Clipped from: https://taxguru.in/income-tax/madras-hc-nixes-reassessment-change-opinion-justify-reopening.html
PCIT Vs Ramanathan Adaikalavan (Madras High Court)
The Madras High Court dismissed the appeal of the Revenue & upheld the ITAT’s order quashing reassessment proceedings u/s 148.
Assessee had filed his return u/s 139 along with the balance sheet & tax audit report u/s 44AB. In the original scrutiny assessment u/s 143(3), AO had examined the claim of long-term capital gains arising on sale of capital assets. Subsequently, the case was selected under CASS on the ground of “low capital gain vis-à-vis sale consideration”. A notice u/s 148 was issued, seeking to reopen the assessment.
Revenue argued that certain schedules relating to Assessee’s investments had escaped the attention of AO during the original scrutiny & that Assessee was not entitled to certain benefits claimed on LTCG. According to the Revenue, ITAT erred in treating the reassessment as a mere change of opinion.
The High Court, however, noted that the notice u/s 148 only called for details which were already part of the record at the time of original scrutiny. No new tangible material or fresh information had been brought to light to justify reopening. It was evident that the basis for reassessment was nothing but a change of opinion on the very same set of facts examined earlier.
Relying on the settled principle that reassessment cannot be resorted to for a mere change of opinion, the Court upheld the Tribunal’s finding & dismissed the Revenue’s appeal, holding that no substantial question of law arose for consideration.
Thus, the High Court reaffirmed that once all material facts are placed before the AO & examined during original scrutiny, reassessment proceedings u/s 148 cannot be sustained merely because the AO later wishes to take a different view.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Heard the appeal on admission.
2. The Revenue has filed this appeal raising the following substantial questions of law:
“1.Whether on the facts and circumstances of the case, the learned ITAT was right in quashing the proceedings under Section 148 being bad in law holding that, all documents comprising balance sheet, profit & loss a/c of the assessee were submitted before the Assessing Officer during original assessment proceedings; whereas the assessee in the return of income filed under Section 139 of the Act, balance sheet, tax audit report under Section 44AB submitted to the Department had not disclosed the true nature of the asset sold?
2.Whether on the facts and circumstances of the case, the learned ITAT was right in quashing the re-assessment proceedings reopened based on the information on the capital asset received by the Assessing Officer after completion of the original assessment under Section 143(3) where one of the reason for CASS selection was low capital gain w.r.t sale consideration as returned by the assessee in the return of income under the head long term capital gain and the Assessing Officer had scrutinized the details submitted by the assessee under the head LTCG based on the documents submitted by the assessee and information available with the Assessing Officer, during the assessment proceedings under Section 143(3) of the IT Act?
3. Whether on the facts and circumstances of the case, the learned ITAT is perverse to the facts and circumstances of the case?”
3. Learned counsel for the Revenue would submit that the Tribunal has acted perversely against the legal position, that present was not a case of reopening based on new information but only change of opinion. He would further submit that at the time of scrutiny assessment, the schedule with regard to the assessee’s investments escaped the attention of the Assessing Officer and later on, it was found that the assessee could not have claimed benefits arising out of the long term capital gain in view of various transactions made.
4. We find that the learned Tribunal has gone through the contents of notice under Section 148 of the Income Tax Act which only requires certain information which were available earlier before the Assessing officer at the time of making assessment.
5. Therefore, it is apparently clear that the basis for reopening was change of opinion and not new information. Therefore, no question of law is involved. The appeal is dismissed. There will be no order as to costs.
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