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TMI Blog2012 (12) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2.2 We may notice that in such return, the assessee had disclosed that it had earned income through sale of certain landed properties and treated it as capital gain. After adjusting the expenses and other allowable deductions, the assessee had worked out the capital gain at Rs. 37,32,950/- which was the only item of income disclosed by the assessee in the said return. 2.3 During the scrutiny assessment, Assessing Officer examined such claim. Several queries were raised and replies were received from the assessee. To these queries and replies, we would advert at a later stage. 2.4 Eventually, the Assessing Officer framed scrutiny assessment under Section 143 (3) of the Act and accepted the computation of income done by the assessee in the return. In such assessment order dated 21.05.2009, the Assessing Officer recorded as under: "The assessee is a housing co-operative society engaged in purchase and sale of land/plots. In response to notices issued on various dates of this office Shri Bhavesh P. Shah C.A. and authorized representative of the assessee and Shri Priyam Khambhata of M.S.Dhiren Shah & Co. has attended from time to time and furnished the details c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess such income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of proceedings under this section." 2.6 The petitioner raised his objections to such proposal for reopening the assessment under communication dated 30.04.2012. Respondent No.1, Assessing Officer, however, rejected such objections vide his order dated 27.07.2012. Hence, this petition. 3. Learned counsel for the petitioner submitted that the only head under which the assessee had earned income and which was disclosed in the return was of long term capital gain on sale of plots. Such return was taken in scrutiny, several queries were raised and replies were filed by the assessee. After considering such replies, the Assessing Officer accepted the computation of income made by the assessee in the return. Such scrutiny assessment cannot be reopened even within four years on the ground that the sale proceeds should have been treated as income from business and not as long term capital gain. Counsel submitted that any such attempt on part of the Assessing Officer would be on the basis of mere change of opinion. 4. In support of his contention, counsel relied on follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Consultant and Organizer Agarwal Estate Organizers Ltd., to terminate their development rights as the Society wants to sell the land of the society to the Prospective Buyer. It is to be taken note of that the society was not in a position to sell the land of the Society till the development agreement entered into between the society and Agarwal Estate Organizers Ltd. in operation. Therefore, if the society wants to sell the land of the society, first of all, the society was required to terminate the development rights given to Agarwal Estate Organizers Ltd. and for which the Society entered into a termination agreement with Agarwal Estate Organizers Ltd. and compensation amount payable to Agarwal Estate Organizers Ltd. on sale of land of the society was determined and agreed upon between both the parties. In view of the aforesaid facts and legal submission, the compensation paid to Agarwal Estate Organizers Ltd. is deductible in computation in computation of capital gain in the case of the Society as an expenditure in connection of the sale of land of the Society and therefore, the proportionate expenditure incurred on compensation paid to Agrawal Estate Organ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xhibit-I." Along with such reply, the petitioner produced at Exh.I the opinion with respect to Shah Corporation as called for by the Assessing Officer. 10. It was only after such detailed scrutiny that the Assessing Officer framed original assessment on 21.05.2009 making no additions to the income disclosed by the petitioner. As already noted, the Assessing Officer recorded that the representative of the assessee had attended the office from time to time and furnished details of the information called for. Thus, it is established inescapably that the Assessing Officer examined the claim thoroughly before passing the assessment order. The question is whether such scrutiny assessment can be reopened even within four years from the end of relevant assessment year on the reasons recorded by the Assessing Officer. 11. In our opinion, the answer has to be in the negative. It is true that the impugned notice has been issued within a period of four years from the end of relevant assessment year. Therefore, the requirement that the income chargeable to tax should have escaped assessment for the reason of the failure on the part of the assessee to disclose truly and fully all material fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be reopened on a mere change of opinion. It is stated that power to reopening cannot be equated with review. 42. Bearing in mind these conflicting interests, if we revert back to central issue in debate, it can hardly be disputed that once the Assessing Officer notices a certain claim made by the assessee in the return filed, has some doubt about eligibility of such a claim and therefore, raises queries, extracts response from the assessee, thereafter in what manner such claim should be treated in the final order of assessment, is an issue on which the assessee would have no control whatsoever. Whether the Assessing Officer allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly initiated in case return of income is processed under s. 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) 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 principle of "change of opinion". (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the AO does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the AO did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the AO had formed an opinion in the original assessment, though he had not recorded his reasons." 14. In the result, the impugned notice dated 29.03.2012 is quashed. Since facts are common in all petitions, respective impugned notices in all petitions would stand quashed. All petitions are allowed and dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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