Case Law Details
ACIT Vs Smt. Rajeswari Kumar (ITAT Chennai)
Admittedly, the assessment year involved is 2012-13 and during the course of original assessment proceedings, the AO in his original assessment order passed u/s.143(3) dated 27.03.2015 noted the fact of taxability of builders portion of land and the AO has gone into the factum of builders portion of land while taxing long term capital gain of this transaction.
Revenue now could not controvert during the course of hearing that as to how the AO has formed his opinion not to tax the builders portion of land because the AO has gone into the details and reached to a conclusion that builders portion of land should not be treated as long term capital gain. The AO after applying his mind computed the long term capital gain and assessed the income accordingly. We have gone through the entire facts of the case, including the original assessment order and are of the view that the AO has formed an opinion and while reopening of assessment subsequently by the AO by issuing notice and recording reasons, as per reasons there is no whisper of any tangible material came to the notice of the AO during the course of recording of reasons. In such circumstances, we are convinced that the issue is covered by the decision of Hon’ble Supreme Court in the case of Kelvinator India Ltd., supra.
ITAT held that one needs to give a schematic interpretation to the words “reason to believe” failing which, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of “mere change of opinion”, which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of “change of opinion” as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words “reason to believe” but also inserted the word “opinion” in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words “reason to believe”, Parliament re-introduced the said expression and deleted the word “opinion” on the ground that it would vest arbitrary powers in the Assessing Officer.
From the above, we noted that in the present case before us, the AO has gone into the details of builders portion of land and formed an opinion what is to be taxed whether the same is to be taxed in the hands of the assessee or not. The AO once has formed opinion, reopening made by the AO is bad in law.
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