2023 (8) TMI 1252 - AT - Income Tax

Tribunal invalidates reassessment due to 'mere change of opinion' under Sec 147. Capital gains disclosed, annuls assessment.

The Tribunal quashed the assessment under Section 144 read with Section 147, ruling that the notice issued under Section 148 was invalid as it constituted ... Reopening of assessment - Change of opinion - undisclosed income as LTCG on the sale transaction of the property [plot] - reasons to believe - HELD THAT:- AO had remained ignorant of the fact that his predecessor had already framed the assessment in the case of the assessee vide his order passed u/s. 143(3). Apart from that, the fact that LTCG on the transaction of sale of the property under consideration had duly been disclosed by the assessee in his return of income filed in response to the notice u/s. 148 and the same was considered by his predecessor while framing the original assessment vide order u/s. 143(3), was also completely lost sight of by the A.O. at the stage of reopening the concluded assessment of the assessee. As there can be no escape from the fact that the concluded assessment of the assessee had been reopened not only based on misconceived facts but has as its foundation facts that had not only been considered, deliberated upon, and formed the basis of the original assessment framed by the A.O vide his order passed u/s 143(3) of the Act, dated 31/03/2016. Thus the reopening of the assessee’s case has to fail for the very reason that the same is not based on any new material that had come to the notice of the A.O after the culmination of the original assessment by him vide his order passed u/s 143(3) of the Act, but is a clear case of assumption of jurisdiction u/s 147 of the Act based on a mere “Change of opinion.” As an assumption of jurisdiction by the A.O for disturbing a concluded assessment of an assessee based on a “change of opinion” is not permitted under law, we, thus, are unable to subscribe to the jurisdiction assumed by the A.O in the present case u/s 147 of the Act. Decided in favour of assessee. Issues Involved:1. Validity of the notice issued under Section 148 of the Income-tax Act, 1961.2. Disallowance of Rs. 32,18,238/- under the head long-term capital gain (LTCG).Summary:Issue 1: Validity of the Notice Issued Under Section 148The assessee contended that the notice issued under Section 148 was bad in law, arguing that the assessment was already completed under Section 143(3) and Section 147 of the Income-tax Act, 1961. The CIT(Appeals) dismissed this ground, noting that the assessee failed to provide evidence of previous assessments verifying the capital gains. The Tribunal observed that the sale transaction of the property and the corresponding LTCG had already been disclosed in the assessee's return filed in response to an earlier notice under Section 148 and considered in the original assessment under Section 143(3). The Tribunal concluded that the reopening of the assessment was based on a 'mere change of opinion,' which is not permissible under law, citing the Supreme Court judgment in CIT, Delhi Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC). Consequently, the Tribunal quashed the assessment framed under Section 144 read with Section 147.Issue 2: Disallowance of Rs. 32,18,238/- Under the Head Long-Term Capital GainThe assessee claimed various deductions related to the indexed cost of acquisition, improvement, and other expenses, which were disallowed by the Assessing Officer (A.O) due to lack of substantiation. The CIT(Appeals) upheld the disallowance, stating that the assessee failed to furnish supporting material to substantiate the claims. However, since the Tribunal quashed the assessment on jurisdictional grounds, it did not address the merits of the disallowance, leaving the issue open.Conclusion:The Tribunal allowed the assessee's appeal, quashing the assessment framed under Section 144 read with Section 147 due to invalid assumption of jurisdiction based on a 'mere change of opinion.' The merits of the disallowance of Rs. 32,18,238/- under the head LTCG were not adjudicated.