TaxTMI 
TaxTMI 
2026 (9) TMI 1004
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....The brief facts of the case are that the Petitioner, an individual, filed his Return of Income for the relevant A.Y. 2016-17 on 30th July 2016. During the year, the Petitioner sold 345 shares of Concord Enviro Systems Pvt. Ltd. to a foreign entity viz. AF Holdings, Mauritius resulting in capital gains of Rs. 2,96,82,371/- in the hands of the Petitioner. Out of such capital gain, the Petitioner invested in a residential property situated in Mumbai and consequently claimed exemption under Section 54F of the IT Act in his Return of Income. 4. Thereafter, the Petitioner's case was selected for a 'Limited Scrutiny' and a notice dated 14th September 2017 was issued under Section 143(2) of the IT Act to examine whether exemption from capital gains has been claimed correctly by the Petitioner. Thereafter, several notices under Section 142(1) of the IT Act (containing questionnaires) were issued to the Petitioner to inquire into inter alia the acquisition and sale of assets, nature of capital gains, and eligibility of such claim for exemption. The Petitioner claims that such notices were duly responded to and all the relevant documentary evidence supporting the claim of exemption was pla....
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....) of the IT Act, the concerned Assessing Officer (at the relevant point in time) had not made any discussion in respect of the issue on which the present reopening proceedings were premised. Accordingly, it could not be said that the erstwhile Assessing Officer had formed any opinion on such issues during the original assessment proceedings and the window to re-open the assessment would remain available where the Assessing Officer had neither accepted nor rejected the claim of the Petitioner. In this regard, in the impugned order, reliance was placed on the judgment of the Hon'ble Supreme Court in Income Tax Officer, ward No. 16(2) V/S TechSpan India (P.) Ltd. [(2018) 92 taxmann.com 361 (SC)]. As far as the request of the Petitioner to provide relied upon information and material is concerned, it was stated that the statute does not mandate providing all the documents at the stage of the Show Cause Notice. Thus, it was held that the case of Petitioner was fit for issuing a notice under Section 148 of the Act. In view of the aforesaid, the impugned Notice under Section 148 of the IT Act was also issued on 20th April 2023. Before us, the Petitioner has challenged the validity of the ....
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....quity shares, after selling 345 shares of the said entity. As far as the claim of exemption is concerned, the Petitioner also submitted all the relevant details relating to his share in the property purchased from his mother. After due verification of all these details and documents, the then Assessing Officer ultimately accepted the claim of the Petitioner and did not make any addition. In these circumstances, he submitted that once the claim of the Petitioner was accepted during the scrutiny assessment proceedings, reassessment after six years from the end of the relevant assessment year on the same issue is impermissible under the law prevailing at the time of issuance of the impugned Notice under Section 148 of the IT Act. To fortify his submission on 'change of opinion' Mr. Walve relied upon the following judgments of this Court :- (i) Sir Jamsetjee Jejeebhoy Charity Fund V/S Income-tax Officer (Exemption)[(2025) 180 taxmann.com 401 (Bombay)]; (ii) Siemens Financial Services (P.) Ltd. V/S Deputy Commissioner of Income-tax [(2023) 154 taxmann.com 159 (Bombay)]. 9. As far as the second jurisdictional ground is concerned, Mr. Walve submitted that because the ....
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....ent of tax. He further submitted that the share in the immovable property allegedly acquired from his mother is not supported by any conveyance deed duly stamped and registered with the sub-registrar and therefore, the Petitioner was not eligible for the benefit under Section 54F of the IT Act. As far as the applicability of the fifth and sixth proviso is concerned, Mr. Sharma submitted that if one were to harmoniously read the first and fifth/sixth Provisos to Section 149(1)(b) of the IT Act then the impugned Notice dated 20th April 2023 would be within time, after excluding the days granted to the Petitioner for the purposes of filing a reply to the Show Cause Notice. Therefore, Mr. Sharma strongly submitted that the Petitioner is not entitled for any relief and the Writ Petition be dismissed. 11. To counter the first limb of Mr. Sharma's argument, Mr. Walve submitted that it is only when the Assessing Officer is rejecting the claim of an Assessee, the Assessing Officer is required to discuss and assign proper reasons for such rejection. This exercise is unnecessary when the claim of an Assessee is being accepted to the satisfaction of the Assessing Officer. To substantiate th....
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....ection 143(3) of the IT Act after a thorough inquiry and due verification. We observe that the exercise carried out by the Assessing Officer was not merely perfunctory, but a detailed inquiry was in fact conducted before arriving at the said conclusion. In our view, it would suffice to say that the Assessing Officer had indeed formed an opinion to his satisfaction that no addition was required to be made. We find force in the argument of the Petitioner that it is not necessary for an Assessing Officer to discuss each and every issue elaborately to disclose his satisfaction when the Assessing Officer is accepting the claim of the Assessee. In this regard we are supported by the judgment of a coordinate Bench in Knight Riders Sports Pvt. Ltd. (supra). The relevant portion of this decision reads thus :- "17. The reason we say that there is a change of opinion is because once a query has been raised during the assessment and query has been answered and accepted by the Assessing Officer while passing the assessment order, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. This would apply even if the assessm....
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....ument of Mr. Sharma that in the present case the Petitioner was making a claim for exemption under Section 54F (exemption from payment of capital gain) by executing a notarized agreement with his mother on a stamp paper of Rs.500 only to avoid his liability to pay capital gains tax. We are also unable to agree with the argument of Mr. Sharma that the immovable property allegedly acquired by the Petitioner from his mother is not supported by any conveyance deed duly stamped and registered with the sub-registrar and therefore, the Petitioner was not eligible for the benefit under Section 54F of the IT Act. We say this because, the reasons for reopening supplied by way of the impugned Show Cause Notice under Section 148A(b) of the IT Act do not reflect the stand that is now taken by the Department in their Affidavit in Reply. The Show Cause Notice only seeks to doubt the share transaction and more particularly, the valuation of such shares. There is not a whisper about the corresponding claim of exemption under Section 54F of the IT Act and the reasons also do not reflect that this was the basis for initiating the reassessment. We are clearly of the view that the reasons recorded cann....
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....corded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced." (emphasis supplied) 17. Though we are mindful of the fact that the decision in Hindustan Lever Ltd (supra) was rendered in the context of the old regime of Sections 147 and 148, the principles laid down therein would ....