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TMI Blog2020 (6) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of reassessment. In the overall view of the matter, we are convinced that this is a case of mere change of opinion. The law in this regard is well settled as explained in the case of CIT vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] .The impugned notice is hereby quashed and set aside. - Decided in favour of assessee. - R/Special Civil Application No. 18355 of 2018 - - - Dated:- 16-3-2020 - HONOURABLE MR. JUSTICE J.B. PARDIWALA AND HONOURABLE MR. JUSTICE BHARGAV D. KARIA Mr B S Soparkar for the Petitioner Mr. Varun K. Patel for the Respondent ORAL JUDGMENT PER: HONOURABLE MR. JUSTICE J.B. PARDIWALA 1. Rule returnable forthwith. Mr. Varun K. Patel, the learned senior standing counsel, waives service of notice of rule for and on behalf of the Revenue 2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs; (a) Quash and set aside the impugned notice at Annexure-A to this Petition; (b) Pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the notice at Annexure-A to this petition an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold share of land to 15 purchasers of flat ₹ 10 Lakhs at ₹ 1,50,00,000/- was sold. The total cost of land was ₹ 9,11,00,000/- out of which the land valued at ₹ 1,50,00,000/- was sold, therefore, the closing value of land was required to be ₹ 7,61,00,000/- (91100000-15000000) against which the assessee had shown the value of closing stock at ₹ 6,00,000/- on the basis of valuation of its site supervisor. 3. Analysis of information collected/received From the balance sheet, Form No.3CD, profit and loss account and submission of assessee in respect of valuation of closing stock revealed that the assessee had claimed an expenditure of ₹ 9,11,00,000/- on account of purchase of land. The assessee had shown income of ₹ 6,50,09,501/- as sales. The sales income has been bifurcated in two parts viz. (I) sales (1) termed as sale sales of flats 15 flats @ 10,00,000 each totaling to ₹ 1,50,00,000/- (I) sales (ii) termed as construction income of ₹ 5,00,09,501/- in respect of 36 flats. In the notes forming part to the 3CD report, it has been mentioned by that revenue from the construction is recognized when the construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has shown the closing stock at ₹ 6,22,13,206/- as on 31.03.2011. But , however, the assessee has not mentioned anything under the head 'work-in-progress' The value of closing stock was calculated based on the certificate of the site supervisor. On the basis of the document with respect to sale of flat no.702, it is seen that the assessee is executing two deeds (I) one related to sale of proportionate share of land at ₹ 10 Lakh and the other is related to construction cost at ₹ 32 lakh. So, accordingly, the assessee had sold share of land to 15 purchasers of flat @ 10 lakhs valuing for ₹ 1,50,00,000/-. Further the assessee had claimed an expenditure of ₹ 9,11,00,000/- being the cost purchase of the land. Therefore, after taking into consideration the assessee's working of sale of deeds i.e. one related to sale of proportionate share of land, the closing stock of the land was required to be ₹ 7,61,00,000/- (9,11,00,000-1,50,00,000). Against this, the assessee has shown the closing stock at ₹ 6,00,00,000/- as per the valuation given by the site supervisor. By this, the assessee has undervalued the closing stock by ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of provision of section 147 /151 to the facts of the case. In this case, return of income was filed for the year under consideration and regular assessment u/s.143(3) was made on 11.02.2014. Since 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceeding u/s.147 are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraph 2 to 6). I have carefully considered the assessment records containing the submission made by the assessee in response to various notices issued during the assessment /re-assessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the year under consideration. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same are rejected and filed. 4.4 Being dissatisfied with the action on the part of the Assessing Officer in reopening the assessment, the writ applicant is here before this Court with the present writ application. 4.5 Mr. B.S. Soparkar, the learned counsel appearing for the writ applicant submitted that the impugned notice under Section 148 of the Act dated 28th March, 2018 is beyond the period of four years from the end of the relevant assessment year. According to Mr. Soparkar, all the necessary information had been furnished before the Assessing Officer for the purpose of scrutiny assessment and there was no failure on the part of his client to disclose fully and truly all the material facts relevant for the purpose of assessment. Mr. Soparkar would submit that the assumption of jurisdiction on the part of the Assessing Officer under Section 147 of the Act could be termed as one without any authority of law. Mr. Soparkar also pointed out that the assessment is sought to be reopened on the basis of the audit objection and not on the basis of the formation of any belief on the part of the Assessing Officer that any income chargeable to tax had escaped assessment. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer by the audit party and the Assessing Officer of his/her application of mind finds that the ground is valid, reopening of assessment cannot be quashed merely because such ground was brought to the notice of the Assessing Officer by the audit party. In this context, even the counsel for the petitioner was unable to dispute that the question of depreciation require re-examination since the question whether the asset for which the depreciation was claimed was put to use before 30th September of the year under consideration, and therefore, whether full depreciation at the specified rate during the year under consideration was allowable. 4.7 Mr. Patel, thereafter, invited our attention to Page-24 of the paper-book. Page-24 of the paper-book is the trading account ended on 31st March, 2011. Referring to the document of trading account, he pointed out that the purchase price of the land is ₹ 9,11,00,000/-. By sales, the total is shown at ₹ 6,50,09,501/-. The closing stock has been shown at ₹ 6,22,13,506/-. According to Mr. Patel, from the balance-sheet Form No.3CD, i.e, the tax audit report, the assessee had claimed an expenditure at ₹ 9,11,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. However, we are not able to accept the submission of Mr. Patel that the case is not one of mere change of opinion. We take notice of the fact that the sample copy of the document in respect of the sale of Flat No.702 in favour of one Shri Rajesh Panchori was already on record. If it is the case of the revenue that the reassessment is on the basis of the materials which came to be noticed, for the first time, through the sample copy of the document, then we are afraid, the same sample copy of the document was very much before the Assessing Officer during the time of scrutiny assessment. Besides the same, the only ground on which the assessment is sought to be reopened is the under valuation of the stock to the extent of ₹ 1,60,00,000/-. It appears that the assessee had furnished all the necessary details with regard to the valuation of the stock. The stock certificate of the valuation issued by the site supervisor was also on record. In the tax audit report, we find reference as regards the method of valuation. It has been stated therein that the assessee is a developer and builder . The assessee is in the business of construction and sale of flats, buildings, land etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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