LAKHICHAND SIDARA,BILASPUR vs. INCOME TAX OFFICER-1(2), BILASPUR

आयकर अऩीऱीय अधधकरण, रायऩुर न्यायऩीठ, रायऩुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR श्री रविश सूद, न्याययक सदस्य एवं श्री अरुण खोड़वऩया, ऱेखा सदस्य के समक्ष । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अऩीऱ सं./ITA No.180/RPR/2017 (ननधाारण वषा / Assessment Year : 2009-2010) Lakhi Chand Sidara, Vs ITO-1(2), Bilaspur Main Road Torwa, Bilaspur (C.G.) PAN No. : ADKPS 8800 M (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

ननधााररती की ओर से /Assessee by : None राजस्व की ओर से /Revenue by : Shri G.N.Singh, Sr. DR सुनिाई की तारीख / Date of Hearing : 27/07/2022 घोषणा की तारीख/Date of Pronouncement : 17/10/2022 आदेश / O R D E R Per Arun Khodpia, AM : This appeal is filed by the assessee against the order passed by the CIT(A), Bilaspur, dated 09.03.2016, on the following grounds :- 1. That on the facts & circumstances of the case, the order of learned CIT (Appeals) is bad in law as wells as on facts. 2. That on the facts & circumstances of the case, the notice issued u/s 148 is bad in law as wells as on facts 3. That on the facts & circumstances of the case, the learned CIT (Appeals) erred in taking the value U/s 50C without referring it to the valuation officer. 4. That the learned CIT (A) erred in law and on facts in adding Rs. 1459100/- in total income previously computed U/s 143(3) of Rs.419100/- 5. The appellant craves leave to add and/or alter, amend or withdraw any ground/s before or at the time of hearing of this appeal. 2. Brief facts of the case are that the assessee had filed his return of income on 29.09.2009 declaring total income of Rs.2,95,400/-. The AO completed the assessment u/s.143(3) of the Act assessing total income of Rs.4,40,410/- and included long term capital gain of Rs.21,312/- as declared by the assessee. Thereafter the case of the assessee was

2 ITA No.180/RPR/2017 reopened by issuance of notice u/s.148 of the Act after recording the reasons. In response to the notice, the assessee replied to treat the return already furnished as return filed. During the course of reassessment proceedings the AO found that the value so adopted by the Stamp Valuation Authority was not under dispute and no need came up to make a reference to any authority or to a Valuation Officer. Further the AO worked out the Long Term Capital Gains u/s.50C of the Act at Rs.10,61,312/- and brought the same to tax in the hands of the assessee. 3. Against the above additions made by the AO in the assessment order, the assessee preferred appeal before the CIT(A) and the CIT(A) partly allowed the appeal of the assessee. 4. Now, the assessee is in further appeal before the Tribunal. 5. Before us, no one was present on behalf of the assessee, thus it is requested to the Ld DR to apprise on the facts of the case. Ld DR has took us to the facts of the case, he drew our attention to the para 2 of the AO’s order and read out brief facts of the case. Further, Ld DR submitted that the assessee’s contention that reassessment proceedings started against the assessee u/s 147 are bad in law and also that under provision of clause 2 of Section 50C the value adopted or assessed (or assessable) by the Stamp Valuation Authority under sub section (1) exceeds the fair market value of the property as on the date of transfer, thus, should be referred to a valuation officer by the AO, this contention of the assessee was not accepted by the Ld AO because the value adopted by the Stamp Valuation Authority was not disputed. Ld DR had strongly supported the

3 ITA No.180/RPR/2017 order of AO on this issues and drew our attention to the findings of the Ld CIT(A) which reads as under:- Ground No. 1 -That on the facts and in the circumstances of the case, the notice issued u/s 148 bad in law as well as on facts. Decision - The AO has discussed the issue from Para 5 to 8 of his assessment order. The learned AR had submitted that in case of CIT vs. Tutuaja Tea Company 236 ITR 447 the Hon'ble Apex Court held that information which was with the AO at the time of original assessment cannot be used for opening assessment u/s 147. He had also relied on Hon'ble I TAT Raipur decisions in case of Narayan Singh Calara vide ITA No. 92/BLPR/2010 and argued that the assessing officer is not permitted to reopen the case on the basis of change of opinion. The decision has been carefully considered. In case of The Hon'ble Apex Court the decision has been rendered when the information already under possession of the AO and he did not utilized in the original assessment. After completion of assessment the Hon'ble Apex Court has held that multiplicity of the proceedings should have been avoided and the AO was well within his power to confront the information to the assessee and should have considered the reply of the assessee. In the case of Narayan Singh The Hon'ble IT AT Raipur Bench, Raipur vide order dated 10.02.2015 has dismissed the appeal of the department because the department did not object the quashing of the assessment by the CIT(A) and in absence of ground of appeal the Hon'ble IT AT has observed that when the order does not survive and the issue is not challenged the amount which is deleted by the CIT (A) cannot necessitate the adjudication of the ground. The issue in this case is that the assessee has declared income of Rs. 295400/- which included long term capital gain of Rs. 21312/-. The assessment year involved here is 2009-10 and the case was reopened well before 28.11.2012. The period is covered less than four years, hence the proviso u/s 147 is not attracted. The relevant clause of explanation 2 under section 147 is worth to be reproduced as below: Explanation 2- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a)..................... (b)..................... (ba)..................... (c) where an assessment has been made, but- (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too Iowa rate; or (Hi) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;

4 ITA No.180/RPR/2017 The instant case falls in clause (c) sub clause (i) of the explanation. I have called the record and have noted the queries raised by the AO. During original assessment proceeding there has been no query about the sale consideration and income had been computed as such after making nominal disallowances. When there has been no query and view has not been expressed in the original assessment order, in my considered view there cannot be any change of opinion. In the case of Kelvinator of India Ltd. the Hon'ble Apex Court has laid down the principle as to what the change of opinion means. Relying on the High Court decision that there is no discussion in the order of assessment of any query raised by the AO it cannot amount for expressing the opinion and in absence of any opinion there is no question of change of opinion. Thus in my considered view there is no infirmity in the assumption of jurisdiction by the learned AO. The ground of appeal is dismissed. Ground No. 2 - That the facts and in the circumstances of the case, the learned Assessing Officer erred in taking the value u/s 50C without referring it to the valuation officer. Decision - The assessee has sold capital asset, a plot of land owned by him. Section 50C is applicable for the deemed sale consideration in case of land or land and building. I do not find any force in the arguments of the learned AR and do not find any error in the application of value of the plot as per stamp valuation authority who has assessee its value at Rs. 14,40,000/-. The ground of appeal is dismissed. 6. Ld DR, finally concluded with the remark that the revenue authorities had very judiciously dealt with the above issues and thus their orders are liable to be upheld. 7. We have considered the rival submissions and perused the record carefully. 8. The first issue raised by the assessee was regarding issuance of notice u/s 148 bad in law. On this issue, it is emanated from the order of AO that the assessee had stated that all the desired information and necessary documents, including the Sale deed, purchase deed of land relating to Long Term Capital Gain were filed before the AO and were minutely examined by the AO. Consideration declared by the Assessee

5 ITA No.180/RPR/2017 was not disputed by the AO, neither the matter was referred to Valuation officer. Assessee further contented that in reasons, the A.O. stated with the words “From the records of the assessee, which were examined”. This contention of the assessee was not controverted by the Ld AO. Various case laws were relied upon by both the parties. 9. The undisputed fact of the present case is that the original assessment of the assessee for AY 2009-10 was completed U/s 143(3). Returned Income of the assessee for Rs. 2,95,400/-, assessed and determined at Rs. 4,40,410/- which included LTCG for Rs. 21,312/-. Documents pertaining to LTCG were submitted by the assessee during the assessment proceedings u/s 143(3). Reason for reopening that the information based on which reopening was done was from the records of the assessee, shows that the AO was already in possession of such documents, has full command over such information and while accepting the LTCG declared by the assessee was having these documents with him. Thus, the assessee had fully and truly submitted all the necessary information during the original assessment proceeding u/s 143(3). 10. Ld CIT(A) has decided this issue against the assessee by observing that during the original assessment proceedings no query about the sale consideration was raised by the AO, thus in case of no query and no view expressed, there cannot be change of opinion, thus reopening u/s 147 was valid. 11. In backdrop of the above discussion and facts, it is explicitly clear that the material based on which the reopening was done, was available

6 ITA No.180/RPR/2017 with the AO during the assessment proceeding and the same was duly considered during the original assessment proceedings while accepting the amount of taxable LTCG and determining the taxable income. On this submission of the assessee before AO during reassessment proceeding, no comment was offered by the AO. Merely, no query was raised or no view was expressed in the assessment order will not tantamount that the material available before the AO was not considered by him and once the issue has been examined by the Assessing Officer in the original assessment proceedings, then it is not open for the Assessing Officer to change his view. Thus, the legal precedence laid by the Hon’ble Apex Court in the case of Kelvinator India Ltd. 320 ITR 561 (SC) will squarely applicable in this case, where in it has been held that: On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re- open. We 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 re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening 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 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the

7 ITA No.180/RPR/2017 belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote here in below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: 2 http://www.itatonline.org "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147. --A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." 12. In an order of the Hon’ble Delhi High Court in the case of Rasalika Trading & Investment Co. (P.) Ltd. Vs. DCIT, dated 14.02.2014, reported in 365 ITR 447, wherein the issue with respect to use of information available at the time of original assessment u/s 143(3), which was apparently used by the AO for competing the assessment has been precisely explained. Such information was acknowledged as “stale information” and therefore based on such information an attempt to use the provisions of section 147 and initiating proceedings were termed as a result of change of opinion. This ratio laid down by the Honble Delhi Highcourt was in line with the principle laid down by the Honble Apex Court in the case of Kelvinator India Ltd. (supra), the findings of the Hon’ble High Court is reproduced as under:-

8 ITA No.180/RPR/2017 “It is evident from the above discussion that the reassessment proceedings were initiated by the impugned notice which expressly and plainly states that “reasons to believe” are based upon the materials contained in an investigation report of 13.3.2006. The notice itself does not spell out that the report was not on the record when the original assessment was completed on 24.12.2007 nor did the revenue even suggest so in the counter affidavit filed in the proceedings. It is only in a subsequently filed additional affidavit that the position is sought to be clarified. Clearly this Court refrains from making such an enquiry, at a time when the AO has, in the first instance, failed to spell out clearly in the section 148 notice itself that such report was not on record. In other words “the reasons to believe” do not state that even in one sentence that the investigation report of 13.3.2006 was not with the AO when he completed the assessment. The material on record in fact suggests otherwise; the nature of the queries put to assessee and the replies and confirmation furnished to the AO in the course of the regular assessment clarify that what excited the suspicion was indeed gone into by the AO himself while framing the assessment under section 143(3). This Court is fortified in its conclusions by the decision of the Supreme Court in Commissioner of Police v. Gordhandas Bhanji AIR 1952 SC 16 where it was held that public orders made by public authorities intended to have effect on the public should be construed objectively with reference to the language used rather than explanations subsequently offered. This principle was reiterated in a somewhat different vein in MS Gill v. Chief Election Commissioner AIR 1978 SC 851 by the Supreme Court. Such being the case this Court has no doubt that the impugned notice, in the circumstances of the case is based upon stale information which was available at the time of the original assessment and in fact appears to have been used by the AO at the relevant time i.e. during the completion of proceedings under section 143(3). Therefore, the attempt to reopen the proceedings under section 147/148 is really the result of a change of opinion – and thus beyond the pale of the AO’s jurisdiction and falling under the illustration spelt out in Kelvinator of (India) Ltd. (supra). Consequently, the impugned notice and all proceedings further thereto are beyond the authority of law and are hereby quashed.” 13. In view of the aforesaid observation, after thoughtfully consideration of the facts and circumstances of the present case, respectfully following the aforesaid judicial precedence laid down, we are of the considered view that the reopening proceedings initiated and assumption of jurisdiction u/s 147 of the Act by the Ld AO, without any fresh information against the assessee to establish the allegation which could validate the

9 ITA No.180/RPR/2017 reopening u/s 147 thus in the present case the assumption of jurisdiction u/s 147 is beyond the authority of law. Thus, orders of the Ld CIT(A) and Ld AO u/s 147/ 143(3) are set aside and original order of AO U/s 143(3) dated 29-12-2011 is restored. Resultantly, ground no 1 & 2 of the appeal of the assessee stands allowed. 14. Since, legal ground no 1 & 2 of this appeal of assessee regarding reopening of the assessment and issuance of notice u/s 148 has been decided in favour of the assessee. Remaining alternative grounds on the same addition / issue are academic only, need not be adjudicated. 15. In the result, the appeal of the assessee is partly allowed. Order pronounced in pursuance to Rule 34(4) of ITAT Rules on 17/10/ 2022. Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER रायऩुर/Raipur; ददनाांक Dated 17/10/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1. प्रत्यथी / The Respondent- 2. आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. विभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, रायऩुर/ DR, ITAT, 5. Raipur गार्ड पाईऱ / Guard file. 6. आदेशानुसार/ BY ORDER, सत्यावऩत प्रयत //True Copy// (Assistant Registrar) आयकर अऩीऱीय अधधकरण, रायऩुर/ITAT, Raipur