The Bombay High Court quashed the re-opening of assessment on the ground that no new tangible material available on record to prove escapement of income.
The writ petition under Article 226 of the Constitution of India challenged the notice under section 148 of the Income-tax Act, 1961, issued by the Assistant Commissioner of Income Tax proposing to reassess the income for the assessment year (‘AY’) 2015-16 and the order, rejecting the objections raised by the petitioner to the proposed action of reopening.
The assessee, A&J Associates, filed its return of income for A.Y. 2015-16 declaring income at Rs. 11 crores and the same was assessed under Section 143(3) of the Income Tax Act determining total income at Rs.12 crores.
The Assessing Officer while reopening assessment noted that “it is not correct on the part of the assessee to show the new property purchased in the balance sheet as on 31.03.2015. Since the property was not in the possession of the assessee as on 31.03.2015, in the assessment order the amount of profit on sale of the property should be taxed as short-term capital gain.”
In Ananta Landmark P. Ltd v Dy. CIT, the Bombay High Court observed that “Where assessment was not sought to be reopened on the ‘reasonable belief’ that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of AO the reopening was not justified.”
The Court of Justices Kamal Khata and Dhiraj Singh Thakur observed that in the present case, the Assistant Commissioner of Income Tax has relied upon the same information available from the assessment records there was no new tangible material available on record to conclude that income had escaped assessment. The Bench concluded by noting that the instant case is clearly a ‘change of opinion’.
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