Assessment reopening set aside as revenue lacked new material, only showed change of opinion on property valuation

The HC set aside the reopening of assessment based on alleged property undervaluation. The revenue authorities attempted to reopen assessment citing difference between stamp duty value (Rs. 12,000 per sq. ft.) and purported guideline value (Rs. 16,000 per sq. ft.). The court held that Rs. 16,000 per sq. ft. was for commercial property, not residential property in question. The jurisdictional registering officer under Indian Stamps Act, 1899 had already determined proper valuation at Rs. 12,000 per sq. ft. during registration. The court ruled reopening was merely change of opinion without new material, which is impermissible under Section 148, citing SC precedent in Kelvinator case.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 and consequential speaking order based on alleged under-valuation of property.

Analysis:
The petitioner challenged a notice issued under Section 148 of the Income Tax Act, 1961, and a subsequent speaking order based on the alleged under-valuation of a property transaction. The petitioner sold a property and purchased another on the same day. The return of income was filed, assessed, and accepted by the assessing officer. However, the assessment was reopened based on the difference between the purchase price and the guideline value of the property. The respondent overruled the petitioner's objection, stating that there was a failure to disclose the correct value during the assessment proceedings.

The petitioner argued that the reassessment under Section 148 was beyond the limitation period and that there was no failure to disclose income. The respondent justified the reassessment citing the TOLA Ordinance, 2020 and TOLA Act, 2020, extending the limitation period due to the Covid-19 pandemic. The respondent contended that the assessment order was silent on the guideline value and the difference needed to be taxed. The petitioner relied on legal provisions and previous court decisions to challenge the reassessment.

The court considered both parties' arguments and held that the reassessment was inspired by a change of opinion and not based on new material. The court noted that the guideline value was for commercial property, not residential, and the registering officer's confirmation supported the lower value used in the assessment. Citing the decision in CIT Vs. Kelvinator of India Ltd., the court emphasized that the power under Section 148 cannot be used for a mere change of opinion. Consequently, the court set aside the impugned order and disposed of the writ petition without costs.

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