NANMANGALAM SADAGOPAL MADANAGOPAL,CHENNAI vs. ACIT, NCC-22(1), CHENNAI

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ITA 3042/CHNY/2025Status: DisposedITAT Chennai13 October 2026AY 2014-154 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of the assessment under Section 147 by issuing a notice under Section 148 was not sustainable in law. The Tribunal observed that the issue regarding the Section 54F deduction had already been discussed, analyzed, and duly assessed by the AO in the original assessment under Section 143(3). The AO's subsequent action to re-examine the same transactions, which were already assessed after considering the assessee's documents, explanations, and evidence, amounted to a 'change of opinion'. Respectfully following the decision of the Hon'ble Apex Court in CIT, Delhi v. Kelvinator of India Ltd. (supra), the Tribunal found the AO's action to be in contravention of the law. Consequently, the assessment order passed under Section 143(3) read with Section 147 was quashed and declared null and void. The grounds raised by the assessee were allowed.

What were the facts?

The assessee, Nanmangalam Sadagopan Madanagopal, filed an appeal against the order of the CIT(A) for Assessment Year 2014-15. The assessee had initially filed a return declaring income of Rs. 27,78,070, which was assessed at Rs. 30,75,080 under Section 143(3). Subsequently, the Assessing Officer (AO) issued a notice under Section 148, alleging escaped income. The assessee filed a revised return declaring the same income. The AO then passed an order under Section 143(3) read with Section 147, denying a deduction of Rs. 1,03,53,962 claimed by the assessee under Section 54F. The CIT(A) upheld the AO's order. The assessee's primary ground of appeal was the disallowance of the Section 54F deduction, arguing that the AO and CIT(A) erred in their understanding of the ownership of the properties.

What were the issues?

1. Whether the reopening of assessment under Section 147 by issuing a notice under Section 148 was valid, when the issue of Section 54F deduction was already discussed and decided in the original assessment under Section 143(3)? (Question of law and fact, turning on Section 147 and the principle of 'change of opinion'). Assessee's contention: The AO and CIT(A) erred in disallowing the Section 54F deduction. The assessee had only one house at Chromepet other than the new asset at Nanmangalam on the date of transfer, and both authorities misunderstood the ownership timeline. The reopening constitutes a 'change of opinion' by the AO, which is not permissible. Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 139,Section 143(3),Section 147,Section 148,Section 54F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: HONOURABLE GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 20.08.2026Pronounced: 13.10.2026

आयकर अपीलीय अधिकरण ’सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री जॉजज जॉजज के., उपाध्यक्ष एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE GEORGE GEORGE K, VICE PRESIDENT AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 3042/Chny/2025 ननिाारण वर्ा /Assessment Years: 2014-15 Nanmangalam Sadagopan v. Assistant Commissioner of Madanagopal, Income Tax, No.18, Ramasamy Street, Chromepet, Non-Corporate Circle-22(1), Chennai-600 044. Tambaram. [PAN: ABRPM1048C] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. V. Mahaganapathi, C.A, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. R. Raghupathy, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 20.08.2026 घोषणाकीतारीख /Date of Pronouncement : 13.10.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’), Delhi dated 05.08.2025 for the Assessment Year (hereinafter referred as the ‘AY’) 2014-15.

GROUDS OF APPEAL 1. Disallowance of Section 54F Deduction - Rs.1, 03, 53,962/-. That on facts and as well as on law, Hon'ble CIT (A) erred by upholding the original decision of the Assistant Commissioner of Income Tax, who disallowed the deduction for New Asset claimed u/s 54F by the Appellant, without considering the facts that the Appellant had only one house at Chromepet other than the New Asset at Nanmangalam on the date of transfer. Both the Assistant Commissioner of Income Tax and the Hon'ble CIT (A) erred in their understanding by considering the Appellant's Existing House at Chromepet and the New Asset at Nanmangalam, as if both houses were owned prior to the date of transfer. For this reason and for any other reason that may be adduced at the time of hearing, it is humbly prayed that the Hon'ble Tribunal may direct the Assistant Commissioner of Income Tax, Non- Corporate Circle 22(1), Tambaram to set aside the Order dated 18-12-2019 and allow the appellant's contention and render justice.

ITA No.3042/Chny/2025 Nanmangalam Sadagopan Madanagopal 2. The brief facts of the case are that the assessee filed his original return of income u/s. 139 of the Act declaring taxable at Rs. 27,78,070/- and the case of the assessee was assessed u/s. 143(3) of the Act vide order dated 22.11.2016 at a figure of Rs. 30, 75, 080/-. Subsequently, it was observed by the AO that income chargeable to tax has escaped assessment, accordingly, a notice u/s. 148 of the Act was issued to the assessee on 06.02.2019. In response to the same, the assessee has filed his return of income on 07.03.2019 declaring a total income at Rs. 30, 75, 080/-. Ultimately, the case of the assessee was assessed u/s 143(3) r.w.s. 147 of the Act after denying the exemption of Rs. 1, 03, 53, 962/- claimed by the assessee u/s. 54F of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT(A), who in turn confirmed the order of the AO. The assessee being further aggrieved, preferred the present appeal before us. 3. We have gone through the order of the AO, the order of the Ld. CIT (A) and the submissions of the assessee along with the grounds raised. It is observed that the case of the assessee was selected for limited scrutiny for a specific reason, i.e., “Deduction claimed under the head Capital Gains”. Thereafter the case of the assessee was assessed u/s. 143(3) of the Act vide order dated 22.11.2016 at a figure of Rs. 30, 75, 080/-. It is also observed that the assessment of the assessee u/s. 143(3) of the Act was completed after a detailed deliberations between the assessee and the AO and the issue under consideration was specifically discussed and decided by the AO. Now, the AO again wants to verify the same transactions which he has already assessed after going through the documents, explanation and evidence adduced by the assessee at the time of original assessment. 4. The matter under consideration has legal as well as factual questions to be adjudicated. We deem it fit to decide the legal issue first i.e. assumption of charge by the AO by issuing notice u/s. 148 of the Act. On the similar issue the Hon’ble Apex Court [2010] 187 Taxman 312 (SC) CIT, Delhi v. Kelvinator of India Ltd. Held as below: “ Prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under two conditions, viz., if (a) the ITO had reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the ITO or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax had escaped assessment for that year, or (b ) the ITO had in consequence of information in his possession reason to believe that income chargeable to tax had escaped assessment for any Page 2 of 4

ITA No.3042/Chny/2025 Nanmangalam Sadagopan Madanagopal assessment year. The fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 with effect from 1-4-1989 those conditions are given a go-by and only one condition has remained, viz., where the Assessing Officer has reason to believe that income has escaped assessment, the section confers jurisdiction to reopen the assessment. Therefore, post 1-4-1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe', failing which section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. One must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess, but the reassessment has to be based on fulfilment of certain pre-conditions and if the concept of 'change of opinion' is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, the Assessing Officer has power to reopen, provided there is 'tangible material' to come to conclusion that there is escapement of income from assessment. Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in section 147. However, on receipt of representations from the companies against omission of the words 'reason to believe', the Parliament re-introduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer. [Para 4]” 5. In the matter before us also, the action of the AO falls in the category of change of opinion, as the matter has already been discussed, analysed and duly assessed u/s. 143(3) of the Act. In view of the facts of the matter and respectfully following the decision of the Hon’ble Apex Court in CIT, Delhi v. Kelvinator of India Ltd. (supra), we do not find the action of the AO sustainable in law and is in contravention of the law declared by the Hon’ble Apex Court, hence, same needs to be set aside. Resultantly, the grounds raised by the assessee are allowed and the orders of the authorities below are set aside and assessment order passed u/s. 143(3) r.w.s. 147 of the Act is quashed and declared to be null and void. 6. In the result, the appeal of the assessee is allowed in above terms. Order pronounced on the 13th day of October 2026, in Chennai.

Sd/- Sd/- (जॉजा जॉजा के.) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K.) लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष /VICE PRESIDENT चेन्नई/Chennai, ददनाांक/Dated: 13th October 2026. KB

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ITA No.3042/Chny/2025 Nanmangalam Sadagopan Madanagopal आदेश की प्रततललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रतततनधि/DR 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.10.16 09:14:22 +05'30'

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