OM PRAKASH GULATI,JIND vs. ACIT, BHIWANI

perused the material on record. A perusal of the assessment order passed u/s 143(3) of the Act vide dated 12.11.2010 shows that the issue as to whether the agricultural land sold by the assessee was capital asset or not has been considered by the Assessing Officer wherein he has stated that proof regarding agricultural land has been furnished which is away by 8 K.M. from the Municipal Committee Limit and that no capital gain attracts as per patwari’s report. The Assessing Officer has further stated that after verification and examination of requisite information, nothing adverse has been noticed. Thus, it is established beyond doubt that the matter had received due to consideration of the Assessing Officer while finalising the original assessment proceedings u/s 143(3) of the Act. Moving further on, it seen that notice u/s 154 of the Act was issued in which the assessee was required to establish

Om Prakash Gulati, Jind vs. ACIT how the agricultural land sold by him did not fall under ‘capital asset’. We also note that the proceedings initiated u/s 154 of the Act were dropped vide order dated 04.02.2013 without making any addition. The Ld. Sr. DR had argued that dropping of 154 proceedings does not mean that the assessee’s explanation has been accepted. However, we cannot agree with this proposition of the Ld. Sr. DR. If the Assessing Officer has initiated proceedings under specific provision of the Act and has, thereafter, closed the proceedings after obtaining an explanation from the assessee, by no stretch of imagination can it be assumed that the Assessing Officer had not accepted or was not satisfied with the explanation given by the assessee. Therefore, it is our considered opinion that the issue as to whether the agricultural land sold by the assessee was a capital asset or not was again given due consideration by the Assessing Officer during the 154 proceedings and by dropping of these proceedings, it is apparent to that he had accepted the explanation of the assessee.

5.1 Now coming to the notice issued u/s 148 of the Act, a perusal of the reasons recorded shows that they are recorded on Om Prakash Gulati, Jind vs. ACIT almost identical lines as the show cause notice issued u/s 154 of the Act. There is no mention by the Assessing Officer in the reasons recorded as to whether the Department had come in possession of any tangible fresh material justifying the reopening. Reference has been made by the Ld. Dr. DR to the audit objection raised by the internal audit party and to two judgments of the Hon’ble Apex Court in the cases of R.K. Malhotra, ITO vs. Kasturbhai Lalbhai reported in 109 ITR 537 (SC) and CIT vs. P.V.S Beedies Pvt. Ltd. reported in 237 ITR 13 (SC) for the proposition that information received from audit party on factual issues constitutes information and that reopening on that basis is valid. However, it is our considered opinion that the information received from audit party might be considered fresh information only in those cases where the Assessing Officer would not have examined the issue being brought to the notice of the Assessing Officer in the original assessment proceedings. However, in the present case, this is not so as the reason for which the reopening had been done had been the subject matter both under the 143(3) proceedings as well as 154 proceedings. We also note that the judgment relied upon by the Ld.

Om Prakash Gulati, Jind vs. ACIT Sr. DR as aforesaid are of 1977 & 1999 respectively whereas in 2019 the Hon’ble Apex Court in the case of ACIT vs. FIS Global Solutions India Pvt. Ltd. reported in 263 Taxmann 369 (SC) dismissed the Department’s SLP against the order of the Hon’ble Delhi High Court wherein the Hon’ble Delhi High Court had held that audit object being only an information, reassessment notice based on such objection is not sustainable. Therefore, in view of the factual matrix and the judicial precedents, we are of the considered opinion that objection of the audit party in the present case cannot be considered as information for the purpose of reopening of the assessee’s case.

5.2 We also note that in the present factual matrix it is apparently a case of change of opinion of the Assessing Officer as he has on two earlier occasions accepted the assessee’s explanations and has made no additions. We would like to make reference to the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Usha International Ltd. reported in 348 ITR 485 (Delhi) wherein it was held by the majority view that assessment proceedings cannot be validly reopened u/s 147 of the Act even within 4 years if an Om Prakash Gulati, Jind vs. ACIT assessee has furnished full and true particulars at the time of original assessment with reference to the income alleged to have escaped assessment, if the original assessment was made u/s 143(3). In this present appeal there is no allegation in the reasons recorded that the assessee has not furnished full and true particulars. It is also evident from the assessment order that the issue had been duly considered by the Assessing Officer.

5.3 The Hon’ble Apex Court in the case of CIT vs. Kelvinator India Ltd. reported in 320 ITR 561 (SC) held that there has to be some new tangible material in possession of the Assessing Officer to come to the conclusion of escapement of income and mere change of opinion cannot be the reason to re-open the assessment.

As we have already observed, there is no new tangible material which had come into the possession of the Assessing Officer in the present case. Accordingly, the reopening on the same material amounts to a mere change of opinion which cannot be upheld.

5.4 Therefore, in view of the judicial precedents relied upon by us in the preceding paragraphs, coupled with the factual matrix of the case, we are of the view that the reopening in the Om Prakash Gulati, Jind vs. ACIT present case is not sustainable. We set aside the order of the Ld. CIT (A) and quash the reassessment proceedings.

6.0 In the final result, the appeal of the assessee stands allowed.