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TMI Blog2023 (6) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... blic purposes and as such a notification was issued in the Extra Ordinary Gazette dated 07.10.2013 to acquire the same portion of lands which are narrated in the notification. In response to the said process of acquisition, the petitioner alongwith other co-owners provided the details of the land owned by them on 30.08.2013 and later on, the petitioner was served with a notice dated 30.12.2013 to receive consideration against the same. The petitioner alongwith other co-owners received 75% of the consideration against the acquisition of three land parcels, as indicated above, on 08.12.2015. Subsequently, the petitioner alongwith other co-owners executed an agreement to sale on 16.12.2015. Eventually, sale deeds were executed on 30.06.2017 for the sale of these lands by the petitioner alongwith other co-owners. [3.1] It is the case of the petitioner that petitioner has filed her original return of income for Assessment Year 2016 - 2017 on 17.03.2017 declaring total income of Rs.9,10,000/- and claimed exemption on income from compulsory acquisition of land totaling around Rs.2,74,83,074/-. The said of return of the petitioner was duly processed and detailed scrutiny was undertaken. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, the petition has come up for consideration before this Court wherein the respondent authority has affirmed the affidavit on 21.04.2023 and pursuant to the said submission of the pleadings, both the learned advocates have requested the Court to take up the matter for its adjudication and as such, upon consent and request of both the learned advocates, the matter is taken up for hearing in which Mr. B. S. Soparkar, learned advocate has represented the petitioner and Mr. Varun K. Patel, learned advocate has represented the respondents authorities who issued the impugned action. [6] Mr. B. S. Soparkar, learned advocate appearing for the petitioner has vehemently contended that the impugned action i.e. notice as well as order passed by respondent Nos. 1 and 2 respectively are totally impermissible and it violates the relevant proposition of law and the issue. It has been submitted that respondent No.1 authority has recorded practically only one reason to believe that income has escaped assessment. The petitioner alongwith three more co-owners have claimed that their land was compulsorily acquired by GIDC and they have received consideration against the same and such consideration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under Section 147 of the Act cannot be invoked merely for the purpose of verification and / or for making a roving and fishing inquiry and as said earlier, the contours of Sections 147 and 263 of the Act are quite distinct and as such the issuance of notice for roving enquiry or re-verification is not sustainable. It has been further contended that reason to suspect is practically no reason to believe, the Assessing Officer has to form an opinion under Section 147 of the Act but the said opinion cannot be formulated on the basis of mere suspicion and here is the case wherein a proper scrutiny at length has been undertaken and thereafter assessment order has been passed and as such under this circumstance, the action is not sustainable in the eye of law. It has further been contended that apart from this, the assessment order has been passed way back in year 2018 wherein the present action which is sought to be initiated is in the year March, 2021 which is beyond the reasonable period as it is approximately around two years down the line. Hence, at such a belated stage, no power can be exercised in view of settled position of law. [6.3] Mr.Soparkar, learned advocate has furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the decisions of Hon'ble Apex Court in case of Union of India versus Infopark Kerala reported in (2017) 81 taxmann.com 51 (SC) and in the case of Balakrishnan versus Union of India reported in (2017) 80 taxmann.com 84 (SC) which the Court would deal with at a later point of time. [6.5] At this stage, Mr.Soparkar, learned advocate has relied upon few decisions on the issue of change of opinion and a reference is made to in the case of Friends of WWB, India versus Deputy Commissioner of Income-tax (Exemption) reported in (2015) 56 taxmann.com 455 (Gujarat) and in the case of Janaki Mohan versus Income-tax Officer, Non- Corporation Ward - 15(2), Chennai reported in (2021) 132 taxmann.com 109 (Madras) as well as in the case of Cliantha Research Ltd. versus Deputy Commissioner of Income-tax, Ahmedabad Circle-I reported in (2013) 35 taxmann.com 61 (Gujarat). [6.6] So far as the proposition that in the absence of no new tangible material reopening is impermissible, Mr.Soparkar, learned advocate has made a reference to in the case of Shanti Enterprise versus Income-tax Officer, Ward 2 reported in (2016) 76 taxmann.com 184 (Gujarat) as well as in the case of Principal Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 23 of the said decision, a contention is raised that since strong case made out by the petitioner, the impugned action may be quashed which would subserve the interest of justice. [7] As against this, Mr. Varun K. Patel, learned advocate appearing for the respondents has submitted that it is not correct that only on the basis of one reason about order under Section 263 of the Act action is sought to be initiated. On the contrary, after due application of mind, the action is tried to be initiated and therefore, cannot be said to be erroneous in any form. The concept of change of opinion does not apply when in respect of other co-owners the order is passed under Section 263 of the Act. It has been contended that if this order could have been placed on record probably even co-ordinate bench could not have passed any order in favour of the petitioner. Hence, the action deserves to be corrected. [7.1] Mr. Patel, learned advocate has submitted that an assessment order has been passed in favour of the petitioner by not adding the income but then that itself is not a circumstance which can prevent the authority from exercising jurisdiction. In fact in case of this very property a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made a reference to two decisions which are in the cases of Gala Gymkhana (P.) Ltd. versus Assistant Commissioner of Income-tax, Circle- 4 reported in (2012) 27 taxmann.com 294 (Gujarat) and Rajesh Jhaveri Stock Brokers Private Limited reported in 2007 LawSuit (SC) 725 and by referring to these decisions, a contention is reiterated that there is hardly any substance in the submission made by learned advocate appearing for the petitioner. [7.4] Mr. Patel, learned advocate has further submitted that this being an action within the period of four years the concept of change of opinion would not help out the petitioner. In fact, according to Mr. Patel, learned advocate, the taxability is not examined by an authority and there was no such specific query and as such it is always open for an authority to reopen the assessment even if it has been well scrutinized. [8] At this stage, Mr. B. S. Soparkar, learned advocate appearing for the petitioner in rejoinder has submitted that as said earlier the contours of Sections 147 and 263 of the Act are altogether different and in case of Ms. Poonamben Modi, one of the co-owner of the land, the case is dropped for this very property on 22.06.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of revision proceedings under Section 263 of the Act. On this very material, a decision is taken that present assessee has wrongly availed benefit under Section 10(37) of the Act of an amount of Rs.2,74,83,073/- during the year and therefore, has arrived at a conclusion that to that extent income has escaped the assessment within the meaning of Section 147 of the Act. So on one hand, this exemption issue has already been dealt with during the scrutiny proceedings which has accepted the claim of the petitioner and passed an order of assessment in specific form and later on the opinion is formulated to reopen the assessment since in respect of proceedings under Section 263 of the Act in case of other co-owners the claim of the exemption was not allowed and as such this is not an independent exercise of power but it is based upon the very same material and on information the different opinion is now to be formed once having accepted while passing an assessment order and therefore, to some extent, the learned advocate for the petitioner has justifiably contended that it is a case of change of an opinion based upon the proceedings in respect of co-owners. In fact, it appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under the Act (subject to fulfilment of certain conditions for spcified urban land). 2. The RFCTLARR Act which came into effect from Ist January, 2014, in section 96, inter alia provides that income-tax shall not be levied on any award or agreement made (except those wade under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax. 3. As no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under the RFCTLARR Act, the exemption provided under section 96 of the RFCTLARR Act is wider in scope than the tax exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of taxability of compensation received on compulsory acquisition of land, especially those relating to acquisition of non-agricultural land. The matter has been examined by the Board and it is hereby clarified that compensation received in respect of award or agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTLARR Act Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of incone-tax. 3. As no distinction has been made between compensation received for compulsory acquisition of agricultural land and non-agricultural land in the matter of providing exemption from income-tax under the RFCTLARR Act, the exemption provided under section 96 of the RFCTLARR Act is wider in scope than the tax-exemption provided under the existing provisions of Income-tax Act, 1961. This has created uncertainty in the matter of taxability of compensation received on compulsory acquisition of land, especially those relating to acquisition of non-agricultural land. The matter has been examined by the Baard and it is hereby clarified that compensation received in respect of award or agreement which has been exempted from levy of income-tax vide section 96 of the RFCTLARR Act shall also not be taxable under the provisions of income-tax Act, 1961 even if there is no specific provision of exemption for such compensation in the Income-tax Act, 1961. 4. The above may be brought to the notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of present petitioner has now tried to change the opinion since in respect of other coowners the exemption is not considered but then since the issue has not attained finality with respect to other co-owners, we are not satisfied that could be a valid reason for reopening the assessment of present petitioner though once has been scrutinized and culminated in an order of assessment. It is needless to state that the moment the issue with respect to other co-owners is finally settled by the High Court, it is always open for the authority to take appropriate corrective measure if permissible in law since authorities are sufficiently couched with the power. [16] There is one another circumstance, which also cannot be sideline is that in case of Ms. Poonamben Modi one of the coowner in the proceedings have been dropped with respect to this very property on 22.06.2021 and similar to present petitioner the assessment was undertaken and found no addition. The said aspect has not been controverted so specifically by the learned advocate appearing for the revenue. [17] In the background of these circumstances, if we peruse the contentions raised by the petitioner and to justify the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the present case pertains to notice of reopening issued within the period of four years from the end of the relevant assessment year. The additional requirement flowing from proviso to section of such income chargeable to tax having escaped assessment for the failure of the assessee to disclose truly and fully all material facts, therefore need not be satisfied. Nevertheless, if an issue had been examined by the Assessing Officer in the original assessment proceedings, any reopening on the basis of such issue without any additional material would be a mere change of opinion. As held by this Court in the case of Gujarat Power Corporation v. Asst. CIT, 350 ITR 166 (Guj.), even when the Assessing Officer in an order of assessment had accepted the assessee's stand and granted the claim as put forth, reopening on the same issue would not be permissible on the basis of selfsame material on record. Similar view is also taken by the Delhi High Court in the case of CIT v. Usha International Ltd, 348 ITR 485 (Delhi). In the present case, the Assessing Officer had raised a pointed query with respect to the amount accumulated or set apart for utilization in subsequent years. He called upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of sub-section (2) of section 54F and by considering all those aspects, he granted exemption for only one property alone. This being the factum, the Assessing Officer clearly formed an opinion for the purpose of grant of exemption under section 54F while passing the original assessment order and now the reasons furnished for reopening of assessment would reveal that they are taking a different opinion on the same set of facts. Thus, the said reasons furnished for reopening the proceedings dated 6-4-2016 amounts to change of opinion beyond any pale of doubt. " [20] As such when this issue has been in substance reiterated over the period of time, we are of the opinion that since very issue about exemption has been dealt with during the assessment proceedings, now after about almost two years, reopening is impermissible by resorting to Section 147 of the Act simply because in respect of other co-owners the claim has not been allowed but then the said issue is very much pending, has not attained finality and as such action initiated by respondent authority is impermissible. [21] Further it appears that there is no independent application of mind by respondent authority and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically contended in its objections that neither the order of CIT (Appeals) or the communication dated 16.03.2018 of the ITO was furnished to the petitioner. It is the opinion of the ITO, Kolkata and the finding recorded by CIT (Appeals) which perforced the AO to issue the impugned notice partakes the character of borrowed satisfaction and/or without there being independent finding recorded by AO for reopening of the assessment. In fact, Assessing Officer seems to have reopened the assessment to fish out evidence which is impermissible and the pre-requisite for reopening being 'satisfaction of income to tax having escaped', the authority should have reason to believe that income of the assessee has escaped assessment; and, secondly, he must have reason to believe that such escapement is by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. If these twin conditions are not being fulfilled, notice issued by the authority would be one without jurisdiction. The belief which the authority entertains must not be arbitrary or irrational. It must be reasonable or having nexus to the escapement of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 263 of the Act and as such when the authority has resorted to Section 147 of the Act is appearing to be impermissible especially when there appears to be no subjective satisfaction independently arrived at that any income chargeable to tax has escaped the assessment for any assessment year. This reason to belief contemplated under Section 147 of the Act requires proper application before initiating the step which here appearing to be missing and as such we are quite satisfied that case is made out by the petitioner to call for any interference. [24] The background of facts as such has led to a situation where yet another decision which has been brought to our notice has some impact on the conclusion which we may arrived in the present case on hand. In case of NLC India Ltd. (supra) the Madras High Court has also touched the said issue and as such we deem it proper to quote hereunder the observations contained in paragraphs 54, 55, 56 and 58:- "54. Likewise, section 148 must be resorted to only in those cases where the reasons disclose prima facie satisfaction that there is escapement of turnover. In a case where orders of assessment have been passed under scrutiny, the spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the above, on the transfer of agricultural land by way of compulsory acquisition under any law, no capital gain tax is payable. It is clear from the above that the initial view of the Income Tax Department, while refunding the aforesaid TDS amount to the appellant, was that the land in question was compulsorily acquired under the LA Act and, therefore, capital gain tax was not payable. The appellant filed income tax return for the Assessment Year 2009-10 and the income was also assessed accordingly. However, thereafter on 30.05.2012, a notice was issued to the appellant under Section 148 of the Act whereby the Income Tax Department decided to re-open the assessment on the ground that income which was assessable to income tax escaped assessment during the year 2009-10. The stand which was taken by the Revenue in this notice was that the amount of compensation/consideration received by the appellant against the aforesaid land was not the result of compulsory acquisition and on the contrary it was the voluntary sale made by the appellant to the Techno Park and, therefore, the provisions of Section 10(37) of Act were not applicable. The appellant objected to the re-opening of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isition. We are not in agreement with the aforesaid view. It is clear that but for Notification under Section 4 and Award under Section 9 of the LA Act, the appellant would not have entered into any negotiations for the compensation of the consideration which he was to receive for the said land. As far as the acquisition of the land in question is concerned, there was no consent. The appellant was put in such a condition that he knew that his land had been acquired and he cannot reiterate the same. The appellant, therefore, only wanted to salvage the situation by receiving as much compensation as possible commensurate with the market value thereof and in the process avoid the litigation so that the appellant is able to receive the compensation well in time. If for this purpose the appellant entered into the negotiations, such negotiations would be confined to the quantum of compensation only and cannot change or alter the nature of acquisition which would remain compulsory. We, therefore, overrule the judgment of the Kerela High Court in Info Park Kerala vs. Assistant Commissioner of Income Tax (2008) 4 KLT 782." [26] Here also the land appears to be compulsory acquired and the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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