008) vide sale deed no.1763, however, no capital gain has been shown in the return of income. When all the information and details were furnished by the assessee with regard to the information called for by the AO, the then AO satisfied that such information were tallied AIR information. If there is any capital gain arose in such sale transaction, the AO ought to have discussed and weighed such factor in the original assessment order itself. He did not do so, rather accepted the contentions and details submitted by the assessee and framed assessment under section 143(3). There is nothing to suggest that all the primary facts were not disclosed by the assessee at the time of original assessment completed u/s 143(3) of the Act nor any failure on the part of the assessee to disclose fully and truly all the material facts relevant to the assessment, which would otherwise liable to be reopened. When the AO itself stated in the original assessment that details called for by the AO in respect of AIR information are tallied, there is no room for the AO to find a reason for reopening of the assessment. In fact the assessee has not suppressed any facts. There was no new tangible materials, as discernible from the reasons recorded by him for initiation of reassessment proceedings in his hands, thus, it is a case of change of opinion of the present AO. Earlier AO who has framed original assessment under section 143(3) accepted the contentions of the assessee and recorded a finding to the effect that information submitted by the assessee are tallied with the AIR information, but due to change of incumbent, the present AO, on the same set of facts which was decided by the earlier the AO, the assessment was reopened, which is not legally permissible - Thus invoking provisions of section 147 was not valid - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening the assessment under Section 147.
2. Quantum of long-term capital gain to be assessed.

Issue-Wise Detailed Analysis:

1. Validity of Reopening the Assessment under Section 147:

The assessee filed an appeal against the order of the CIT(A) for the assessment year 2008-09. The appeal was initially complicated by the death of the assessee, necessitating the inclusion of legal heirs. The primary issue revolved around whether the reopening of the assessment was valid.

The original assessment was completed under Section 143(3) on 30.9.2010. The assessment was later reopened by issuing a notice under Section 148 on 30.3.2015, more than four years after the end of the assessment year. The reasons for reopening included the sale of land for ?71,38,845/- which was not shown as capital gain in the return of income. The assessee objected to the reopening, but the objections were rejected by the AO and the CIT(A).

The Tribunal noted that the AO had already considered the sale transaction during the original assessment and had accepted the return filed by the assessee. The Tribunal emphasized that for reopening an assessment, there must be new tangible material, which was not the case here. The original AO had tallied the AIR information with the details provided by the assessee and found no discrepancies. The Tribunal concluded that the reopening was based on a change of opinion, which is not legally permissible. Thus, the reassessment order was quashed.

2. Quantum of Long-Term Capital Gain:

The Tribunal did not delve deeply into the quantum of long-term capital gain since the primary issue of reopening the assessment was resolved in favor of the assessee. The Tribunal noted that the original AO had considered all relevant details, including the sale deed and the subsequent dispute over the sale consideration. The assessee had disclosed all material facts fully and truly during the original assessment. Therefore, the Tribunal did not find it necessary to reassess the quantum of long-term capital gain.

Conclusion:

The Tribunal allowed the appeal of the assessee, quashing the reassessment order on the grounds that the reopening of the assessment was not valid due to the lack of new tangible material and the fact that it was based on a change of opinion. The original assessment under Section 143(3) was upheld, and no further assessment of long-term capital gain was deemed necessary.