SHRI NAVINCHANDRA N. PATEL,VADODARA V. THE ACIT, CIRCLE-1(2), VADODARA

ITA 869/AHD/2023

AI Insights

The case involves Shri Navinchandra N. Patel, who appealed against the order of the Commissioner of Income-tax (Appeals) confirming the reassessment made by the Assessing Officer under Section 147 of the Income-tax Act, 1961. The reassessment was initiated based on audit objections and was contested on grounds of jurisdiction and validity. The Tribunal examined whether the reopening of the assessment was justified and whether the additions made were based on valid legal grounds. The Tribunal concluded that the reopening was not justified as it was based on a mere change of opinion without any new material facts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312186 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Vs. M/s. Kelvinator Of India Ltd, Garden Silk Mills Ltd. vs ACIT, VXL India Ltd. vs. Asstt. CIT, CIT Vs. Usha International Ltd, Bhavani Gems (P) Ltd. v. ACIT, CGS-CIMB Securities (I) P. Ltd. Vs CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.N. DZOUZA
• Assessee Lawyers: VIPUL SHAH
• Keywords: Business income; Difference of opinion; Change of opinion; Capital asset; Reassessment proceedings; Depreciation; Fair market value; Cost of acquisition; Reopening of assessment; Capital Gains; Search and seizure; Earning of tax free income; Audit objection; Assessment record; Reason to believe; Rule 8D; Capital asset converted into stock in trade; Tangible material; Date of conversion
• Section: 147; 148; 143(3); 142(1); 271(1)(c); 45(2); 139; 234B; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No. 869/Ahd/2023 (Assessment Year: 2012-13) Shri Navinchandra N. Patel, 22/23, Rokadnath Society, Near Race Course Circle, Gotri Road, Vadodara-390021 [PAN : ACXPP 6848 G] Vs. Asstt. Commissioner Of Income-tax, Circle 1(2), Vadodara (Appellant) .. (Respondent) Assessee by : Shri Vipul Shah, AR Revenue by: Shri R.N. Dzouza, CIT-DR Date of Hearing 06.03.2025 Date of Pronouncement 30.04.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the Assessee against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi (in short ‘the CIT(A)’) dated 01.09.2023 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2012-13. 2. The assessee has taken following grounds of appeal:- “1. That the Hon'ble CIT(A) has erred in law and on the facts of the case in confirming the action of ld. AO in reopening the assessment by invoking the provisions of section 147 of the Income ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 2– Tax Act, 1961 (\"the Act\") and completing the assessment, commenced under invalid exercise of powers u/s 147 of the Act. Under the facts and circumstances of the case, the action of reopening is without jurisdiction and not permissible either in law or on fact. The present proceedings, therefore, are required to be quashed being bad in law. 2. That the Hon'ble CIT (Appeals) has erred in fact and in law in confirming the action of the Ld. AO in invoking section 45(2) r.w.s. 2(47) and thereby making addition of Rs. 9,40,27,625/- (8,97,16,439 + 43,11,186) without considering various facts & legal aspects. 3. That the Hon'ble CIT (Appeals) has erred in law and on fact in confirming the addition made by the Ld AO of Rs. 1,62,05,500/- U/s. 69 of the IT Act without considering the fact that through inadvertence advance payment made towards purchase of land having R.S. No. 69 & 72 at Khanpur land was wrongly debited to Investment in Agriculture land during F.Y: 2010-11 which were rectified in subsequent year. 4. That the Hon'ble CIT (Appeals) has erred in law and on fact in confirming the addition made by Ld. AO Rs. 7,05,466/-U/s. 14A r.w.r. 8D of the IT Act. 5. That the Hon'ble CIT (appeals) and learned AO erred in fact and in law in charging interest u/s 234B & C of the Act. 6. That the Hon'ble CIT (Appeals) and the learned AO erred in fact and in law in initiating penalty proceedings u/s 271(1)(c) of the Act.” ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 3– 3. The brief facts of the case are that the assessee is an individual engaged in the business of \"Trading of Land for project Development & in shares\". The assessee had filed his return of income for the year under consideration on 30.09.2012 declaring total income of Rs. 1,71,47,960/-. Subsequently, the case of the assessee was selected for scrutiny assessment through CASS and the assessment was completed u/s 143(3) of the Act on 23.01.2015. Subsequently, based on the audit objection, the Assessing Officer had reopened the assessment by issuing of notice U/s. 148 of the Act dated 31.03.2019 and reasons recorded vide letter dt.04.10.2019. The reassessment u/s 143(3) r.w.s. 147 of the Act was completed on 20.12.2019 by making following additions (i) Addition u/s 45(2) r.w.s. 2(47) of Act - Rs. 9,40,27,625/- (ii) Undisclosed investment u/s 69B of the Act - Rs. 1,62,05,500/- (iii) Disallowance u/s 14A r.w.r. 8D - Rs. 7,05,466/- 4. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee and confirmed all the additions made by the Assessing Officer. 5. Aggrieved by the order the Ld. CIT(A), the assessee is now in appeal before the Tribunal. ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 4– Issue No.1 – Reopening of assessment u/s 147 6. With regard to this issue, the Ld. AR submitted that the action of reopening of the assessment is without jurisdiction and not permissible either in law and on fact. He submitted that reopening of assessment under invalid exercise of powers u/s 147 of the Act which is beyond four years. Ld. AR argued that the reassessment on the objection of audit party without application of mind cannot be sustained. He further contended that the reasons recorded were provided u/s 148(2) of the Act subsequent to issue of notice u/s 148 of the Act and approval by higher authority was without recording satisfaction, and the reassessment was merely on change of opinion. 7. Ld. DR, on the other hand, supported the orders of the authorities below. 8. We have heard the rival contentions and perused the material available on record. The reasons for reopening of the assessment of the assessee, as recorded by the Assessing Officer, are as under:- “ANNEXURE Reasons for reopening of the assessment in case of Shri Navin N. Patel, Vadodara for the AY.2012-13 U/s 147 of the Act. 1. Brief Details of the Assessee: The assessee, an individual is engaged in trading business of land for project developments and in shares & investments activity. The return of income for the asst. year under consideration was filed on 3O.O9.2012 declaring total income at Rs. 1,71,47,960/-. 2. Brief details of information collected/received by the AO: ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 5– (i) The. assessee had purchased agriculture land block bearing consolidated R.S. No. 57, 41, 83, 91,36, 72 and 73 at Ankodia, Vadodara admeasuring to 1,14,829 square meter (12,36,919 square feet) at a total cost of Rs. 7,77,23,910/- jointly With Shri Krupesh N. Patel (PAN: ADHPP6422B) during financial years 2007-98 and 2008-09. Out of the above, the assessee’s share works out to Rs. 3,88,61,955/- (Rs. 7,77,23,910/-). (ii) Investment of agricultural, land valuing at Rs. 3,19,76,667/- was shown in the balance sheet for the asst, year 2012-13 whereas investment of agricultural land valuing Rs. 1,73,25,167/- (including land purchased during the year) was shown in the balance sheet for the asst, year 2012-13. (iii) During the financial year 2011-12 relevant to the asst, year 2012-13 the assessee had earned exempted income of Rs. 19,88,178/-. 3. Analysis of information collected/received: (i) The assessee had purchased agriculture land block bearing consolidated R.S. No. 57, 41, 83, 91,36, 72 and 73 at Ankodia, Vadodara admeasuring to 1.14.829 square meter (12,36,019 square feet) at a total cost of Rs. 7,77,23,910/- jointly with Shri Krupesh N. Patel (PAN: ADHPP6422B) during financial years 2007-08 and 2008-09. The assessed is having 50% shares in these pieces of Ankhodia land. The said pieces of land were converted into non-agricultural land on 29.11.2008. The assessee had shown this land in his balance sheet under the head fixed assets/investments upto 31.03.2009. During the year under consideration land admeasuring total area of 59,935 square feet were transferred by the assessee through a development agreement on 03.02.2010 @ Rs. 210 per sq.ft. Thus, total sale consideration @ Rs. 210 per sq.ft in respect of 59395 sq.ft of land works out to Rs. 1,24,72,950/- out of that assessee's share each Rs. 6,23,64,275/- being 50% of Rs. 1,24,72,950/-. The assessee has credited to profit and account by sale consideration of Rs. 6236475/-. (ii) From the assets of the balance sheet for AY 2012-13 that there was an agricultural land amounting to Rs. 1,73,25,167/- (including land purchased during the year R.S. no. 665/P/1 for Rs. 15,54,000) under the head investment. However, the balance sheet of the previous year's i.e. A.Y. 2011- 12, the investment in agricultural land were valued at Rs. 3,19,76,667/-. The variations observed in the valuation of agricultural lands (other than land purchased during the year R.S. no. 665/P/1 for Rs. 15,54,000/-). No information was found regarding sale of above said agricultural land. (iii) On perusal of the profit and loss account and balance sheet it is noticed that the assessee had earned exempt income by way of dividend income of Rs. ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 6– 19,88,178/-. However, it is noticed from the computation of income that the assessee has not calculated and disallowance under section 14A of the Act r.w.r. 8D. 4. Enquiries made by the AO as sequel to information collected/received: As per para no. 2 5. Findings of the AO: (1) The assessee had purchased agriculture land block bearing consolidated R.S. No. 57, 41, 83, 91,36, 72 and 73 at Ankhodia, Vadodara admeasuring to 114829 square meter (12,36,019 square feet) at a total cost of Rs.7,77,23,910/- jointly with Shri Krupesh N. Patel (PAN: ADHPP6422B) during financial years 2007-08 and 2008-09. The assessee is having 50% shares in these pieces of Ankhodia land. The said pieces of land were converted into non-agricultural land on 29.11.2008. The assesses had shown this land in his balance sheet under tire head fixed assets/ investments upto 31.03.2009. Both the owners of the aforesaid land, the assessee alongwith Shri Krupesh N. Patel, inked development agreement with Neptune Reality Private Limited (NRPL) on 03.02.2010. A supplementary agreement was done on 20.02.2010 with respect to the development agreement made on 03.02.2010 in which Neptune Reality Private Limited was authorized to develop the said land and construct one or more units. In consideration, the NRPL agreed to pay to the owners a sum of Rs. 210 per square feet at the time of sale of the units. The assessee has transferred the said land to stock in trade account during the asst, year 2010-11. The above land was developed and consequently sold 59,395 square feet out of the above total 12,36,019 square feet (1,14,829 square meters) of land during the year-under consideration i.e. A.Y. 2012-13. Accordingly, the assessee in the financial year. relevant to the asst. year 2012-13 had accounted for sale of 59,395 square feet at the consideration rate of Rs. 210 per square feet (as per the rate agrees on in the development agreement dated 03.02.2010) and credited proportionate earnings of Rs. 62,36,475/- (59395 square feet X 210 = 1247295, assessee’s portion is 50%, hence Rs. 6236475) in his profit and loss account. However, the assessee has failed to offer taxation under the head capital gain with respect to the capital asset converted into stock in trade by adopting fair market value. (ii) Scrutiny of records, it was noticed from the assets of the balance sheet for AY 2012-13 that there was an agricultural land amounting to Rs. 1,73,25,167 (including land purchased during the year R.S. no. 665/P/1 for Rs. 15,54,000) under the head investment. However, the balance sheet of the previous year’s i.e. A.Y. 2011-12, the investment in agricultural land were ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 7– valued at Rs. 3,19,76,667. The variations observed in the valuation of agricultural lands (other than land purchased during the year R.S. no. 665/P/1 for Rs. 15,54,000) are tabulated hereunder : Land location Particulars A.Y. 2011-12 (Amt. in Rs.) A.Y.2012-13 (Amt. in Rs.) Difference amount in Rs. Ankodia R.S. No. 21 3045350 3045350 Nil R.S. No. 22/2 1646850 1646850 Nil Khanpur Block No. 40/2 5038353 849503 4188850 Block No. 44 12726409 3228144 9498265 Block No. 52 4913038 2394653 2518385 Miscellaneous Samiyala land Block No. 389 1069867 1069867 Nil Samiyala land Block no. 399 3536800 3536800 Nil Total 31976667 15771167 16205500 Further, it is seen that these agricultural lands were not sold during the year under consideration. Therefore, the value of the agriculture land to the extent of Rs. 16205500/- has been understated during the year. (iii) 0n going through the particulars of assessee’s income, it was observed that the assessee during the financial year 2011-12 relevant to the asst, tear 2012 has earned exempted income of Rs. 19,88,178/- in the form of dividend u/s 10(34) of the Act. On further verification, it was seen that the assessee had not made any disallowance u/s 14A of the Act as prescribed in Rule 8D of the Income-tax Rules, 1962. As per the provisions of section 14A of the Income-tax Act, 1961, no deduction shall be allowed in respect of expenditure incurred by the assessee in respect of income which does not form part of the total income. The method of computing the expenditure relating to exempted income has been prescribed under Rule 8D. Taking into consideration the average value of investments, average total assets in balance sheet, expenditure by way of interest, disallowance u/s 14A of the Act r.w.r 8D amounting to Rs. 706466/- is to be disallowed. 6. Basis of forming reason to believe and details of escapement of income: (i) According to section 2(47)(iv) of the Act, if capital asset is converted into stock-in- trade or treated as stock-in-trade by the owner, such conversion or treatment shall be regarded as transfer. Further, as per sec. 45(2) of the Act, the profits or gains arising from such transfer shall be chargeable to income-tax as his income (capital gain) of the previous year in which such stock-in-trade is sold or otherwise transferred. For the purpose ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 8– of computing the capital gains chargeable to tax as aforesaid, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. The fair market value of the above non agriculture land on the date of (Conversion i.e. 03.02.2010 and 20.02.2010 relevant to asst, year 2010-11, was taken as at jantri rate, for that land which stands at Rs. 4,500 per square meter (the above referred land was converted to non agriculture land on 29.11.2008 i.e. A.Y, 2009-10). Accordingly, the fair market value of the above referred land works out to Rs. 5167.31 lakhs (114829 square meter X jantri rate of Rs. 4,500 per square meter). As per section 45(2) of the act, the notional short term capital gain arising from transfer by way of conversion of capital asset into stock in trade at fair market value of Rs. 5167.31 lakh after deducting cost of acquisition of Rs. 777.24 lakh works out to Rs. 4390.07 lakh ( Rs. 5167.3.1 lakh less Rs. 777.24 lakh), chargeable to: tax in the year in which stock in trade was sold. Conversationally, the short term capital gain per square feet works out to Rs. 355.17 (Rs. 4390.07 lakh / 1236019 square feet [114829 square meters]). However, the assessee has already offered Rs. 210 per square feet out of the above short term capita] gain of Rs. 355.17 square feet as his business income and brought to tax. Tn view of the above, the actual implication works: out to Rs. 1794.33 lakh (difference: amount of Rs, 145.17 per square feet was required to be levied on 12,36,019 square feet). The proportionate under assessment of income in the hands of the assessee works out to Rs. 807.16 lakh (Rs. 1794.32 lakh /2) on potential basis. Taking into consideration the assessment year-wise summary of proportionate stock (@ 50%) sale of land and chargeability of short term capital in the hands of the assessee, the actual impact on account of short term capital gain of Rs. 43,11,186/- was chargeable to tax in the asst, year under consideration. On verification of the case records, it is seen that the assessee has offered an income of Rs. 248/- under the head income from capital gain (the amount is not earned by way sale of land). Therefore, I have a reason to believe that an amount of Rs. 43,11,1816/- has escaped assessment under the head capital gain. (ii) Scrutiny of records, it was noticed from the assets of the balance sheet for AY 2012- 13 that there was an agricultural land amounting to Rs. 1,73,25,167 (including land purchased during the year R.S. no. 665/P/1 for Rs. 15,54,000) under the head investment. However, the balance sheet of the previous year’s i.e. A.Y. 2011-12, the investment in agricultural land were valued at Rs. 3,19,76,667. Thus, the assessee has understated the value of ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 9– agriculture land to the extent of Rs.1,62,05,500/- Which attracts the provisions, of section 69B of the Act. (iii) The assessee during the financial year 2011-12 relevant to the asst. year 2012-13 has earned exempted income of Rs. 19,88,178/- in the form of dividend u/s 10(34) of the Act. On further verification, it was seen that the assessee had not made any disallowance u/s 14A of the Act as prescribed in Rule 8D of the Income-tax Rules, 1962. As per the provisions of section 14A of the Income-tax Act, 1961, no deduction shall be allowed tin respect of expenditure incurred by the assessee in respect of income which does not form part of the total income. Since the assessee has not made any disallowance u/s 14A of the. Act r.w.r 8D, in view of the above an amount of Rs. 7,06,466/- is to be disallowed. 7. Seventh paragraph will include escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India: Not applicable. 8. Findings of the AO on true and full disclosure of the material facts; necessary for assessment under Proviso to section 147 : (i) According to. section 2(47)(iv) of the Act, if capital asset is converted into stock-in- trade or treated as stock-in-trade by the owner, such conversion or treatment shall be regarded as transfer. Further, as per sec. 45(2) of the-Act, the profits or gains arising from such transfer shall be chargeable to income- tax as his income (capital gain) of the previous year in which such stock-in- trade is sold or otherwise transferred. For the purpose of computing the capital gains chargeable to tax as aforesaid, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. The fair market value of the above non agriculture land on the date of conversion i.e. 03.02.2010 and 20.02.2010 relevant to asst, year 2010-11, was taken as at jantri rate for that land which stands at Rs. 4,500 per square meter ( the above referred land was converted to non agriculture land on 29,11.2008 i.e. A.Y. 2009-10). Accordingly, the fair market value of the above referred land works out to Rs. 5167.31 lakhs (114829 square meter X jantri rate of Rs. 4,500 per square meter). As per section 45(2) of the act, the notional short term capital gain arising from transfer by way of conversion of capital asset into stock; in trade at fair market value of Rs. 5167.31 lakh after deducting cost of acquisition of Rs. 7717.24 lakh works out to Rs. ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 10– 4390.07 lakh (Rs. 5167.31 lakh less Rs. 777.24 lakh), chargeable to tax in the year in which stock in trade was sold. Conversationally, the short term capital gain per square feet works out to Rs. 355.17 (Rs. 4390.07 lakh / 1236019 square feet [114829 square meters)). However, the assessee has already offered Rs. 210 per square feet out of the above short term capital gain of Rs. 355.17 square feet as his business income and brought to tax. In view of the above, the actual implication works out to Rs. 1794.33 lakh (difference amount of Rs. 145.17 per square feet was required to be levied on 12,36,019 square feet). The proportionate under assessment of income in the hands of the assessee works out to Rs. 897.16 lakh (Rs. 1794.32 lakh /2) on potential basis. Taking into consideration the assessment year-wise summary of proportionate stock (@ 50%) sale of land and chargeability of short term capital in the hands of the assessee, tire actual impact on account of short term capital gain of Rs. 43,11,186/- was chargeable to tax in the asst, year under consideration. On verification of the case records, it is seen that the assessee has offered an income of Rs. 248/- under the head income from capital gain (the amount is not earned by way sale of land). Therefore, I have a reason to believe that an amount of Rs. 43,11,186/- has escaped assessment under the head capital gain. (ii) Scrutiny of records, it was noticed from the assets of the balance sheet for AY 2012- 13 that there was an agricultural land amounting to Rs. 1.73,25,167 (including land purchased during the year R.S. no. 665/P/l for Rs. 15.54,000) under the head investment. However, the balance sheet of the previous 'year’s i.e. A.Y. 2011-12, the investment in agricultural land were valued at Rs. 3,19,76,667. Thus, the assessee has understated the value of agriculture land to the extent of Rs. 1.62.05.500/- which attracts the provisions of section 69B of the Act. (iii) The assessee during the financial year 2011-12 relevant to the asst, year 2012-13 has earned, exempted income of Rs. 19,88,178/- in the form of dividend u/s 10(34) of the Act. On further verification, it was seen that the assessee had not made any disallowance u/s 14A of the Act as prescribed in Rule 8D of the Income-tax Rules, 1962. As per the provisions of section 14A of the Income-tax Act, 1961, no deduction shall be allowed in respect of expenditure incurred by the assessee in respect of income which does not form part of the total income. Since the assessee has not made any disallowance u/s 14A of the Act r.w.r 8D, in view of the above an amount of Rs. 7,06,466/- is to be disallowed. 9. Applicability of provisions of section 147/151 to the facts of the case: ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 11– In this case, return of income was filed for the year under consideration and regular assessment u/s 143(3) was made on 23.01.2015. Since, 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceeding u/s 147 are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraph 2 to 6). I have carefully considered the assessment records containing the submission made by the assessee in response to various notices issued during the assessment/ re-assessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the year under consideration. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is true that the assessee has filed a copy of the annual report and audited P&L A/c and balance sheet along with the return of income where various information/ material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P&L A/c and balance sheet or other evidences as mentioned above; the requisite material facts as noted above in the reasons for reopening were embedded di such a mariner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provisions of explanation 1 of section 147 of the Act. In this case more than four year’s have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Principal Commissioner of Income-tax as per the provisions of section 151 of the Act. 9. We have examined the validity of issuing the notice u/s 148 of the Act. From the reasons recorded, we find that the reopening has been made based on analysis of information collected (refer to para no. 3); the Assessing Officer held that no information was formed ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 12– regarding the sale of agricultural land. Further, the Assessing Officer at para No. 5(ii), held that on scrutiny of record, it was noticed from the assets of the balance-sheet……. At para 5.5(iii), the Assessing Officer held that on going through the particulars of assessee’s income, it was observed that…… At para 6(i), the Assessing Officer held that on verification of case records, it is seen that…... At para 6(ii), the Assessing Officer went through the records and held that scrutiny of records, it was noticed from the……. At para no.8 (i), the Assessing Officer held that on verification of case records……. and at para 8(ii), scrutiny of records…….. and para No. 8(iii), on further verification, it was seen that the assessee had not made…. At para 9, the Assessing Officer held that it is true that the assessee has filed a copy of the annual report and audited P&L A/c and balance sheet along with the return of income where various information/ material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P&L A/c and balance sheet or other evidences as mentioned above; the requisite material facts as noted above in the reasons for reopening were embedded di such a mariner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provisions of explanation 1 of section 147 of the Act. 10. Thus, we find that the entire reason for reopening of the case was based on re-examination of the available record before the Assessing Officer. There was no new evidence or information which was hitherto not available before the Assessing Officer for reopening the case. Reassessment proceedings, initiated beyond a period of four ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 13– years and mere change of opinion on the same set of facts, cannot be sustained. The assessee in the original assessment proceedings u/s 143(3) of the Act has furnished all the details regarding sale of land and the said fact also mentioned in the Trading & Profit & Loss Account of the Audited Books of Accounts. The reasons are mere change of opinion and the assessee can be found to have made true and fair disclosure of facts and furnished the details in the original assessment proceedings and also there is no lapse on the part of the assessee. The provisions of Section 147 of the Act r.w. Explanation 1 which is as under: \"147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 14– Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.\" 11. The assessee has produced all the details during assessment proceedings, the Assessing Officer has verified the facts/material filed on record in the original assessment and therefore cannot be a reason for reopening of assessment. In response to notice issued u/s 142(1) during original assessment proceedings, the assessee vide his letter dated 26.12.2014 (Page No. 100-104 of PB) alongwith Development Agreement explained the entire transaction. The Assessing Officer after verifying submission and after due satisfaction, passed order u/s 143(3) dated 23.01.2015. 12. From the above, we hold that notice issued u/s. 148 for re- opening of assessment is bad in law and entire reassessment proceedings need to be quashed. Reliance is being placed on the following judgments:- i. CIT Vs. M/s. Kelvinator Of India Ltd, (2010) 2 SCC 723 (SC) “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 ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 15– 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 re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment 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 belief. ii. Garden Silk Mills Ltd. vs ACIT, SCA No. 16245 of 2018, Order dated 01/03/2021, wherein it was held as under:- “19. ….. (ii) In view of the legal proposition and considering the facts and circumstances of the present case, it appears that on the issue of steam power, the succeeding Assessing Officer has different opinion and it seems to be re-look on the issue decided in previous assessment. The record indicates that special queries were raised on the issue of allowances made under 80IA of the Act. The calculation of deduction works out by the assessee company was reflected in the audited books of accounts and it was not hidden. Therefore, Assessing Officer could have possibly with due diligence discover the incorrect allowances by drawing heavy inference. On the contrary, in the previous assessment proceedings, the Assessing Officer was duty bound to go through the issue of dis-allowances claimed on the basis of steam power generation, before completing the assessment. Therefore, now mere change of opinion cannot be basis for reopening completed assessment, where in the previous assessment proceedings, the then Assessing Officer has applied his mind and taken a conscious decision in respect of time usage charge component and partly disallowed the claim made under Section 80IA of the Act.” iii. VXL India Ltd. vs. Asstt. CIT (1995) 215 ITR 295 (Guj), wherein it was held as under:- \"4….. We are also of the view that howsoever wide the scope of taking action under s. 148 of the Act, it does not confer jurisdiction on change of opinion on the interpretation of a particular provision earlier adopted by the assessing ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 16– authority. For coming to the conclusion whether there has been excessive loss or depreciation allowance or there has been underassessment or assessment at a lower rate or for applying other provisions of Expln. 2, it must be on material and it should have nexus for holding such opinion contrary to what has been expressed earlier. The scope of s. 147 of the Act is not for reviewing its earlier order suo motu irrespective of there being any material to come to a different conclusion apart from just having second thoughts about the inferences drawn earlier.\" iv. CIT Vs. Usha International Ltd, I.T.A. No. 2026/2010 (Del.) (HC); “4. The Supreme Court has affirmed the judgment of the Full Bench of this court in Kelvinator (supra). The controversy should end there and can admit of no debate. The Full Bench has unequivocally held that when the assessing officer completes an assessment under section 143(3) of the Act, he is presumed to have accepted the contentions of the assessee even if there is no express reference to them in the assessment order; and if within 2 years he issues a notice to reopen the assessment, it is nothing but a change of opinion. The Supreme Court has held that a change of opinion cannot be introduced in the garb of reopening the assessment, which would be nothing but a review, which power the assessing officer does not possess. I demur to the proposition that the observations of the Full Bench of this court vis-as-vis section 114(e) of the Evidence Act and its applicability to an assessment order passed under section 143(3) were not expressly referred to and approved by the Supreme Court. That would introduce an undesirable element of uncertainty even when finality has been accorded by the decree of Supreme Court. That way, matters could be reargued and re-agitated till the end of time.” v. Bhavani Gems (P) Ltd. v. ACIT (2022) 287 Taxman 682 (Bom.)(HC) “11]….. ….. In our view, the reopening of assessment by impugned notice dated 30.03.2021 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. 12] Since all these details have been disclosed in the documents filed along with return of income including balancesheet and answers to all queries raised have been provided, admittedly it cannot be stated that there was any failure on the part of petitioner to truly and fully disclose any material facts. Statement in the reasons recorded that there was failure to fully and truly disclose material facts, in ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 17– our view, is only to get over the restrictions provided in proviso to section 147 of the Act. ” vi. CGS-CIMB Securities (I) P. Ltd. Vs CIT, ITA. No. 573/Mum/2022. “4. It is also trite that the assessment cannot be re-opened on change of opinion as held by various courts including this court as well as the Hon'ble Supreme Court of India. 5. Now, coming to the reasons, the reasons recorded clearly indicate that re-opening is proposed on the basis of change of opinion which is not permissible and the reasons do not disclose that there were non disclosure of material fact by petitioner though there is general statement made that petitioner's income has escaped assessment on account of failure on the part of petitioner to disclose truly and fully all material facts. In our view, it is only made with an attempt to overcome restrictions in re- opening as per proviso to section 147 of the Act ................” 13. In view of the above, we quash the reopening proceedings and accordingly the re-assessment order so framed is also quashed. 14. Since the reopening itself has been quashed, the other grounds raised by the assessee are rendered academic & infructuous. 15. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 30.04.2025 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 30/04/2025 *btk ITA No. 869/Ahd/2023 Shri Navinchandra N Patel Vs. ACIT Asst. Year : 2012-13 - 18– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/ / / /सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …24.04.2025….. 2. Date on which the typed draft is placed before the Dictating Member … 24.04.2025.. 3. Other Member… 28.04.2025……………… 4. Date on which the approved draft comes to the Sr.P.S./P.S … 28.04.2025…………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …30.04.2025…. 6. Date on which the fair order comes back to the Sr.P.S./P.S …30.04.2025……………. 7. Date on which the file goes to the Bench Clerk …30.04.2025…….…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "