2018 (11) TMI 1007

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....ing of assessment u/s, 147. Hence, the reopening of assessment is bad in law. 4) The learned CIT(A) further erred in not appreciating that the reopening of assessment amounted to change of opinion and hence the reopening of assessment was bad in law. 5) The appellant prays that the reopening of assessment u/s. 147 may be held to be bad in law and the order u/s. 143(3) r.w.s. 147 may be annulled. B) Without prejudice to the above, assessing income from house property at Rs. 5,88,073/- as against the returned "Income from house property" ofRs.310/- 6) The learned CIT(A) erred on facts and in law in upholding the order of the AO assessing the income from house property at Rs. 5,88,073/- as against the returned income from house property of Rs. 310/-. 7) The learned CIT(A) erred in not appreciating that the appellant had only 50% share in flat no. 15 and the balance 50% was owned by the appellant's mother, who was residing in the said flat till her death and hence the said flat could not be let out by the appellant. 8) Without prejudice to the above, the learned CIT(A) erred in not appreciating that the Society had at the time of transfer of flat no. 15 placed a c....

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.... reopening of the assessment as the income has been escaped assessment in respect of annual letting value of house properties. Insofar as addition made by the AO towards Income from house property, the Ld.CIT(A) observed that the AO has determined annual letting value of the property on the basis of prevailing market rent in the locality by obtaining report from the Inspector, as per which the property may fetch rental income of Rs. 90,000 per month. The Ld.CIT(A) further observed that the arguments of the assessee that on the basis of municipal valuation it has determined annual letting value of the house property, is incorrect, as the co-operative society is not an authority under any law of the land to determine the rental value or municipal value of the residential house. Further, how could a flat admeasuring 1270 sq.ft. at a prime location can fetch such a negligible amount of monthly rent. Since the AO has determined the annual letting value of the property on the basis of prevailing market rent, there is no reason to interfere with the finding of the AO and accordingly, rejected the arguments of the assessee and confirmed addition made by the AO. Aggrieved by the order of Ld....

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....ement of income and accordingly, there is no merit in the arguments of the assessee that reopening of assessment is on the basis of change of opinion. 8. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. Admittedly, the assessment has been reopened after 4 years from the end of the relevant assessment year. It is also an admitted fact that the original assessment has been completed u/s 143(3) of the Income-tax Act, 1961. When the assessment has been completed u/s 143(3) and the reopening of assessment has been done after four years from the end of the relevant assessment years, then the Proviso to section 147 will come into operation. As per the said Proviso, before reopening of assessment, the jurisdictional condition is that in such case before an assessment can be validly reopened, there must be a failure on the part of the assessee to state fully and truly all material facts necessary for the assessment. On perusal of reasons recorded for reopening of assessment, absolutely, there is no reference to there being any failure on the part of the assessee to fully and truly disclose all material facts necessar....

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....elevant assessment year, viz., that there must have been a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment during the original assessment proceedings. Thus, the primary requirement to reopen any assessment is a reason to believe that income chargeable to tax has escaped assessment. However, as observed by the Supreme Court in the case of CIT v. Kelvinator of India Ltd, [2010] 320 ITR 561 (SC), in the context of section 147/ 148 of the Act that reason to believe found therein does not give arbitrary powers to reopen an assessment. The concept of change of opinion is excluded/omitted from the words "reason to believe". Thus a change of opinion would not be reason to believe that income chargeable to tax has escaped assessment. Besides the power to reassess is not a power to review. Further,reopening must be on the basis of tangible material. Therefore, the power to reassess cannot be exercised on the basis of mere change #f opinion, i.e., if all facts are available on record and a particular opinion is formed, then merely because there is change of opinion on the part of the Assessing Officer notice under section 147/148 ....