2021 (6) TMI 242 - AT - Income Tax

Reopening of assessment u/s 147 - calculation of capital gain, wherein the consideration of the sale of the property in question was taken less than the guideline value - HELD THAT - It appears that in the original assessment order the Ld. A.O had verified and examined the facts and documents and accordingly given its opinion on the facts. In fact the claim of exemption under section 54B of the Act was denied by the Learned AO in the original assessment proceeding on the premise that the new asset being the agriculture land was purchased by the appellant on 22.03.2011 i.e. after the date of filing of return under section 139(1) of the Act. Ultimately the issue was resolved by the CIT(A) in favour of the assessee in the appellate proceeding. But it appears that during the reassessment proceeding, on the similar issue, the AO had given his different findings. This clearly demonstrates that the matter did came for due consideration before the Learned AO and was in fact considered. When during the original assessment proceeding upon considering all aspect of the matters and upon proper application of mind the determination of amount of taxable income was made and the tax paid thereon, in the absence of any error and/or mistake being found merely for the sake of giving different opinion the learned AO is not permissible to change the earlier opinion. Neither any new material and/or information has been brought by the learned AO for reopening of assessment. When reopening has been done on the same set of facts/documents and/or information is by the Ld. AO in the instant case the same cannot be indulged which would amount to give premium to the authority exercising quasi-judicial function to take benefit of its own wrong. Apart from that while reopening no allegation was made by the learned AO of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment which is the primary condition to be fulfilled for reopening of assessment beyond 4 years from the end of the relevant assessment year as stipulated by the statutory provisions, the reopening cannot be said to be justified at all. The same, in our considered opinion is merely a change of opinion and therefore bad in law, void ab initio and without any jurisdiction and hence liable to be quashed. Thus in the absence of any new material which can lead to reassessment proceedings by the Ld. A.O particularly when the original assessment u/s. 143(3) of the Act was completed upon due consideration of the relevant materials made available by the assessee for adjudication of the same issue involved therein, we find no justification in such reassessment initiated by Ld. A.O which has rightly been considered in its proper perspective by Ld. CIT(A) - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment based on calculation of capital gain - Maintainability of reopening assessment beyond 4 years - Change of opinion - Failure to disclose material facts - Validity of reassessment proceedings.

Analysis:
The appeal pertains to the reopening of assessment by the Revenue for Assessment Year 2010-11 based on the calculation of capital gain arising from the sale of a property. The Revenue reopened the assessment under section 147 of the Income Tax Act, issuing a notice under section 148 after the expiry of four years from the end of the assessment year. The primary contention raised was the maintainability of the reopening, as the notice did not mention any failure on the part of the assessee to disclose all material facts necessary for assessment, a statutory requirement for reopening beyond four years. The assessee argued that since this condition was not fulfilled, the entire proceeding was void ab initio. Additionally, the assessee highlighted that the issue of capital gain had already been examined during the original assessment under section 143(3) of the Act, where a claim for deduction under section 54B was disallowed. The assessee contended that the reassessment was a change of opinion and not based on any new material.

During the hearing, both parties presented their arguments, with the Revenue relying on the order passed by the Assessing Officer (AO) under section 148, while the assessee emphasized the order by the Commissioner of Income Tax (Appeals) [CIT(A)]. The Tribunal considered the facts, including the original assessment order, the reassessment, and the appellate order. It was observed that the AO had already examined the issue of capital gain and deduction under section 54B during the original assessment. The CIT(A) had resolved the matter in favor of the assessee, but the AO gave different findings during the reassessment, indicating a change in opinion without any new material.

The Tribunal referred to legal precedents, including the case of CIT v. Kelvinator India Ltd., and held that reopening based on the same set of facts without disclosing failure to disclose all material facts is unjustified. The Tribunal also cited the case of Lucas TVS Limited, emphasizing that the reassessment without new material and solely based on a change of opinion is invalid. Consequently, the Tribunal found the reassessment proceedings initiated by the AO to be without jurisdiction, void ab initio, and quashed the reopening of the case. As a result, the appeal of the Revenue was dismissed, affirming the order in favor of the assessee.

In conclusion, the Tribunal upheld the CIT(A)'s decision, emphasizing the importance of fulfilling statutory requirements for reopening assessments and highlighting that reassessments based solely on a change of opinion without new material are not valid. The judgment serves as a reminder of the legal principles governing the reopening of assessments beyond the prescribed time limits and the necessity of disclosing all material facts for such actions to be justified.