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TMI Blog2022 (8) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... see has furnished detailed submissions towards realizing net profit on sale of lands. In the assessment order, the AO has elaborately discussed on the sale of the impugned agricultural lands, scrutinized the documents and evidences submitted by the assessee and arrived at the findings that the profits from the sale of land being agricultural in nature are exempt from tax. Thereafter, having different opinion on the sale of land is not an agricultural land, AO again reopened the assessment, which is mere change of opinion and not permissible as per the law laid down in the case of CIT v. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] wherein, it was held that an assessment cannot be reopened on a mere change of opinion; reason to believe that the income chargeable to tax has escaped assessment is one of the conditions precedent for invoking the jurisdiction of the Assessing Officer to reopen the assessment under section 147 - The Hon'ble Supreme Court further observed that the Assessing Officer had power to re-assess but no power to review. If the concept of change of opinion is removed, review would take place in the garb of reopening of assessment. Thus, applyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed under section 143(1) of the Act accepting the return of income filed. Subsequently, the Assessing Officer has reopened the assessment and concluded the assessment under section 143(3) r.w.s. 147 of the Act dated 30.03.2013 by assessing the total income of the assessee at Rs. 1,40,79,997/-. Thereafter, again the Assessing Officer has reopened the assessment and re-concluded the assessment under section 143(3) r.w.s. 147 of the Act dated 30.03.2016 by determining the total income of the assessee at Rs. 6,24,45,621/-. 3. On appeal before the Ld. CIT(A), the assessee challenged the validity of reassessment proceedings twice passed in this case. After considering the submissions of the assessee and in view of the decision of the Hon'ble Supreme Court in the case of CIT v. Kelvinator of India Ltd. 320 ITR 561 (SC), the Ld. CIT(A) has held that the reassessment proceedings to be bad in law and accordingly the assessment order passed under section 143(3) r.w.s. 147 of the Act dated 30.03.2016. 4. Aggrieved, the Revenue is in appeal before the Tribunal. 5. We have heard the rival contentions, perused the materials available on record and gone through the orders of author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Municipalities. More over the population in these villages are less than 1000. The assessee has admitted income of Rs. 73,25,808/- on sale of 29.36 acres of land in his real estate business. It establishes that wherever lands are converted into house sites, the income realized is admitted as his business income or his capital gains as the case may be. Other lands are sold as such and the reason for this is due to personal reasons which made him and his family members to sell as such and such income derived are admitted as profit on sale of agricultural lands. From the statement of income of the assessee it is also seen that the assessee has admitted income from both agricultural and non agricultural land in his return of income claiming the profit on sale of agricultural lands as exempt and profit on sale of non agricultural as either his business income or under capital gain. 7. After considering the submissions of the assessee, the Assessing Officer has observed and held as under: 10. From the evidences filed and perusal of the records, documents produced/filed, it is clearly seen that the lands were purchased as agricultural land (Nanjai and Punjai) as per the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of India Ltd. (supra), the Ld. CIT(A) has held that the Assessing Officer has power to reassess but no power to review and by applying the ratio of the decision in the case CIT v. Kelvinator of India Ltd. (supra) the salient findings of the Ld. CIT(A) are reproduced as under: 1. That the impugned issue of profit from sale of agricultural lands was elaborately discussed in the order dated 30.03.2013 and all the relevant evidences were examined following which a view was taken. 2. That the Assessing Officer has not established the specific failure on the part of the appellant as to what 'material facts' were suppressed. 3. That an opposite view on the issue of taxability of profit from the sale of agricultural land has been on the same set of facts and evidences. 4. That the view taken in the impugned order dated 30.03.2016 tantamounts to a 'review', and a change of opinion not valid as per the law laid down by the Hon'ble Supreme Court (supra) In view of the discussion as above, I hold the reassessment proceedings to be bad in law. 10. On perusal of the first reassessment order under section 143(3) r.w.s. 147 of the Act dated 30.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the Assessing Officer to prove that the assessee has failed to furnish fully and truly all material facts to complete the assessment. In this case the Assessing Officer was not able to establish that there is failure on the part of the assessee to disclose fully and truly all materials. We, therefore, considering the entire facts and circumstances of the case, hold that the reopening is invalid beyond four years from the end of the relevant assessment year. 11.1. In this connection, in the case of Fenner (India) Ltd. v. DCIT 241 ITR 672 (Mad), the Hon'ble Jurisdictional High Court has held that the reasons recorded by the Assessing Officer did not establish even prima facie, a failure on the part of the assessee to fully and truly disclose the material fact for the assessment and accordingly quashed the notice. The head-notes of the above judgment are reproduced as under: Mere escape of income is insufficient to justify the initiation of action under section 147 of the Income-tax Act, 1961, after the expiry of four years from the end of the assessment year. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had placed before the Assessing Officer all statements, a perusal of which clearly showed that all the materials required for calculating the extent of benefits under sections 80HHC and 32AB and the actual calculation had been placed before the officer. The mistake, if any, was solely due to the mistake made by the officer and was not a mistake attributable to any failure on the part of the assessee. (b) a perusal of the statements filed by the assessee in the assessment proceedings showed that the assessee had placed before the Assessing Officer every relevant detail regarding the excise duty paid, the manner in which the payment was effected, the amounts paid through the deposit account, the amount adjusted from the Modvat account, the opening balance in the Modvat accrual account, the extent of the credit taken from that account, the extent of the amount utilised from that account, as also the closing balance as on March 31, 1989. All the information required in relation to the account had been placed before the Assessing Officer. The assessee could not have done anything more. The utilisation of the Modvat credit results in the payment of the excise duty on the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d truly all material facts necessary for its assessment for the assessment years 2003-04 and 2004-05, the notices under section 148 having been issued after the expiry of period of four years from the end of the relevant assessment years, the very initiation of proceedings under section 147 stood vitiated and could not be sustained. 11.4. In the case of CIT v. Sil Investments Ltd. 339 ITR 166, the Hon'ble Delhi High Court has observed and held as under: The assessments of the assessee for the assessment years 2001-02 and 2002-03 were reopened after four years on the ground that an amendment to section 80HHC of the Income-tax Act, 1961, had been made with retrospective effect from April 1, 1998. The conditions were not there in section 80HHC at the time when the assessee filed the returns or even the original assessments were made. The Commissioner (Appeals) and the Tribunal held that the invocation of the proviso to section 147 to be invalid and set aside the reassessments under section 147/148. On appeal: Held, dismissing the appeals, that the findings of the Tribunal was that all the relevant facts were available on record and that it could not be said that at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the conclusion that action can now be taken for reopening the assessment even if the information is wholly vague, indefinite, farfetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. The original assessment for the assessment year 1958-59 was made on the respondent after allowing deduction of a sum of Rs. 10,494 'towards interest to certain creditors. Thereafter, by a notice under section 148 of the Income-tax Act, 1961, dated March 8, 1967, served on the respondent on March 14, 1967, the Income-tax Officer sought to reopen the assessment. In his report made in February, 1967, to the Commissioner for reopening the assessment of the respondent for the assessment year 1958-59 after four years under section 147(a) of the Income-tax Act, 1961, two reasons were mentioned: (i) that M.K., who was shown to be one of the creditors of the respondent had since confessed that he was doing only name-lending; and (ii) that N.M., D.K.N., B.S. and others, whose names too were mentioned in the list of the creditors of the respondent, were known name-lenders. The respondent thereupon filed a writ petition claiming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment years, the Commissioner should be satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. The duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the Income-tax Officer of the account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw from the primary facts. If an Income-tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. The grounds or reasons which lead to the formation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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