Reopening of Income Tax Assessment cannot be made on mere Change of Opinion: ITAT [Read Order]

Reopening - Income Tax - ITAT - TAXSCAN

The Income Tax Appellate Tribunal (ITAT), Chennai held that Reopening of assessment cannot be made on mere change of opinion.

The assessee was assessed u/s 143(3) of the Income Tax Act,1961 for the year under consideration on 23.03.2016. However, the case was reopened and notice u/s 148 was issued on 27.03.2018 which is within 4 years from end of relevant assessment year. The reasons to reopen the case were communicated to the assessee.

The assessee, Joseph Selvakumar Selvan purchased vacant land during the year 2008 and converted the same into plots and sold the same during the year. The income thus earned was offered under the head ‘Capital Gains’ which was accepted in original assessment, However, AO opined that the said activities would be adventure in the nature of trade and therefore, the income was to be assessed as ‘Business Income’ which would be taxable at higher rates. Accordingly, the case was reopened.

The assessee opposed reopening on the ground that the same was at the behest of revenue audit and based on borrowed satisfaction. It was also submitted that the reopening was on mere change of opinion and based on same material which was available at the time of regular assessment proceedings. However, rejecting the same, AO assessed the resultant gains as ‘Business Income’ and framed the assessment.

A Division Bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that “The AO, with due application of mind, adopted one of the views during regular assessment proceedings. Thereafter, without there being any fresh intangible material on record, AO proceeded to reopen the case merely to change the head of income. It is trite law that review of the order, on same set of facts and material, is impermissible. Therefore, we have no hesitation to hold that the reopening was merely on the basis of change of opinion.”

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