2021 (1) TMI 473 - AT - Income Tax

Reopening the assessment u/s 147 - As argued reopening an assessment is without jurisdiction and is merely based on a change of opinion as the appellant had disclosed fully and truly all the material facts at the time of original assessment made - AO has reopened the case on the basis of audit objection - disallowance of deduction u/s 54F - HELD THAT - We find that the assessee had filed before the AO a written submission dated 29.11.2010 containing inter alia a detailed note on exemption claimed u/s 54F and 54EC along with supporting documents. The said written submission was filed in the office of the AO on 29.11.2010 as evident from the stamp mark. It is not disputed by the Ld. DR. Also as per the purchase agreement of the residential property and Index No. II, which were filed before the AO during the course of original assessment proceedings, the agreement is for the purchase of residential property comprising of 6700 sq. ft. and 400 sq. ft. Thus it is evident that the appellant had purchased a residential property i.e. House No. 1057 of 6700 sq. ft. and House No. 1059 of 400 sq. ft. along with the land appurtenant thereto and claimed deduction u/s 54F against the sale of long term shares. The consistent view is that even after amendment of section 147 (w.e.f. 01.04.1989) mere change of opinion does not confer jurisdiction on the Assessing Officer to initiate proceedings for re-assessment merely by resorting to Explanation 1 to that section on the basis of change of opinion. Where, on the same material, the succeeding officer wants to take a different view than taken by the predecessor Assessing Officer and wants to take action u/s 147, such action cannot be sustained because the view taken by the subsequent officer is nothing but a change of opinion. Thus mere change of opinion by Assessing Officer cannot be a ground for reassessment and that amendment of section 147 w.e.f. 01.04.1989 has not altered the position- the Assessing Officer must have reason to believe that income has escaped assessment As the assessee in the instant case disclosed all the primary facts necessary for assessment of its case to the Assessing Officer a mere change of opinion by the AO in the instant case cannot be a ground for reassessment. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of reopening the assessment under Section 147 of the Income Tax Act.
2. Justification of exemption claimed under Section 54F of the Income Tax Act.
3. Accuracy of interest charged under Section 234B of the Income Tax Act.

Detailed Analysis:

1. Legality of Reopening the Assessment under Section 147:
The appellant contended that the reopening of the assessment by the Assessing Officer (AO) under Section 147 was illegal, bad in law, and based merely on a change of opinion. The AO initially completed the assessment under Section 143(3) and later reopened it within four years, citing that the exemption claimed under Section 54F was irregular. The appellant argued that all material facts were fully and truly disclosed during the original assessment. The Tribunal found that the assessee had indeed submitted detailed documentation and explanations regarding the exemption claimed under Section 54F during the original assessment. The Tribunal held that the reopening was based on a mere change of opinion, which is not permissible under the law. The Tribunal quashed the reopening under Section 147, citing the principle that mere change of opinion does not confer jurisdiction to reopen an assessment.

2. Justification of Exemption Claimed under Section 54F:
The appellant claimed an exemption of ?5,70,45,771 under Section 54F for the purchase of a residential property. The AO restricted the exemption to ?57,04,578, arguing that the property primarily consisted of agricultural land with only a small residential house. The appellant provided evidence that the residential property included a main house of 6700 sq. ft. and an outhouse of 400 sq. ft., totaling 7100 sq. ft. The Tribunal examined the purchase agreement and other documents, confirming that the property purchased was indeed a residential property with the stated area. The Tribunal found that the appellant had correctly claimed the exemption under Section 54F and that the AO's restriction was unjustified.

3. Accuracy of Interest Charged under Section 234B:
The appellant challenged the interest charged under Section 234B, contending that the interest amount should be ?45,37,227 instead of ?86,48,016. However, since the Tribunal quashed the reopening of the assessment, the issue of interest under Section 234B became academic and was not further addressed in the judgment.

Conclusion:
The Tribunal allowed the appeal, quashing the reopening of the assessment under Section 147 and confirming the appellant's entitlement to the exemption claimed under Section 54F. The issue of interest under Section 234B was rendered academic due to the decision on the jurisdictional issue. The judgment emphasized that a mere change of opinion does not justify reopening an assessment and upheld the importance of full and true disclosure of primary facts by the assessee.