TaxTMI 
TaxTMI 
2025 (1) TMI 1112
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....the original assessment. No new material was available to the A.O. - ITAT Raipur in Lakhichand Sidara ITA NO. 180/RPR/2017. 3. The order is Void-ab-initio as the copy of reasons were supplied at the fag end of the order u/s 143(3), thus violating the directions of the Hon'ble SC in GKN Driveshaft. 4. That the order is Void-ab-initio as the copy of approval as requested was not provided - ITAT, Raipur in the case of Saraswati Garewal, ITA No. 166/RPR/2022 dated 25/10/2023. 5. That the CIT(A) erred in invoking section 56(2)(vii)(b) not considering that the land purchased was stock in trade and shown in the balance sheet as current assets at the time of original assessment also. 6. That CIT(A) erred in confirming addition of Rs. 3,70,89,000/- to the total income of the appellant. 7. That the appellant craves leave to add to and/or amend. Alter; rescind the grounds taken here in above, before or the time of hearing of this appeal." 2. Also, the assessee has raised an additional ground of appeal which reads as under: "In the facts and circumstances of the case and in law, reassessment order passed by A.O is illegal, ab initio ....
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.....T. Act 1961 This office is in possession of information from O/o. Asst. DIT(I & CI), Raipur in regarding the above mentioned assessee. As per the information received, the assessee had purchased the land situated at Talapara. Bilaspur from Smt. Uma Bajpai, Smt. Rudrani Bai and Shri Mahendra Bajpai during the F.Yr. 2013-14. On perusal of sale deed it is noticed that the total purchase value of the land was Rs. 4,11,000/- whereas, Market value (Stamp Duty Value) of the land was Rs. 3,75,00,000/-, hence it is clear that actual purchase value is much lower than market value which is clearly a contravention of section 56(2)(vii)(b) of the L. T. Act. 1961. According to the section 56(2)(vii)(b) of the I.T. Act, 1961 if the stamp duty value exceeds the purchase consideration by more than Rs. 50,000/- then, the difference between the stamp duty value and the purchase consideration will be treated as Income from other sources. But, the assessee had not shown the difference of stamp duty value and purchase consideration i.e. Rs. 3,70,89,000/- as his income in his return of income for the A.Yr. 2014-15. Thus, there is a escapement of income of Rs. 3,70,89,000/-(Rs. 3,75,00,....
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....ain details. In reply, the assessee submitted that the subject land formed part of the stock-in-trade of a project which was under planning stage. It was, thus, stated by the assessee that as the property under consideration i.e. land situated at Talapara, Bilaspur was purchased/held as stock-in-trade of his business, therefore, the provisions of Section 56(2)(vii) of the Act were not attracted. The assessee to fortify his aforesaid claim had filed before the A.O the "trading account" for the year ending on 31.03.2014, wherein he had shown "opening stock" of Rs. 21,47,900/-, purchases of Rs. 30,47,800/- and "closing stock" of Rs. 51,95,700/-. 6. The A.O in order to verify the authenticity of the aforesaid claim of the assessee referred to his return of income for the immediately preceding year i.e. A.Y.2013-14, which revealed the "closing stock" (as on 31.03.2013) at Rs. Nil. Accordingly, the A.O based on the aforesaid facts that had surfaced on a perusal of the return of income for the preceding year i.e. A.Y.2013-14, observed that the assessee had projected a wrong claim of "opening stock" (as on 01.04.2013) of Rs. 21,47,900/- as the "closing stock" (as on 31.03.2013) in his r....
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....sed on his aforesaid observations rejected the assessee's claim that the subject property i.e. land situated at Talapara, Bilaspur was held by him as stock-in-trade and, thus, for the said reason, the provisions of Section 56(2)(vii) of the Act were not applicable in his case. 7. Accordingly, the A.O based on his aforesaid conviction vide his order passed u/s. 143(3) r.w.s. 147 of the Act, dated 30.12.2019 brought the difference in the FMV (stamp duty value) vis-à-vis the actual purchase value of Rs. 3,70,89,000/-[Rs.3,75,00,000/-(-) Rs. 4,11,000/-] to tax by treating the same as the income of the assessee u/s. 56(2)(vii)(b) of the Act and determined his income at Rs. 4,08,95,600/-. 8. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: "5. Observations, Findings and Decisions: 5.1. I have carefully examined the facts of the case, the assessing officer's (hereinafter A.O) conclusion and the appellant's submission. The order passed by the A.O. under section 143(3) read with section 147 of the Income Tax ct,1901 (h....
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....on 6/6/2018 In response, ITR was filed on 17/6/2018. Request for supply if reasons recorded for re-opening together with copy of approval obtained, if any, was made vide letter 13/6/2018." "For proper presentation of facts, and for arriving at reasonable conclusion on the crux of the issue, the A/R of the assessee had officially inspected the records of the assessee for the relevant year. 6.4 Thus, it is clear from the appellant's above submissions that the appellant failed to comply with the decision of Hon'ble Supreme Court in the case GKN Drive shift(India) Ltd vs ITO because he sought reasons recorded for re-opening of assessment even before submitting the return in response to the notice under section 148. It was held by the Hon'ble Supreme Court that after filing of the return in response to notice under section 148 of the act request for copy of the reasons recorded to be made by assessee. It is important to mention here that the appellant practically sought for reasons recorded for re-opening of assessment when he furnished submission before the A.O. on 08/11/2019. It is pertinent to take note of the fact that the appellant did not comply with ....
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....s that on the one hand, he claims that he was not given a copy of the approval, while on the other hand, he asserts that approval for initiation of reassessment proceedings was granted mechanically and without application of mind by the competent authority. Therefore, the question that arises from the appellant claims is that how he came to know without consulting the relevant record that the approving authority granted approval mechanically without application of mind for initiation of proceedings under section 147 read with 148 of the Act. The appellant's admission that his authorised representative officially inspected the record of the appellant for the relevant assessment year is the key factor in determining the answer. Despite official inspection of records by his A/R the appellant asserts he is not aware of the satisfaction recorded by the approving authority. Although inspection record was carried out but the appellant has failed to demonstrate the reason for his conclusion that the approval was granted mechanically and without application of mind by the approving authority. As previously sated the decisions of various case laws relied upon by the appellate are disting....
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....ssessment year, Furthermore, the appellant Tailed to mention in his return of income the fact that -the-stamp value of the subject land was Rs. 3,75,00,00/- compared to purchase consideration of Rs. 4,11,000/-. Hence there was failure on the part of the appellant to disclose primary fact of taxing in his return of income. And most importantly, the A.O. had no occasion to examine the issue in limited scrutiny proceedings. 7.3. In order to understand the issue at hand and appreciate the facts better I think it is appropriate to reproduce the relevant part of limited scrutiny assessment order passed under section 143(3) of the Act dated 23.08.2016. "Assessment Order" "Return of income was filed by the assessee on 31/03/2015 declaring total income of rupees Rs. 38,06,600/-. Subsequently the case was selected through CASS(Limited). Notice under section 143(2) was issued on 28/08/2015 and served fixing the case for hearing on 21/09/2015. Notice under section 142(1) along with questionnaire issued and order sheet entries which are placed on record. 2. xxxxxxxxxxxxxx 3. During the year under consideration, assessee has sold two pieces of land fo....
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....o beyond the issue for which notice under section 143(2) of the Act in a limited scrutiny case. According to the limited scrutiny order, the AD confined himself to investigating the issue of capital gain arising out of sale of land. There is no evidence on record that A.O. overstepped his authority and converted the case as a complete scrutiny case by examining the all the issued that came to his notice. It is reiterated that the A.O, did not form any opinion on the issue in question. Therefore, there is no question of A.O's change of opinion on the subject matter. 8.2 The fact of the case in which the appellant relied to present his argument do not apply to the fact of present case. In view of discussion made above I am of the considered view that the jurisdiction assumed by the under section 147 of Act does not suffer from jurisdictional defect in so far as the issue mentioned above is concerned. 9.1 The last issue regarding the validity of A.O. assumption of jurisdiction under section 147 read with 148 of the Act is to be determined based on if the A.O. was in possession of credible and tangible information to form a reasonable belief that income chargeable....
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....s stock-in-trade, The key issue is to determine if the land in question was a capital asset or a stock-in- trade. If it was a capital asset, the AO was justified making an addition under the said section otherwise, he was not justified in making an addition. 10.2. It was observed by the A.O that appellant did not declare the plots of land in question in his return of income for the assessment year 2012-13 to 2017-18 as stock in trade except in the return filed for the assessment year 2014-15 in response to notice issued under section 148 of the Act. Furthermore, it was observed that by the A.O. that there were no purchases or sales disclosed in the return of income for the assessment year 2012- 13 to 2017-18. The A.O analysised the return of income for the assessment year 2013-14 to determine the position of opening stock in assessment year 2014-15 and found that closing stock was shown 'nil in the assessment year 2013-14, The AO concluded that no business in real estate was carried out by the appellant as he failed to produce any evidence in support same. Hence, subject land was treated as capital asset and difference between purchase price and stamp duty value was ad....
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....rry on any business in a real estate. The appellant's presumption that the plots of land were held as stock in trade of his real estate business is not sufficient and he needs to demonstrate it by producing evidence. The appellant has failed to do so. 10.5. Section 56(2) (vii)(b) of the Act stipulates that any difference between the stamp duty value and the deed value of immovable property is to be deemed to be to income for and individual and HUF wherever stamp deed value of immovable property exceeds the deed value by Rs. 50,000/-. The above mentioned section deals with any property and is not restricted to any specific nature of property. The scope of that section encompasses agricultural land also. 10.6 Considering the above discussion, I am inclined to agree with the view of the AO that plots land were not held as stock of appellant's business as no business in real estate was carried out by the appellant. Therefore, the addition of Rs. 3,70,89,000/-made by the AO under section 56(2)(vii) of the Act is confirmed. 11. In the final result, the appeal filed by the appellant is treated as dismissed." 9. The assessee being aggrieved with the or....
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....h the notice issued u/s. 148 of the Act by filing a valid return of income. The Ld. AR based on the aforesaid facts, submitted, that admittedly as per the A.O till 15.12.2019 no valid return of income was filed by the assessee. The Ld. AR submitted that in the backdrop of the aforesaid facts the assessee had, thereafter, filed a new return for the year under consideration i.e. A.Y.2014-15 on 17.12.2019, which was e-verified on the same date and was a valid return of income filed in compliance to notice u/s. 148 of the Act. The Ld. AR submitted that though no notice u/s. 143(2) of the Act was issued by the A.O after 17.12.2019, but the assessment was framed by him vide order u/s. 143(3) r.w.s.147 of the Act, dated 30.12.2019, which, thus, was illegal and bad in the eyes of law. To sum up, the Ld. AR submitted that as the assessee had filed a valid return of income in compliance to notice u/s. 148 of the Act only as on 17.12.2019, therefore, the assessment which thereafter had been framed by the A.O in absence of any notice u/s. 143(2) of the Act having been issued after filing of the said return of income was invalid and non-est in the eyes of law. 13. Alternatively, the Ld. AR s....
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....sessee at a value lower than the FMV was there before the A.O in the course of the original assessment proceedings, but was also queried by him and replied by the assessee to his satisfaction, therefore, in absence of any new facts coming to notice after framing of the original assessment, the reopening of the concluded assessment based on the same set of facts as were there before him while framing the original assessment was nothing but a mere "change of opinion, which in the backdrop of the judgment of the Hon'ble Apex Court in the case of CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) cannot be sustained. 14. Per contra, Shri S.L Anuragi, Ld. Departmental Representative (for short 'CIT-DR') relied on the orders of the lower authorities. 15. We have given a thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities. 16. Controversy involved in the present appeal hinges around two material aspects, viz. (i) that as to whether or not the A.O had framed the assessment vide his order passed u/s. 143(3) r.w.s. 147 of the Act, dated 30.12.2019 without issuing a....
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....d by the A.O could not be held to be invalid. Accordingly, finding no justification in the aforesaid claim of the assessee, we reject the same. Thus, the additional Ground of appeal raised by the assessee is dismissed in terms of our aforesaid observations. 18. We shall now deal with the claim of the assessee that as the concluded assessment in his case had been reopened based on a mere "change of opinion", therefore, the A.O in the backdrop of the judgment of the Hon'ble Apex Court in the case of CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), had wrongly assumed jurisdiction and framed the assessment vide his order passed u/s. 143(3) r.w.s. 147 of the Act, dated 30.12.2019. 19. Admittedly, it is a matter of fact borne from record that the A.O had vide his order passed u/s. 143(3) of the Act, dated 23.08.2016 framed the "Original assessment" in the case of the assessee for the year under consideration i.e. A.Y.2014-15. Also, it is a matter of fact borne from record that the A.O while framing the original assessment had vide notice u/s. 142(1) of the Act, dated 10.06.2016, Page 35 & 36 of APB called upon him to put forth an explanation that as to why the sale consid....
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....e case of the assessee that was originally framed by the A.O vide his order passed u/s. 143(3) of the Act, dated 23.08.2016 had, thereafter been reopened by his successor A.O not based on any new facts coming to his notice subsequent to framing of the original assessment but on the basis of same set of facts as were there before his predecessor while framing of the original assessment vide his order passed u/s. 143(3) of the Act, dated 23.08.2016. We find that the issue based on which the case of the assessee was reopened i.e. the subject land situated at Telepara, Bilaspur was though purchased by the assessee for a consideration of Rs. 4,11,000/-, but the FMV (stamp duty value) of the same was Rs. 3.75 crore; was an issue that had already been looked into and deliberated upon by the A.O in the backdrop of the explanation filed by the assessee in the course of original assessment proceedings and, thereafter, accepted by him after considering the reply of the assessee as regards the same. 21. On the basis of the aforesaid facts, it can safely be gathered that the reopening of the concluded assessment of the assessee was based on the same set of facts as were available with the A.....
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....ailable on record. Relying on the observations of the "Full bench" of the High Court of Delhi in CIT Vs. Kelvinator of India Ltd. (supra), the Hon'ble High Court of Bombay in Asian Paints Ltd. Vs. DCIT (supra), had observed that where according to the A.O he had failed to apply his mind to the relevant material in making the assessment order, he cannot take advantage of his own wrong and reopen the assessment by taking recourse to the provisions of Sec. 147. The Hon'ble High Court had further observed that fresh application of mind by the A.O to the same set of facts for the reason that some material that was available on record while framing the original assessment was inadvertently excluded from consideration would not justify reopening of the assessment u/s 147 of the Act. For the sake of clarity, the observations of the Hon'ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (supra) are culled out as follows: "7. We have heard the learned counsel appearing for both sides. We have also gone through the judgments on which reliance was placed by the learned counsel appearing for both sides. 8. In the order rejecting the objection filed by the petit....
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....refore, the power under section 147 cannot be used to review the order. In the present case, though the Assessing Officer has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITR1 referred to above, has taken a clear view that reopening of assessment under section 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under section 148. 11. In the result, there....