2023 (9) TMI 262 - HC - Income Tax

Reopening of assessment u/s 147 - LTCG on sale of shares - Borrowed satisfaction of independent application of mind by AO - HELD THAT - As petitioner has disclosed fully and truly all relevant materials during the course of regular assessment in response to the notice under Section 142(1) of the Act and based upon such information the AO passed the assessment order u/s 143(3). On perusal of the material available on record, it also reveals that the assessee has disclosed the sale consideration at Rs. 39,000/- per share which is evident from the computation of the long term capital gains provided along with the return of the income. Thus the assessee has disclosed all facts truly and fully during the course of the regular assessment and therefore, there is a mere change of opinion on the part of the respondent to issue the impugned notice based upon the information received from the CIT Appeals. The respondent has issued the impugned notice on the borrowed satisfaction without application of mind contrary to the material and facts available on record and therefore such notice cannot be sustained in view of the dictum of Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT - Decided in favour of assessee.

Summary

Issues involved:
The judgment deals with a challenge to a notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2012-13, proposing to reopen the assessment. The key issues include the disclosure of all relevant materials during the regular assessment, the applicability of Section 50B of the Act, and the validity of the reasons recorded for reopening the assessment.

Disclosure of Relevant Materials:
During the regular assessment, the petitioner fully and truly disclosed all relevant materials in response to the notice under Section 142(1) of the Act. The assessment order under Section 143(3) was passed based on the information provided by the petitioner. It was observed that the petitioner had disclosed the sale consideration per share, as evidenced by the computation of long term capital gains submitted with the income tax return. The court found that there was no new material that would warrant the reopening of the assessment, leading to a mere change of opinion on the part of the respondent.

Applicability of Section 50B of the Act:
The respondent contended that the Assessing Officer did not consider the applicability of Section 50B of the Act, based on fresh material received from the file of CIT (Appeals). It was argued that the MOU between the petitioner and other parties was not presented before the Assessing Officer, leading to discrepancies in the valuation of shares. The respondent claimed that the petitioner's failure to disclose all relevant facts resulted in the belief that income had escaped assessment. However, the court found that the petitioner had indeed disclosed all relevant facts during the regular assessment, rendering the reasons for reopening the assessment invalid.

Validity of Reasons Recorded for Reopening:
The court concluded that the impugned notice was issued on borrowed satisfaction without proper application of mind, contrary to the material and facts available on record. Citing the decision of the Hon'ble Apex Court in the case of CIT Vs. Kelvinator of India Ltd., the court held that the notice could not be sustained. Consequently, the petition was allowed, and the impugned notice dated 31.03.2019, along with the order rejecting the objections, was quashed and set aside.

Final Decision:
The petition succeeded, and the impugned notice and order were quashed. The court made the rule absolute to that extent, with no order as to costs.