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2014 (4) TMI 280 - GUJARAT HIGH COURTValidity of Reopening of assessment - Treatment of amount – Capital gain OR Business income – Assessee converted the landed property into stock in trade – Claim of deduction u/s 54G of the Act – Held that:- AO gave no reasons for not treating the income as a business income instead of capital gain but gave detailed reasons why assessee’s further claim for deduction under section 54G of the Act should be rejected - the AO had a full innings of complete scrutiny of the question and the manner in which the income should be taxed - In the original assessment having examined the issue fully, any attempt on the part of the AO to reopen the assessment would be nothing but a change of opinion. The Revenue contended that the AO did not scrutinize the issue - This was the main if not the sole issue before the Assessing Officer alongside the question of deduction u/s 54G of the Act - The question of granting or rejecting such deduction would arise only once the petitioner’s claim that such income should be treated as capital gain was accepted – thus, would be wholly irrelevant, when the AO had raised specific queries in writing, elicited the assessee’s response and thereafter, however, silently, accepted the assessee’s stand - Within four years also reopening would not be allowed - the decision in CIT vs. Kelvinator of India Ltd. [2002 (4) TMI 37 - DELHI High Court] followed – Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee - Reassessment proceedings in the said cases will be hit by the principle of “change of opinion”. In a situation where the AO during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition – Decided in favour of Assessee.
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