It is not permissible to reopen based on change of opinions: HC

Samet Estates Pvt. Ltd. Vs CIT (Bombay High Court)

It is Petitioner’s case that the same issue which is mentioned in the reasons for reopening was a subject matter of consideration during the assessment proceedings and the assessment order dated 20^th December, 2010 in fact even discussed this item. Therefore, reopening is based on change of opinion which is not permissible. Third point of challenge to notice is the very subject matter of reasons for reopening was a subject of revision proceedings under Section 263 of the Act and Commissioner of Income Tax had issued a notice dated 21^st January, 2013 under Section 263 of the said Act, calling upon Petitioner to show cause as to why the assessment order under Section 143(3) should not be modified or cancelled and profit on sale of investments of Rs.85,62,314/- should not be added as business receipts instead of capital gains.

in the assessment order dated 28^th December, 2010, the assessing officer has recorded that assessee has in the profit and loss account shown profit on sale of investment of Rs.85,62,3 14/-. He has also recorded that assessee has carried out activities only in respect of capital gains. In fact, by this conclusion he has disallowed certain expenses and has added it back to total income by assessee as per Section 37(1) of the said Act. Therefore, issue raised by the assessing officer to reopen has been in the active consideration of the assessing officer who passed the original assessment order dated 28^th December, 2010. Therefore, it is a clear case of change of opinion and it is not permissible to reopen based on change of opinions.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1] Petitioner was served a notice dated 28^th March, 2013 under Section 148 of the Income Tax Act, 1961 (the said Act) for assessment year 2008-09 which is impugned in this petition. Petitioner was provided reasons for reopening by a communication dated 8^th April, 2013. The basis for reopening is that Petitioner is a Company engaged in the business of real estate activities and has shown profit from sale of investment of Rs. 85,62,314/- in P & L Account, but has claimed capital gains to which it was not entitled to. According to assessing officer, properties sold should have been treated as business income and not capital gains.

Please become a Premium member. If you are already a Premium member, login here to access the full content.