2023 (9) TMI 481 - AT - Income Tax

Validity of Reopening of assessment - Long term capital gain - whether reopening of the concluded assessment based on a mere change of opinion ? - HELD THAT - As reasons to believe that had formed the basis for reopening the assessee s case u/s. 147 of the Act it transpires that the same as stated by the Ld. AR and rightly so is based on a mere change of opinion of the A.O on the same set of facts as were there before his predecessor while framing the original assessment u/s. 143(3) Reopening a concluded assessment based on the same set of facts as were available on record during the original assessment is not permissible under law. The aforesaid view is supported by the judgment of Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT Thus, we concur with the contention advanced by the Ld. AR that as the case of the assessee had been reopened based on a mere change of opinion therefore the A.O had wrongly assumed jurisdiction and framed the impugned assessment u/s. 143(3) r.w.s 147. Assessee had disclosed fully and truly all the material facts; therefore by no means could she have been saddled with any failure to disclose fully and truly all material facts that were necessary for framing her assessment which would have otherwise justified bringing her case within the realm of the extended period contemplated in the 1st proviso of section 147 of the Act for validly reopening the same. Thus A.O had wrongly assumed jurisdiction and reopened the concluded assessment of the assessee which was earlier framed by his predecessor vide order passed u/s. 143(3) therefore quash the consequential assessment order passed by him u/s. 143(3) r.w.s. 147 - Assessee appeal allowed.

Summary

Issues Involved:
1. Sustaining the addition of Rs. 6,23,903/- on account of long-term capital gain.
2. Validity of reopening the concluded assessment u/s 143(3) in the absence of any fresh/new material.
3. Validity of initiation of reassessment u/s 147/148 beyond four years without any failure on the part of the assessee to disclose fully and truly all material facts necessary for the original assessment.

Summary:

Issue 1: Sustaining the Addition of Rs. 6,23,903/- on Account of Long-Term Capital Gain
The assessee declared an income of Rs. 3,72,070/- for A.Y. 2008-09, including LTCG of Rs. 2,21,602/-. The A.O. originally assessed the income at Rs. 4,42,070/-. However, upon reopening the case, the A.O. reassessed the LTCG at Rs. 8,45,505/-. The CIT(Appeals) partly allowed the appeal, directing the A.O. to verify and allow the cost of acquisition and subsequent indexation as claimed by the assessee. However, the cost of improvement claimed by the assessee was disallowed as it was considered an afterthought, given that the expenses were claimed to have been incurred after the death of her husband.

Issue 2: Validity of Reopening the Concluded Assessment u/s 143(3) in the Absence of Any Fresh/New Material
The assessee contended that the reopening of the assessment was based on a mere "change of opinion" and not on any fresh material. The Tribunal found substance in this claim, noting that the original assessment had already considered the transaction of the sale of the property and the resultant LTCG. The Tribunal cited the Supreme Court judgment in Commissioner of Income-Tax Vs. Kelvinator of India Ltd., which held that reopening a concluded assessment based on the same set of facts is not permissible under law.

Issue 3: Validity of Initiation of Reassessment u/s 147/148 Beyond Four Years Without Any Failure on the Part of the Assessee to Disclose Fully and Truly All Material Facts Necessary for the Original Assessment
The Tribunal concurred with the assessee's claim that the reopening beyond four years was invalid as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal referenced the "1st proviso" to Sec. 147 and judgments from the Hon'ble High Court of Delhi and the Hon'ble High Court of Punjab & Haryana, which support that reopening beyond four years is not permissible without such failure.

Conclusion:
The Tribunal quashed the reassessment order dated 28.03.2014, holding that the A.O. had wrongly assumed jurisdiction to reopen the concluded assessment. As the reassessment was quashed, the Tribunal refrained from adjudicating the merits of the addition. The appeal was allowed in favor of the assessee.