2021 (3) TMI 712 - AT - Income Tax

Validity of reopening of assessment u/s 147 - under-reporting of capital gains arising to Assessee on sale of immovable property having regard to the provisions of Section 50C - HELD THAT - In the instant case, it is a case of omission to consider the deemed sale consideration and to form a bonafide opinion on substitution thereof by apparent sale consideration for the purposes of assessments of capital gains in original assessment proceedings - The assessee cannot claim a vested right arising from a palpably erroneous conclusion owing to non-consideration of significant fact having direct bearing on escapement of income. If a relevant fact not examined in original proceedings on the basis of which the re-assessment proceedings are sought to be initiated and came to the light of the AO subsequent to the original assessment, the doctrine of change of opinion propounded by judicial fiat cannot act as embargo for exercise of powers under s.147 . In the instant case, it is found that while determining the capital gains the deemed sale consideration relevant to provision of Section 50C of the Act has not been seen at all. Mere production before AO of sale deed alongwith receipt of Registering Authority which encompasses some figures representing value on which stamp duty is payable will not, in the absence of anything more, necessarily amount to disclosure for the purpose presuming formation of opinion. We thus concur with the view taken by the CIT(A) and hold that where the relevant facts have been overlooked and has not taken cognizance of, resulting in escapement of chargeable income, such omission would not constitute change of opinion . In the absence of any other contention, we do not see any merit in the plea of assessee towards wrongful usurpation of jurisdiction under s.147 - Decided against assessee.

Summary

Issues involved:
Challenge to the validity of reopening assessment under section 147 of the Income Tax Act, 1961; Dispute over the addition of short term capital gains under Section 50C of the Act; Lack of jurisdiction under section 147; Application of the doctrine of 'change of opinion'; Assessment of deemed sale consideration for capital gains; Merits of the case regarding the computation of capital gains.

Validity of Reopening Assessment under Section 147:
The appeal challenged the reopening of assessment under section 147 of the Income Tax Act, alleging it to be a change of opinion on the same facts. The Appellant contended that the original assessment order was passed after due consideration of the capital gains issue, as evidenced by queries raised during the original proceedings. The Appellant cited judicial precedents to support the argument that the AO's action in invoking section 147 was arbitrary and not based on valid grounds. The Appellant also highlighted that the AO had not conducted an independent valuation of the property before substituting the deemed sale consideration for the actual sale consideration.

Application of Doctrine of 'Change of Opinion':
The Tribunal analyzed whether the AO's failure to consider the deemed sale consideration and form a legitimate opinion on its application constituted a 'change of opinion.' It was observed that the AO had not examined the issue of deemed sale consideration under section 50C of the Act during the original assessment proceedings. The Tribunal held that the doctrine of 'change of opinion' could not be invoked when the AO had not formed any opinion previously on the issue. The Tribunal emphasized that the AO's omission to consider significant facts related to the capital gains calculation did not amount to a valid formation of opinion.

Merits of the Case - Computation of Capital Gains:
The Tribunal declined to interfere with the CIT(A)'s decision, stating that the relevant facts had been overlooked during the original assessment, leading to an escapement of chargeable income. The Tribunal held that such an omission did not constitute a 'change of opinion.' No arguments were presented on the merits of why the deemed sale consideration should not be adopted in this case. Consequently, the Tribunal dismissed the appeal of the assessee, emphasizing the importance of considering all relevant facts in the assessment process.

This detailed analysis of the judgment from the Appellate Tribunal ITAT Ahmedabad highlights the key issues involved, the arguments presented by both parties, and the Tribunal's reasoning in arriving at the decision to dismiss the appeal.