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Facts
The assessee's appeal challenges the reopening of assessment for AY 2012-13, arguing that all relevant rental agreements were provided during the original assessment under Section 143(3). The Assessing Officer (AO) reopened the case after four years, reclassifying income originally under 'Income from House Property' to 'Income from Other Sources'.
Held
The Tribunal held that the reopening of assessment was invalid as it was based on a 'change of opinion' and not on any new material. The lease agreements were available to the AO during the original assessment, and no additions were made at that time. Furthermore, reopening after four years without assessee failure is impermissible under Section 147(3).
Key Issues
Validity of reassessment proceedings under Section 147 when all particulars were filed during original assessment, and reclassification of income from 'Income from House Property' to 'Income from Other Sources'.
Sections Cited
147, 143(3), 24, 147(3)
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Income Tax Appellate Tribunal, “H (SMC
Before: SHRI AMIT SHUKLA, JM & SHRI OMKARESHWAR CHIDARA, AM
Appellant /Assessee by : Shri Nishant Ruparel , AR (Virtually appeared) : Shri Uodal Raj Singh, Sr. DR Revenue / Respondent by Date of Hearing : 17.10.2024 Date of Pronouncement : 30.12.2024 O R D E R
Per Omkareshwar Chidara, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)-56, Mumbai [for short 'the CIT(A)] dated 13.02.204 for the AY 2012-13.
The two issues to be adjudicated in this case are: - (a) Whether reopening of the case u/s. 147 is valid when all particulars were filed by assessee during the original assessment proceedings completed by Ld. AO u/s. 143(3) of the Income Tax Act, 1961 (the Act).
(b) Whether part of the income assessed originally under the head “Income from House Property” can be reclassified and assessed under the head “Income from Other Sources”.
From the original assessment order, it is observed that the income offered under the head “Income from House Property” was assessed under the same head and completed u/s. 143(3) of the Act.
Subsequently, in the reassessment proceedings, the Ld. AO took out a part of income which was originally assessed as “Income from House Property” and assessed it as “Income from Other Sources” by holding that certain services rendered along with letting out the premises (as mentioned in rental agreement) are not to be treated as “Income from House Property” and accordingly reduced the “Standard Deduction” u/s 24 of the Act.
Aggrieved by the addition made during reassessment proceedings, the appellant filed an appeal before the Ld. CIT(A) objecting to the reopening of assessment and the addition made. Detailed written submissions were filed by the Ld. AR of the appellant before Ld. CIT(A) and after considering the same Ld. CIT(A) dismissed the appeal of assessee.
As the appellant did not get relief, further appeal was instituted before the ITAT against the orders of Ld. AO and Ld. CIT(A). During the hearing, the Ld. AR of the appellant has argued that all the material facts relating to “Rental Income” along with copies of Rental Agreements were filed before the Ld. AO at the time of original assessment which can be evidenced from the reopened assessment and Ld. CIT(A)’s order. These documents were made available to the Ld. AO at the time of original assessment and no additions were made regarding the rental income and now on the basis of same rental agreements, the assessment were reopened, that too, after 4 years which is impermissible under the provisions of the Act. For this proposition, the Ld. AR of appellant has filed a paper Book and relied on various cases law mentioned therein.
The Ld. DR relied on the orders of Ld. AO and Ld. CIT(A).
Heard both sides and perused the material filed before the Bench. The appellant succeeds in his appeal for the following reasons:
(a) The original and reopened assessment orders, both are quite categorical in stating that the lease agreements were filed at the time of original assessment itself for Ld. AO’s perusal. It is not disputed that there is no new material to reopen the case and the Ld. AO made addition in the reopened assessment relating to “Amenities” only based on the lease agreement provided to Ld. AO at the time of original assessment. Hence, it is clearly “Change of Opinion” as no new material came into possession of Department after the completion of original assessment.
(b) Hon’ble Supreme Court in the case of CIT vs. Commissioner Of Income Tax, Gujarat v/s. Bhanji Lavji (79 ITR 582(SC) and Nawab Mir Ali (97 ITR 239 (SC) has held that having second thought on same matrial is not permissible to reopen the assessment.
(c) Section 147(3) clearly says that assessment cannot be reopened after 4 years, if there is no failure on the part of assessee.
In view of the above, the appeal of assessee is allowed.
Order pronounced in the open court on 30 -12-2024. Sd/- Sd/- (AMIT SHUKLA) (OMKARESHWAR CHIDARA) Judicial Member Accountant Member