2023 (3) TMI 485 - HC - Income Tax

Reopening of assessment u/s 147 - capital reduction and financial statements highlighting the capital reduction in the balance sheet - capital gain transactions filed under Schedule C.G. - Capital Gains - purchase and sale of shares and the conversion of amounts in foreign currency - petitioner categorically mentioned that it had not carried on any business activity since the liquidation/bankruptcy application and also mentioned about the capital reduction - petitioner had incorrectly characterized the transaction and consequently contended that it was not covered under Section 112(1)(c)(iii) and claimed the benefit of computation under Section 48 - HELD THAT:- As at the time of filing the return of income for the A.Y. 2015-16, the petitioner was not covered by Section 112(1)(c)(iii) as it had transferred the shares of the private limited company. Accordingly, in the instant case, the assessment is being sought to be reopened in contravention of the law as it stood during the previous year 2014-15 and A.Y. 2015-16 in which the petitioner filed its tax return. In this regard, the learned counsel for the petitioner placed reliance on the decision in case of Godrej Industries Ltd. v/s. B. S. Singh, Deputy Commissioner of Income-tax, Range 10(2) [2015 (8) TMI 668 - BOMBAY HIGH COURT] which confirms that a retrospective amendment cannot be the basis for reopening of assessment. In any case, it may be noted that for the A.Y. 2015-16, the four years period has expired on 31st March 2020, and absence any failure to disclose facts by the assessee or any tangible new material, the reopening of assessment proceedings by the respondent is bad in law.

it is a clear cut case of change of opinion inasmuch as there is no new material which is discovered by the concerned officer. The application of another section of the IT Act on the facts and circumstances of a case would only constitute a change of opinion and can by no stretch of imagination be construed as new material by the Revenue. The entire emphasis on the petitioner not truly and fully disclosing facts is baseless inasmuch as in the present case, there is only one transaction which was under consideration for the respondents. The entire transaction has been considered by the Assessing Officer and has culminated into the order under Section 143(3) of the Income Tax Act dated 24th December 2018. As apparent from the reasons there were no new tangible material in the hands of the Assessing Officer.

Once the assessment is concluded, it is deemed to have been concluded with application of mind by the Assessing Officer from all perspectives legal and factual. See KELVINATOR OF INDIA LIMITED. [2002 (4) TMI 37 - DELHI HIGH COURT]

The reopening of the assessment based on a different method of computation or application of the section is nothing else but a change of opinion, which is impermissible in law - See JINDAL PHOTO FILMS LTD. [1998 (5) TMI 20 - DELHI HIGH COURT].

The defense is misdirected and misconstrued and unsubstantiated. In our view, appropriate application of the law and correct advise to the concerned officer can save a lot of litigation and burden on the court as well as agony to the citizens. The case law referred by the respondents also is totally meaningless and out of context and by no stretch of imagination applicable to the facts of this case and therefore, we do not propose to deal with each one of them. Decided in favour of assessee.