Change of opinion and accrual of land acquisition interest bar reassessment and tax addition in the relevant year

Where the reassessment proposal was based on an issue already scrutinised in the original assessment, reopening on the same material was treated as a mere change of opinion and was held invalid because the sanction proceeded on an incorrect factual foundation. The note also states that interest on compensation for acquired land accrued when the court decree awarding compensation was passed, so it did not fall in the assessment year under appeal and was not taxable there. The result described is complete relief to the assessee, with both the reopening and the interest addition failing.

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Issues: (i) Whether the reassessment proceedings were invalid because the Assessing Officer had already examined the acquisition compensation issue in the original assessment and the reopening was only a change of opinion, and because the sanction of the Board was obtained on an incorrect factual basis; (ii) whether interest on compensation payable for acquired land was taxable in the assessment year under appeal.

Issue (i): Whether the reassessment proceedings were invalid because the Assessing Officer had already examined the acquisition compensation issue in the original assessment and the reopening was only a change of opinion, and because the sanction of the Board was obtained on an incorrect factual basis.

Analysis: The record of the original assessment showed that the Assessing Officer had called for details, scrutinised the compensation received, required the assessee to explain the cost of acquisition, and obtained a reply on the issue before completing the assessment. The matter had therefore been considered earlier and could not be reopened on the same material as if it had never been examined. The proposal for reopening also proceeded on an incorrect compensation figure and ignored the factual position emerging from the compensation proceedings already concluded, so the sanction for reassessment was based on a misstatement of material facts.

Conclusion: The reassessment was invalid and void ab initio, in favour of the assessee.

Issue (ii): Whether interest on compensation payable for acquired land was taxable in the assessment year under appeal.

Analysis: The interest component was held to accrue when the court decree awarding compensation was passed, because the right to receive such interest arose on that date. On that footing, the amount did not belong to the assessment year under appeal.

Conclusion: The interest amount was not taxable in the assessment year under appeal, in favour of the assessee.

Final Conclusion: The assessment could not be reopened on the facts found, and the disputed interest addition also failed, so the assessee obtained complete relief.

Ratio Decidendi: Where an assessment issue has already been consciously examined in the original proceedings, reopening on the same material amounts to a mere change of opinion, and reassessment based on an inaccurate factual foundation cannot stand.

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