Sigma Paradise Vs DCIT (ITAT Delhi)
Delhi ITAT Quashes Reopening Based on Mere Audit Objection: No New Material to Invoke Section 147
Delhi ITAT considered an appeal challenging reassessment proceedings initiated u/s 147 r.w.s. 144B. Assessee, a partnership firm engaged in cultivation & trading of agri-products, had originally been assessed u/s 143(3) on 29/12/2015, wherein long-term capital gain was computed after accepting indexed cost of purchase, indexed cost of improvement & transfer expenses. Subsequently, notice u/s 148 dated 25/03/2021 was issued on the premise that the stamp duty valuation of the property sold was ₹8.81 crore as against declared sale value of ₹4 crore, attracting deeming fiction u/s 50C.
Assessee explained that the land had gone into compulsory acquisition proceedings initiated by the State Government & the State had determined compensation at only ₹1,000 per sq. metre. It was submitted that stamp valuation could not be invoked in respect of a property under acquisition, & moreover, the purchasers had defaulted on payments due to receiving much lower compensation than expected. CIT(A) sustained reopening & addition.
Before Tribunal, Assessee contended that all primary facts, including sale deed, acquisition notifications & computation of capital gains, were already on record during original assessment, & no new material had surfaced for reopening after 4 years. Tribunal examined the reasons recorded u/s 148 & noted that reopening was based solely on an audit objection, with AO reviewing existing records without any fresh tangible information. Tribunal held that when all material facts were duly disclosed during original scrutiny, AO cannot reopen assessment beyond four years merely to apply section 50C differently, as this amounts to a change of opinion, impermissible in law.
