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2013 (6) TMI 518 - AT - Income TaxRe opening of assessment - addition of treatment under the income of other source by the AD as against income from house property as offer by assessee - Held that - AO reopened the assessment and issued notice u/s 148 on the same material which was placed before him during the original assessment u/s 143(3). AO raised specific queries pertaining to the amounts received from PVR Ltd. and its treatment by assessee as income from house property. The AO concluded the original assessment by considering the same as income form house property. Subsequently, on the same material the AO recorded satisfaction u/s 147 and issued notice u/s 148 which is clearly a change of opinion and hence, CIT(A) rightly held that issuance of notice u/s 148 is bad in law. Against revenue.
Issues Involved:
1. Validity of reopening proceedings under Section 147/148 of the Income Tax Act. 2. Classification of income as "Income from House Property" vs. "Income from Other Sources." Detailed Analysis: Issue 1: Validity of Reopening Proceedings under Section 147/148 The Revenue challenged the annulment of the assessment under Section 148 by the CIT(A), asserting that the reopening proceedings under Section 147 were valid and lawful. The Assessing Officer (AO) reopened the case based on the belief that the income had escaped assessment due to incorrect classification by the assessee. The AO's belief was that the income should have been classified under "Income from Other Sources" instead of "Income from House Property," leading to a wrongful claim of a 30% deduction under Section 24 of the Act. The Tribunal noted that the AO had acted on the same material available during the original assessment proceedings under Section 143(3). The Tribunal observed that there was no new information or material before the AO to justify the reopening. The CIT(A) had rightly concluded that the reopening was merely a "change of opinion," which is not permissible under the law. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO had not gathered any new incriminating material before issuing the notice under Section 148. The Tribunal also highlighted that the reopening was influenced by an audit objection, which the AO initially did not accept, indicating that the reassessment was not justified. Issue 2: Classification of Income The Revenue contended that the income received from PVR Ltd. should be classified as "Income from Other Sources" rather than "Income from House Property." The AO argued that the agreement between the assessee and PVR Ltd. was not a typical rent agreement but an "Operation and Management Agreement," which did not establish a lessor-lessee relationship. The AO relied on precedents from the Hon'ble Supreme Court and various High Courts to support this classification. The Tribunal, however, found that during the original assessment proceedings, the AO had specifically inquired about the nature of the income received from PVR Ltd. and had accepted the assessee's classification of this income as "Income from House Property." The Tribunal agreed with the CIT(A) that the AO's subsequent action to reopen the assessment on the same material constituted a change of opinion. Consequently, the Tribunal did not find it necessary to adjudicate the substantive issue of income classification, as the reopening itself was held invalid. Conclusion: The Tribunal dismissed the appeals of the Revenue, upholding the CIT(A)'s decision that the reopening of the assessments under Section 148 was invalid due to it being a change of opinion on the same material. The Tribunal did not address the merits of the income classification issue, given the invalidity of the reopening proceedings.
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