2014 (6) TMI 376 - HC - Income Tax

Validity of notice u/s 148 of the Act - Mere change of opinion - Claim of exemption u/s 54B of the Act - Held that - In the return filed by the assessee, the main claim was for exemption u/s 54B of the Act on sale of land the proceeds of the sale of land was invested in purchase of another agricultural land - the details has been shown in the Statement of Total income attached with the Return of income filed - in the original assessment, the claim of the assessee for exemption u/s 54B of the Act was thoroughly scrutinized. Merely because during such scrutiny, the AO did not look at the angle of denying exemption on the ground that what the assessee sold was not an agricultural land, would not permit him to reopen the assessment for denying the claim on a new ground - any such exercise on his part would be a mere change of opinion as the claim which did not present any complex facts and which was virtually the sole claim made in the return filed and examined during the course of assessment proceedings, cannot now be revisited on a new ground which may have occurred to the AO - assessee had presented all facts before the AO and on the basis of the facts during the original assessment if he was of the opinion that the claim was not acceptable for any reasons, he would have expressed such opinion - to permit him to reopen the assessment to press in service a new ground for denying the claim would not be permissible thus, the notice is set aside Decided in favour of Assessee.

Issues:
1. Challenge to notice under section 148 of the Income Tax Act, 1961 for reopening assessment for the assessment year 2009-10.
2. Validity of reasons recorded by the Assessing Officer for issuing the notice.
3. Objections raised against the notice for reopening and rejection by the Assessing Officer.
4. Examination of the claim for exemption under section 54B of the Act during the original assessment.
5. Scrutiny of details and responses provided by the petitioner during the assessment process.

Analysis:

1. The petitioner challenged the notice dated 21.8.2013 issued under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2009-10. The Assessing Officer desired to reopen the assessment within the permissible period of four years from the end of the relevant assessment year. The reasons recorded by the Assessing Officer highlighted discrepancies related to the conversion of agricultural land into non-agricultural land and subsequent sale, leading to a claim for deduction under section 54B of the Act. The petitioner objected to this notice, which was subsequently rejected by the Assessing Officer, prompting the filing of the present petition.

2. The petitioner contended that the original assessment thoroughly examined the claim for exemption under section 54B of the Act concerning the sale of land that was converted into non-agricultural land. The petitioner argued that all necessary details were provided during the assessment process, including the conversion process and the reinvestment of sale proceeds in another agricultural land. The petitioner emphasized that the Assessing Officer had already scrutinized and accepted the claim for exemption under section 54B during the original assessment. Therefore, reopening the assessment based on a new ground, not previously considered during the thorough scrutiny, would amount to a mere change of opinion and would not be permissible under the circumstances.

3. The court noted that the petitioner had substantiated the claim for exemption under section 54B with detailed responses and documentation during the original assessment. The Assessing Officer had the opportunity to examine the claim in depth and had accepted it after due consideration. Revisiting the claim on a new ground, especially when the original assessment had thoroughly scrutinized the same claim, would not be justified. The court held that allowing the Assessing Officer to reopen the assessment based on a new ground would be impermissible, as it would essentially be a change of opinion rather than a valid reason for reassessment.

4. Consequently, the court quashed the impugned notice dated 21.8.2013, as the original assessment had adequately examined the claim for exemption under section 54B of the Act, and the Assessing Officer had accepted the claim after thorough scrutiny. The court did not delve into the validity of the reasons recorded by the Assessing Officer for believing that income chargeable to tax had escaped assessment. The petition was allowed and disposed of accordingly, in favor of the petitioner.

← Previous Next →