The Income Tax Appellate Tribunal (ITAT), Kolkata bench, on Friday quashed an assessment framed under sections 147 and 148 of the Income Tax Act, 1961 by holding that an assessment cannot be re-opened merely based on a mistake of opinion.
Assessee, a private limited company, filed its return for the relevant assessment year. The Assessing Officer, during scrutiny, observed that during the relevant Previous Year the assessee had received compensation of Rs. 2,01,10,040/- for premature termination of the two Lease Agreements, which was claimed as capital receipt not exigible to tax. After hearing the assessee at length and appreciating all facts, brought on record in writing, as supported by evidences, the Assessing Officer accepted the assessee’s claim of treating the aforesaid compensation of Rs. 2,01,10,040/- as capital receipt not exigible to tax and passed the order accordingly.
Later, the assessment was re-opened by holding that the the amount received for compensation against early termination of Lease Agreement for property is nothing but rental income from the said leased out property. The Officer was of the opinion that such income need to be considered as income from house property in the hands of the assessee.
On appeal, the first appellate authority quashed the order stating that the same amount to a mere change of opinion. The order stated that “after completion of the original assessment, the Assessing Officer changed opinion on the same set of materials and/or evidences which had already been considered and appreciated in original assessment.”
Citing the order of the Commissioner of Income Tax (Appeals), the Tribunal bench comprising Judicial Member Aby T. Varkey and Accounting Member J. Sudhakar Reddy held that “the ld. D/R could not controvert to this factual finding of the ld. CIT(A). Thus this is a clear case of change of opinion and hence the re-opening of assessment based on mistake of opinion is bad in law.”
“Even otherwise, the re-opening is beyond the period of four years and the original assessment was completed u/s 143(3) of the Act on 08.12.2011. In the reasons recorded, there is no whisper that the assessee has failed to disclose truly and fully all material facts required for assessment. In the absence of such an allegation the reopening is bad in law as the proviso to Section 147 comes into play,” the bench added.
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