Case Note & Summary
The petitioner, Shriprakash Ramshringar Pandey, was the Managing Director of a company and filed his income tax return for Assessment Year 2012-13 on 27 July 2012, disclosing total income of Rs.81,23,933. The assessment was completed under Section 143(3) of the Income Tax Act, 1961, on 31 December 2014, assessing income at Rs.82,07,933. On 26 March 2019, the petitioner received a notice under Section 148 of the Act, stating that income chargeable to tax had escaped assessment within the meaning of Section 147. The reasons recorded alleged that the petitioner had claimed exemption under Section 54 for capital gains of Rs.1,08,46,405, but the flat was purchased on 28 May 2010, while the capital gain arose on 5 September 2011, i.e., more than one year before the date of capital gain, resulting in an incorrect claim. The petitioner filed a return in response and was provided with the reasons. He filed objections, which were disposed of by an order dated 20 November 2019, rejecting the objections. The petitioner then challenged the notice and the disposal order by way of a writ petition. The court examined the reasons and noted that the purchase of the flat was on 28 May 2010, and the transfer giving rise to capital gain was on 5 September 2011. Under Section 54, the exemption is available if the assessee purchases a residential house within a period of one year before the date of transfer. Since the purchase was on 28 May 2010 and the transfer on 5 September 2011, the purchase was within one year before the transfer (from 5 September 2010 to 5 September 2011). The court found that the Assessing Officer had, during the original assessment under Section 143(3), examined the claim and allowed it. The reopening was based on the same material without any fresh tangible information, amounting to a change of opinion. The court held that the notice under Section 148 and the order disposing objections were invalid and quashed them. The petition was allowed with no order as to costs.
Headnote
A) Income Tax - Reopening of Assessment - Section 148, Income Tax Act, 1961 - Reasons to Believe - The Assessing Officer issued notice under Section 148 alleging that the assessee had incorrectly claimed exemption under Section 54 for capital gains, as the flat was purchased more than one year before the transfer. However, the court found that the purchase was within one year before the transfer, and the Assessing Officer had already examined the claim during original assessment under Section 143(3). Held that reopening based on the same material without fresh tangible material amounts to change of opinion and is impermissible (Paras 1-7). B) Income Tax - Change of Opinion - Section 147, Income Tax Act, 1961 - Reassessment - Where the Assessing Officer, during original assessment, had applied his mind to the exemption claim and allowed it, reopening on the same ground without any new information is a mere change of opinion and not valid. Held that the notice under Section 148 and the order disposing objections are liable to be quashed (Paras 5-7).
Issue of Consideration
Whether the reopening of assessment under Section 148 of the Income Tax Act, 1961, based on the same material already considered during original assessment, is valid when the Assessing Officer had applied his mind to the exemption claim under Section 54.
Final Decision
The court allowed the petition, quashing the notice dated 26.03.2019 under Section 148 and the order dated 20.11.2019 disposing objections. Rule made absolute. No order as to costs.
Law Points
- Reopening of assessment
- Section 148
- Section 147
- Section 54
- Income Tax Act 1961
- reasons to believe
- change of opinion
- lack of fresh material
