2023 (5) TMI 483 - HC - Income Tax

Reopening of assessment u/s 147 - validity of notice u/s 148 - Capital gain on sale of land - assessee sold the land by lower rate than which was prevailing - HELD THAT:- While going though the valuation report, rate of the said land was Rs.12,250/- per sq. mtr., (open land rate) and applying rate of land furnished by the Sub-Registrar-8, Rander, Surat the value of the land area of 9424.02 sq.mtr., comes to Rs.11,54,44,245/-. So the land in question is assumed to be open land and despite agriculture which relates to agricultural land and determination of stamp paid is accepted by the stamp valuation authority, there appears to be a fundamental error of fact by the authority as it reflects from the records.

Respondent authority is trying to assume valuation beyond the value which has been prescribed by the stamp valuation authority and further the sale document is clearly indicating that pursuant to the compromise which has taken place, the sale has been made effective of 23% of the overall land for amount of Rs.5,13,61,000/-. Thus, it appears that once this issue has been gone into by the respondent authority, it would not be open for the respondent authority to re-open the issue relating to long term capital gain.

Whether re-opening is permissible after audit party expresses opinion? - Re-opening of the case on the basis of factual error pointed out by the audit party is permissible, we may revert back to the decision delivered in the case of Reckitt Bencksier Healthcare India (P.) Ltd., (2016 (9) TMI 338 - GUJARAT HIGH COURT] wherein it has been propounded that it is settled position of law that reason to believe need to be of the assessing officer alone and same cannot be substituted based upon receiving objection from the Audit Department and as such, considering the aforesaid situation which is prevailing on record, and having found this fundamental error as indicated above, we are of the opinion that a case is made out by the petitioner. Decided in favour of assessee.