TaxTMI 
TaxTMI 
2026 (8) TMI 1180
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....preciating that the reopening was based on tangible material showing escapement of income due to wrong classification of income under the head Capital Gains instead of Business Income. 2) Whether on the facts and in the circumstances of the case and in law the Ld CITA has failed to appreciate that the original assessment order us 143(3) did not contain any specific finding OR conscious application of mind regarding the nature of the property as a capital asset OR stock in trade and therefore the reopening cannot be treated as a mere change of opinion. 3) Whether on the facts and in the circumstances of the case and in law the Ld CITA has erred in holding that there was no tangible material for reopening whereas the incorrect head of income under which substantial income was offered itself constituted tangible material giving rise to "reason to believe" that income had escaped assessment within the meaning of section 147 of the Act. 4) Whether on the facts and in the circumstances of the case and in law the Ld CITA has erred in relying upon the judgment of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd vs. CIT (256 ITR 1) without apprecia....
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....hearing." 3. The brief facts of the case are that the assessee is a Partnership firm & carrying out the business of building and developing, purchase and sell of immovable property. The assessee filed its original return of income on 05-08- 2016 declaring total income of Rs. 31,53,80,900/-. The case was reopened and notice u/s was issued to the assessee on 30/03/2023. In response to notice u/s 148, the assessee filed its return of income on 10-04-2023 declaring total income of Rs. 31,53,80,900/-. During the impugned assessment year assessee sold the property as long term asset and offered the Long term capital gain for the computation of income and paid taxes on the same. Though dealing in immovable property the assessee had classified the said property as a Fixed Asset and not as stock-in-trade in its books of accounts. Since the property is classified as a Fixed Asset, sale of same shall be charged as Income from Capital Gains under Section 45 of the Act. The assessee had purchased the said immovable property on 30.11.2005 and another on 30.12.2006. The said properties were sold through a single agreement dated 17.07.2015. As it evident that the period of holding is more than ....
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....e basis of finding on the above information which suggests that income chargeable to tax has escaped assessment. The date of compliance was fixed on 10.03.2023. In this respect, the assessee vide response uploaded on 09.03.2023 requested for an adjournment. Therefore, vide Show Cause Notice issued through ITBA Portal on 10.03.2023, the case was adjourned to 15.03.2023. It was specifically mentioned in the show cause notice issued on 10.03.2023 that in case of non compliance of the show cause notice till 15.03.2023, it will be presumed that you have nothing to say and order u/s 148A(d) of the Act will be passed on the information available on record. However, the assessee failed to furnish submission till 15.03.2023. Therefore, it is presumed that the assessee has no submission to furnish against the Show Cause Notice issued u/s 148A(b) of the Act issued on 03.03.2023 as well as issue of Notice u/s 148 of the Act. 6. In the instant case, three years but not more than ten years, have elapsed from the end of the relevant assessment year, in accordance with the provisions of section 149(b) of the Act, the income which has escaped assessment should be represented in the form of....
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....enue filed an appeal before us. 5. The Ld. DR strongly supported the orders of the Ld. AO. It was contended that the reopening of the assessment was based on credible information received from the Revenue Audit. The Ld. DR submitted that during the original assessment proceeding, the Ld. AO was unable to fully verify the entire issue; however, in the course of reassessment proceedings, the Ld. AO thoroughly examined the nature of transaction and other related details. 6. The Ld. AR filed a paper book comprising pages 1 to 248, which has been taken on record. The Ld. AR primarily challenged the jurisdiction of the Ld. AO in issuing notice under section 148, contending that the reasons recorded for reopening are unjustified and without any new tangible material. It was submitted that the legal ground challenging the validity of reassessment was duly raised before the Ld. CIT(A) and was succeeded. The Ld. AR invited our attention at the order of the Ld. CIT(A) para no.4.1 and 4.2 which are reproduced as below:- "4.1. Ground No 1,2,3,4, and 5 In these grounds the assessee contested that the reopening is bad in law I have considered facts and circumstances of the....
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....contested the charging of the income by the AO on sale of property as business income instead of long term capital gains: I have considered facts and circumstances of the case and also considered assessee's submissions. From the facts of the case it is seen that the assessee had purchased a property at Wadala Mumbai on two different dates one on 30.11.2005 and another on 30.12.2006 and subsequently this property was sold as a single agreement to Shantilal Sangvi Foundation on 17.07.2015 for Rs. 35,00,00,000 In this regard, the assessee submitted that the above property was always classified as fixed assets in the books of accounts and never classified as stock in trade. The assessee further submitted that as per balance sheet of the earlier years, the value of land and building of the above mentioned property was shown at Rs 1,54,07,543/- The assessee filed necessary balance sheets and P&L accounts of the earlier years to authenticate that the land was classified as fixed assets. Further, the assessee already disclosed the income under the head capital gains which was already examined by the AO in scrutiny assessment and agreed with the assessee's classification of income. Thus, th....
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....lly disclosed to him." 7. The Ld. AR advanced his argument and stated that the identical issue is already dealt by the Coordinate Bench of ITAT Mumbai, 'D' Bench in case of DCIT vs Deepak Roy in ITA No.7781/Mum/2012, A.Y. 2006-07 the date of order 25.07.2014. Relevant observations contended in para no.10 of the order of the Bench is reproduced as below: "10. On a careful perusal of the order of Ld CIT(A), the rival submissions and the facts prevailing in this case, we tend to agree with the view expressed by Ld CIT(A). A perusal of the submissions made by the assessee would show that the assessee has furnished all the details relating to share transactions before the Assessing Officer during the course of original assessment proceedings. The Assessing Officer has completed the assessment under s. 143(3) of the Act by considering those details. Later the assessing officer has passed a rectification order under s. 154 of the Act also. Hence, on both the occasions, the Assessing Officer was very much aware of the fact that the assessee has declared the gains arising on sale of shares under the head Capital gains, that too both the Short term Capital Gains and Long term cap....