2020 (2) TMI 836 - AT - Income Tax

Tribunal overturns assessment & grants exemption, finding lack of fresh material. Appellant succeeds in appeal.

The Tribunal ruled in favor of the appellant, finding the reopening of assessment under sec.147 invalid as it was based on a change of opinion rather than ... Reopening of assessment u/s 147 - withdrawing the exemption granted u/s.54B of the Act on the ground that the property was brought not in the name of the assessee but in the name of different persons - HELD THAT:- Assessing Officer recorded a finding that second assessment was based on the same fact of materials available on record. There is no reference to any fresh tangible material brought on record. It is amply clear from the assessment order that the Assessing Officer had made observation ‘’subsequently on perusal of the records showed that the assessee had claimed an exemption u/s.54B towards purchase of agricultural land under different names’’. This goes to show that reopening is based on the same set of facts which are available with the Assessing Officer at the time of making original assessment. Assessing Officer allowed exemption u/s.54B of the Act after considering the material available on record and took plausible view. Therefore we can safely conclude that reopening of assessment is only based on change of opinion on the same set of facts which are available with the Assessing Officer at the time of framing the original assessment order As relying on M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT] we hold that reopening the assessment is bad in law. Accordingly, we squash the reassessment proceedings and allow the appeal of the assessee. Issues:Validity of reopening of assessment under sec.147 of the Act, Denial of exemption u/s.54B, Failure to disclose all material facts necessary for assessment.Analysis:1. Validity of Reopening of Assessment:The appellant challenged the reopening of assessment under sec.147 of the Act, arguing that there was no fresh tangible material to justify it. The Assessing Officer's decision was based on the same facts available during the original assessment. The Tribunal noted that the original assessment allowed exemption u/s.54B after considering the available material. The reassessment was deemed to be based on a change of opinion, not fresh material, which rendered it bad in law. Citing the Kelvinator of India Ltd case, the Tribunal held the reopening of assessment to be invalid and allowed the appeal.2. Denial of Exemption u/s.54B:The appellant contended that the denial of exemption u/s.54B was incorrect, as the reinvestment in agricultural lands was legitimate. The Assessing Officer withdrew the exemption on the grounds that the property was not in the appellant's name. However, the Tribunal found that the denial was based on conjectures and surmises. The lands were ancestral, and the reinvestment by family members should have qualified for exemption u/s.54. The appellant had complied with statutory requirements for reinvestment, and the denial was unfounded. The Tribunal directed the grant of exemption u/s.54B.3. Failure to Disclose All Material Facts:The appellant argued that there was no failure to disclose all material facts necessary for assessment. The reassessment was challenged on the basis that the same facts were available during the original assessment. The Tribunal agreed that the reassessment lacked fresh tangible material and was merely a change of opinion. Citing relevant case law, the Tribunal found in favor of the appellant, highlighting the absence of any failure to disclose material facts necessary for assessment.In conclusion, the Tribunal found in favor of the appellant on all issues raised in the appeal. The reassessment was deemed invalid due to a lack of fresh material, and the denial of exemption u/s.54B was overturned. The Tribunal's decision was based on a thorough analysis of the facts and legal principles, ensuring a fair outcome for the appellant.