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TMI Blog2024 (9) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... trade and assessing the income therefrom under the head income from business and profession . On perusal of the reasons recorded by the respondent Assessing Officer, it is clear that the provision of Section 50C is admittedly not applicable to sale of stock in trade as the same is not a capital asset and reopening the assessment based on such opinion is nothing but a mere change of opinion and as such, the impugned notice u/s 148 for reopening of the assessment for the year under consideration is not tenable. Decided in favour of assessee. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance: For the Petitioner(s) No. 1: Mr Jimi S Patel (10578) For the Respondent(s) No. 1: Mr Karan Sanghani For Mrs Kalpana K Raval (1046). For the Respondent(s) No. 2: Served By RPAD (N). ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Jimi S. Patel for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for Mrs. Kalpana K. Raval for the respondent no. 1. 2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for the respondents. 3. Havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (3) of the Act. 5.5. Thereafter the petitioner received notice dated 10.05.2019 to furnish purchase deed of sale of land, ledgere account of purchase and balance sheet which was provided by the petitioner by letter dated 17.05.2019. 5.6. The petitioner thereafter received the impugned notice under Section 148 of the Act dated 28.03.2021 after almost 6 years from the end of the Assessment Year for escapement of the income under Section 147 of the Act. 5.7. The petitioner therefore tried to file return of income pursuant to the said notice but due to some technical glitches on portal, it could not be filed within the time allowed. The petitioner thereafter was able to file return of income on 20.11.2021 declaring the same income as stated in the original return. 5.8. The respondent thereafter provided reasons for reopening of the assessment vide letter dated 28.01 2022 as under: 1. Brief details of the Assessee : Assessee is an individual bearing PAN: AAKFK1197Q and has filed return of income for A.Y. 2013-14 on 31.10.2013 declaring total income of Rs. 12,83,920/-. Assessment u/s. 143 (3) was made on 26.02.2016. 2. Brief details of information collected/received by the AO: From ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which, the case of the assessee for the A.Y. 2013-14 needs to be re-opened within the meaning of Section 147 of the IT Act. 5.9. The petitioner filed objections on 03.02.2022, which was disposed of by the respondent vide order dated 24.02.2022, justifying the notice for reopening of the assessment. Being aggrieved, the petitioner has preferred this petition. 6. Learned advocate Mr. Jimi Patel for the petitioner submitted that the impugned notice under Section 148 of the Act is issued beyond the period of four years from the end of the Assessment Year 2013-14 on previously concluded scrutiny assessment under Section 143 (3) of the Act and therefore the same is not a valid notice as per the proviso to Section 147 of the Act. 6.1. It was submitted that the Assessing Officer has failed to establish from the material available on record that there is failure on the part of the petitioner to fully and truly disclose all the material facts during the course of the original assessment proceedings and in absence of the same, the respondent Assessing Officer has no jurisdiction to issue the impugned notice under Section 148 of the Act. 6.2. It was submitted that from the facts available on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to point out that the petitioner is engaged in the business of real estate development and sale of land and that the petitioner had treated the land as its stock in trade and of sale of land, the income arising there from is offered as income from business and profession in the return of income. 6.9. It was therefore submitted that the Assessing Officer now wants to reopen the assessment on the premises that the petitioner has not offered the sale consideration for tax under the head capital gains by invoking Section 50C of the Act would not be applicable as Section 50C is applicable only to capital assets and not to stock in trade. 6.10. Learned advocate Mr. Patel referred to Section 2(14) of the Act to submit that as per the definition of stock in trade cannot be considered as a capital asset as the same is expressly excluded under the said Section. 6.11. It was therefore submitted that when the land in question was held by the petitioner as stock in trade, any income that arose from sale of such land is required to be offered under the head income from business and profession , which was rightly offered by the petitioner. 6.12. Learned advocate Mr. Patel also referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land in question as income from business and profession. 9. Moreover, the entire issue with regard to the sale of land as income from business and profession was thoroughly scrutinized during the regular assessment proceedings by the then Assessing Officer accepting the explanation and information provided by the assessee and thereafter the order under Section 143 (3) of the Act was passed. 10. It is also emerging from the facts as well as material on record that there is no failure on the part of the petitioner assessee to disclose fully and truly all the material facts relevant for the assessment and as such the respondent assessing officer could not have assumed the jurisdiction to issue impugned notice under Section 148 of the Act beyond the period of four years as per the proviso to Section 147 of the Act. 11. Moreover, the petitioner has shown the land in question as stock in trade in the audited balance sheet and profit and loss account and therefore, the assessing officer was not justified in the relying upon Section 50C of the Act as the same would not be applicable to the transaction of sale of land as stock in trade as the same excluded from the definition of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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