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2018 (5) TMI 1435 - HC - Income TaxReopening u/s 147 - AO indicated irregular claim of capital loss - Held that - the AO had noticed the assessee s claim of capital loss - had called upon the assessee to justify the same - The assessee had answered such queries of the AO upon which in the final order of assessment - the AO made no adjustment - Decided in favor of assessee
Issues:
Challenge to notice of reopening for assessment year 2012-13. Analysis: The petitioner, a private limited company engaged in diamond cutting and polishing, challenged a notice of reopening dated 31.03.2017 for the assessment year 2012-13. The original assessment under section 143(3) of the Income Tax Act, 1961, was completed on 31.03.2015 with additions to the returned income. The notice to reopen was based on the claim of a capital loss of ?11.62 lakhs by the petitioner on the sale of an industrial plot. The Assessing Officer believed that the petitioner had actually earned a capital gain of ?9.92 lakhs. The petitioner had responded to queries during the original assessment, providing detailed workings of the capital gain/loss. The petitioner's explanation included combining the cost of construction and land purchase value to justify the claimed loss. Despite this, no adjustment was made by the Assessing Officer in the final assessment order. The High Court found that the Assessing Officer had examined the issue of capital gain/loss during the original assessment proceedings. The petitioner had responded to queries and provided detailed workings of the capital gain/loss. The petitioner's explanation for the claimed loss was based on the total indexed value of the asset sold, which was higher than the sale consideration. The Assessing Officer's attempt to reopen the assessment based on the same issue was deemed impermissible as it would amount to a change of opinion. Since the Assessing Officer had already scrutinized the issue and made no adjustment in the final assessment, reopening the assessment on the same basis was not allowed. Therefore, the High Court set aside the impugned notice of reopening, allowing the petition and disposing of the matter in favor of the petitioner.
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