2018 (9) TMI 1809 - AT - Income Tax

Tribunal upholds income tax assessment, rules on property valuation for partnership firm.

The Tribunal dismissed the appeals of the Revenue and the cross-objections by the assessee, upholding the orders of the Commissioner of Income Tax ... Re-opening the assessment - re-opening in the case of Smt. Sheila Sen, legal heir of Late Shri Bimalendu Sen - HELD THAT:- On the issue of re-opening in the case of Smt. Sheila Sen, legal heir of Late Shri Bimalendu Sen, the original assessment has been completed u/s 143(3) on 31/12/2008, and the re-opening is made beyond a period of four years. There is no whisper, in the reasons that there is failure on the part of the assessee to fully and truly disclose material facts necessary for the assessment. On this ground alone, the re-opening has to be quashed as held in the case of Haryana Acrylic Manufacturing Co. v. Commissioner of Income-tax [2008 (11) TMI 2 - DELHI HIGH COURT]. AO states that, the issue had been considered in the assessment proceedings for the Assessment Year 2002-03. While so, the re-opening is done on a change of opinion. This is also bad in law. When the order of the CIT(A) has not been accepted by the AO, who had challenged the same by way of appeal before the ITAT, he could not, on the other hand, make contrary recordings in the reasons recorded for re-opening the assessment. Hence on this ground also, we uphold the order of the ld. CIT(A). - Decided against revenue Issues involved:1. Reopening of assessment under Section 45(3) and Section 50C of the Income Tax Act, 1961.2. Application of deeming provisions in computing capital gains.3. Validity of reopening assessments beyond the prescribed period.4. Change of opinion as a ground for reopening assessments.Detailed analysis:1. The judgment addresses the appeals filed by the Revenue and Cross-Objections by the assessee against the orders of the Commissioner of Income Tax (Appeals) for the Assessment Year 2006-07. The dispute arose regarding the valuation of property contributed to a partnership firm by the partners, leading to the assessment of capital gains under Section 45(3) and Section 50C of the Act. The Assessing Officer reopened the assessments, which were challenged by the parties, citing various legal precedents to support their arguments.2. The Tribunal considered the application of Section 45(3) in determining capital gains and upheld the order of the Commissioner of Income Tax (Appeals) based on previous decisions and legal propositions. The Tribunal emphasized that the provisions of Section 45(3) deal with special cases of transfer between partnership firms and partners, and the full value of consideration should be based on the amount recorded in the firm's books. The Tribunal also highlighted that deeming provisions like Section 50C cannot be extended to override the specific provisions of Section 45(3) in such cases.3. Regarding the validity of reopening assessments beyond the prescribed period, the Tribunal ruled in favor of the assessee, citing the failure to disclose material facts and change of opinion as grounds for quashing the reopening. The Tribunal referred to legal judgments to support its decision, emphasizing that assessments cannot be reopened based on a change of opinion or when the original order is under appeal.4. The judgment also addressed the issue of change of opinion as a ground for reopening assessments, highlighting that assessments cannot be reopened solely based on a change of opinion when the original order is under challenge. The Tribunal referred to legal precedents to support its decision in dismissing the appeals filed by the Revenue and upholding the orders of the Commissioner of Income Tax (Appeals).In conclusion, the Tribunal dismissed the appeals of the Revenue and the cross-objections by the assessee, upholding the orders of the Commissioner of Income Tax (Appeals) based on detailed analysis and legal interpretations of relevant provisions and precedents.