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Facts
The assessee's appeal challenges an order related to assessment year 2016-17. The Assessing Officer reopened the assessment based on reasons to believe income escaped assessment under Section 50C of the Income Tax Act, concerning the difference between sale consideration and guideline value of immovable property. However, the addition was made under Section 43CA of the Act.
Held
The Tribunal held that the Assessing Officer reopened the assessment based on Section 50C but made additions under Section 43CA. Since the addition was not made based on the original reasons for reopening, the reassessment is considered invalid and quashed.
Key Issues
Whether reassessment is valid when the addition made is under a different section of the Act than the one cited in the reasons for reopening.
Sections Cited
50C, 43CA, 148, 143(2), 147, 144B
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Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
Year: 2016-17 Qilin Supporters Vs. The Income Tax Officer, 11, Kasturibai Street, Udumalpet, Ward 2(4), Tiruppur 642 126. Tirupur. [PAN: AAAFQ2944D] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri S. Sridhar, Advocate (Erode) ��थ� की ओर से/Respondent by : Ms. M. Subashri, Addl. CIT (Virtual) सुनवाई की तारीख/ Date of hearing : 20.11.2025 घोषणा की तारीख /Date of Pronouncement : 02.12.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 07.03.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17.
The ld. AR Shri S. Sridhar, Advocate drew our attention to the additional ground raised vide letter dated 22.09.2025 and submits that the issue of questioning the reopening as legal ground can be raised at any stage of proceedings in terms of the judgement of Hon’ble Supreme Court in the case of NTPC. He submits that the additional raised challenging action of the Assessing Officer in reopening the assessment by recording that the income escaped under section 50C of the Income Tax Act, 1961 [“Act” in short] and no addition made therein under section 50C of the Act. He submits that the Assessing Officer recorded reasons that the assessee had sold immovable properties for a value of ₹. 38,61,600/- as against the guideline value of ₹.1,28,69,000/-, which is more than the sale consideration. He drew our attention to para 1 of the assessment order and submits that the Assessing Officer clearly observed that the assessee’s case is reopened as the provision under section 50C of the Act is applicable on the basis of reasons to believe that income chargeable to tax has escaped assessment. Further, he drew our attention to the notice dated 29.09.2020 issued under section 143(2) of the Act seeking information as per reasons recorded for reopening under section 50C of the Act. The ld. AR argued that though the Assessing Officer reopened the assessment under section 50C of the Act, but, no addition made to that effect, but, however, made addition under section 43CA of the Act and drew our attention to the computation made by the Assessing Officer at page 40 of the assessment order. He vehemently argued that the reassessment is not maintainable for making no addition in terms of the reasons recorded for reopening and placed reliance in the case of DCIT v. Govinda Rajulu Srinivasan for AY 2014-15 in vide order dated 04.09.2025. He drew our attention to page 81 of the paper book and argued that this Tribunal on similar issue held that the reassessment is invalid by observing that the revenue failed to show that the Assessing Officer made addition on the issues for which assessment was reopened. Further, the ld. AR submits that the Tribunal followed the decision of the Hon’ble Jurisdictional High Court in the case of Tractors & Farm Equipment Limited v. ACIT reported in 409 ITR 369 (Mad) in arriving the above said conclusion. He submits since no addition made under section 50C of the Act as per the reasons recorded for reopening and the reassessment made is invalid and prayed to allow the additional ground.
The ld. DR Ms. M. Subhashri, Addl. CIT submits that there is no difference between provisions under section 50C and 43CA of the Act. She submits that the above said two provisions refer to income from capital gains and business income. She submits that though it was reopened for the purpose of 50C of the Act, the addition made under section 43CA of the Act on account of sale consideration and drew our attention to the computation made by the Assessing Officer. She argued vehemently that the arguments of the ld. AR should not be accepted in quashing the reassessment.
Heard both the parties and perused the material available on record. It is clear from first para of the assessment order that the Assessing Officer reopened the assessment vide notice dated 16.07.2019 under section 148 of the Act on his satisfaction that there is reason to believe that income chargeable to tax has escaped assessment in terms of the provisions of section 50C of the Act. Accordingly, it is noted that the Assessing Officer issued notice under section 143(2) r.w.s. 147 of the Act seeking proper clarification from the assessee with reference to the issues as per reasons recorded for reopening attracting the provisions under section 50C of the Act regarding the difference between sale consideration and value /stamp value of the immovable property. Therefore, it is clear that the Assessing Officer was of the opinion that there was reason to believe escaping assessment with reference to provisions under section 50C of the Act only, but, not under section 43CA of the Act. It is noted that the Assessing Officer admittedly made addition under section 43CA of the Act. It is noted that section 50C of the Act is a special provision for full of consideration in certain cases with reference to where the consideration received or accruing as a result of the transfer by the assessee of a capital asset being land or building or both, is less than the value adopted/assessed by any authority of the State Government is assessable under the head “income from capital gains”. Further, the provision under section 43CA of the Act is a special provision for full value of consideration for transfer of assets other than capital assets in certain cases with reference to where the consideration received or accruing as a result of the transfer by an assessee of an asset other than capital asset being land or building or both is less than the value adopted/assessed by any authority of the State Government is assessable under income from “Profits and Gains from business or profession”. Therefore, the argument of the ld. DR is not acceptable in contending that there is no difference between the provisions under section 50C and 43CA of the Act. Thus, we hold that the Assessing Officer made no addition under the provisions of section 50C of the Act for which the assessment was reopened on a belief that the income chargeable to tax escaped assessment attracting the provisions under section 50C of the Act.
Coming to the decision of the Tribunal in the case of DCIT v. Govinda Rajalu Srinivasan (supra), as relied on by the ld. AR, held reassessment is bad under law by placing reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Tractors & Farm Equipment Limited v. ACIT (supra), which held that for every new issue coming before the Assessing Officer during the course of proceedings of reassessment of escaped income, and which he intends to take into account, he would be require to issue a fresh notice under section 148 of the Act, thus, the Assessing Officer had no jurisdiction to reassess the income other than the income in respect of which the proceedings under section 147 of the Act were initiated, but, he was not justified in doing so when the reasons for the initiation of those proceedings ceased to survive. Admittedly, in the present case, the Assessing Officer reopened the assessment for the purpose of attracting the provisions of section 50C of the Act and no addition made thereon under section 50C of the Act, but, made addition under section 43CA of the Act, which is admitted to have not been reason for reopening the assessment. Therefore, following the order of the Tribunal in the case of DCIT v. Govinda Rajulu Srinivasan (supra), we hold that the reassessment dated 29.09.2021 passed by the Assessing Officer under section 147 r.w.s. 144B of the Act, is invalid and quashed. Thus, the additional ground raised by the assessee is allowed.
In view of our decision in additional ground in quashing the reassessment, the grounds raised in Form 36 become academic and requires no adjudication.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 02nd December, 2025 at Chennai.