Principal Commissioner Of Income Tax-1 vs. Ramanathan Adaikalavan

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TCA/170/2025HC Madras04 September 2025Bench: Honourable The CHIEF JUSTICE6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court found that the ITAT had examined the contents of the notice under Section 148. The notice required information that was already available to the Assessing Officer at the time of the original assessment. Therefore, the basis for reopening the assessment was a change of opinion, not new information. Consequently, no substantial question of law was involved. The appeal filed by the Revenue was dismissed. The court did not decide on the merits of the capital gains claim or the specific transactions, focusing solely on the validity of the reopening proceedings. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax I, Coimbatore, filed an appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT), Madras "B" Bench, Chennai, dated 06.12.2024. The ITAT had quashed proceedings initiated under Section 148 of the Income Tax Act, 1961, for reassessment. The Revenue contended that the ITAT's decision was perverse and that the reopening was not based on new information but a change of opinion. The original assessment was completed under Section 143(3). The dispute arose from the assessee's claim of long-term capital gains, which the Assessing Officer (AO) later questioned.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was correct in quashing proceedings under Section 148 as bad in law, holding that all documents, including the balance sheet and profit & loss account, were submitted during original assessment, despite the assessee not disclosing the true nature of the asset sold in the return of income filed under Section 139? 2. Whether, on the facts and circumstances, the ITAT was correct in quashing reassessment proceedings reopened based on information about a capital asset received by the AO after the original assessment under Section 143(3), where one reason for CASS selection was low capital gain, and the AO had scrutinized details submitted by the assessee regarding long-term capital gain? 3. Whether, on the facts and circumstances, the ITAT's order is perverse? Revenue's Contention: The Tribunal acted perversely against the legal position. The reopening was not based on new information but a change of opinion. The schedule of investments escaped the AO's attention during scrutiny, and it was later found that the assessee could not claim benefits from long-term capital gain due to various transactions. Assessee's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 139,Section 143(3),Section 44AB

AI-generated summary — verify with the full judgment below

TCA No.170 of 2025 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04.09.2025 CORAM THE HON'BLE MR.MANINDRA MOHAN SHRIVASTAVA, CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE G.ARUL MURUGAN TCA No.170 of 2025 Principal Commissioner of Income Tax I Coimbatore : Appellant versus Ramanathan Adaikalavan, No.80, Ansari Street, Ram Nagar, Coimbatore 641 009 PAN AANPA 6846P : Respondent Prayer: Appeal filed against the order of the Income Tax Appellate Tribunal, Madras “B” Bench, Chennai, dated 06.12.2024 in ITA No.557/CHNY/2024. For Appellant : Mr.V.Mahalingam, Senior Standing counsel For Respondent : Mr.G.Baskar Page 1 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 10/09/2025 03:51:57 pm ) TCA No.170 of 2025 JUDGMENT (Delivered by the Hon'ble Chief Justice) Heard the appeal on admission. 2. The Revenue has filed this appeal raising the following substantial questions of law: “1.Whether on the facts and circumstances of the case, the learned ITAT was right in quashing the proceedings under Section 148 being bad in law holding that, all documents comprising balance sheet, profit & loss a/c of the assessee were submitted before the Assessing Officer during original assessment proceedings; whereas the assessee in the return of income filed under Section 139 of the Act, balance sheet, tax audit report under Section 44AB submitted to the Department had not disclosed the true nature of the asset sold? 2.Whether on the facts and circumstances of the case, the learned ITAT was right in quashing the re-assessment proceedings reopened based on the information on the capital asset received by the Assessing Officer after completion of the original assessment under Section 143(3) where one of the Page 2 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 10/09/2025 03:51:57 pm ) TCA No.170 of 2025 reason for CASS selection was low capital gain w.r.t sale consideration as returned by the assessee in the return of income under the head long term capital gain and the Assessing Officer had scrutinized the details submitted by the assessee under the head LTCG based on the documents submitted by the assessee and information available with the Assessing Officer, during the assessment proceedings under Section 143(3) of the IT Act? 3. Whether on the facts and circumstances of the case, the learned ITAT is perverse to the facts and circumstances of the case?” 3. Learned counsel for the Revenue would submit that the Tribunal has acted perversely against the legal position, that present was not a case of reopening based on new information but only change of opinion. He would further submit that at the time of scrutiny assessment, the schedule with regard to the assessee's investments escaped the attention of the Assessing Officer and later on, it was found that the assessee could not have claimed benefits arising out of the long term capital gain in view of various transactions made. Page 3 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 10/09/2025 03:51:57 pm ) TCA No.170 of 2025 4. We find that the learned Tribunal has gone through the contents of notice under Section 148 of the Income Tax Act which only requires certain information which were available earlier before the Assessing officer at the time of making assessment. 5. Therefore, it is apparently clear that the basis for reopening was change of opinion and not new information. Therefore, no question of law is involved. The appeal is dismissed. There will be no order as to costs. (MANINDRA MOHAN SHRIVASTAVA, CJ.) (G.ARUL MURUGAN, J.) 04.09.2025 Index : Yes/No Neutral Citation : Yes/No tar Page 4 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 10/09/2025 03:51:57 pm ) TCA No.170 of 2025 To 1.The Principal Commissioner of Income Tax I Coimbatore 2.The Income Tax Appellate Tribunal, Madras “B” Bench, Chennai Page 5 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 10/09/2025 03:51:57 pm ) TCA No.170 of 2025 THE HON'BLE CHIEF JUSTICE AND G.ARUL MURUGAN

, J.

(tar) TCA No.170 of 2025 04.09.2025 Page 6 of 6 https://www.mhc.tn.gov.in/judis ( Uploaded on: 10/09/2025 03:51:57 pm )

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