THE ASST. COMMISSIONER OF INCOME TAX V. M/S STUMPP SCHEDULE AND SOMAPPA PVT LTD.,

WA/960/2023

AI Insights

This case involves an appeal by the Revenue against the decision of a learned Single Judge, which had favored the Assessee, M/s Stumpp Schedule and Somappa Pvt Ltd. The Revenue challenged the quashing of a notice under Section 148 of the Income Tax Act, 1961, and an order overruling preliminary objections, which were issued following the transfer of land by the Assessee. The Revenue argued that the income from this transaction had escaped Capital Gains tax, necessitating the reassessment. However, the learned Single Judge had found that the Assessee had adequately disclosed all pertinent information in his financial statements, and thus, the reassessment constituted a mere change of opinion.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 733194 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 11-02-2025
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax vs. Kelvinator of India Ltd.
• Laws Referred To: Income Tax Act, 1961, Karnataka High Court Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ANNAMALAI
• Assessee Lawyers: RAVI RAJ V; M DILIP
• Keywords: Capital gains tax; Change of opinion; Income Tax; Reassessment
• Section: 148; 143(3)

Judgement Text

" - 1 - NC: 2025:KHC:5988-DB WA No. 960 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE G BASAVARAJA WRIT APPEAL NO. 960 OF 2023 (T-IT) BETWEEN: THE ASST. COMMISSIONER OF INCOME TAX LTU, CIRCLE-2, PRESENT CIRCLE, THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-6(1)(1), 2ND FLOOR, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095. …APPELLANT (BY SRI. RAVIRAJ Y V., ADVOCATE AND SRI. M DILIP.,ADVOCATE) AND: M/ STUMPP SCHEDULE AND SOMAPPA PVT LTD., REPRESENTED BY ITS MANAGING, DIRECTOR SRI. M.R SATISH, S/O SRI. M.R. RAMESH, AGED ABOUT 47 YEARS, PLOT NO. 4, BOMMASANDRA INDUSTRIAL AREA, ATTIBELE HOBLI, ANEKAL TALUK, BENGALURU-560 037. …RESPONDENT (BY SRI.ANNAMALAI S.,ADVOCATE) THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO A)SET ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE IN WP NO. 21146/2019 DATED 03/03/2023 AND B) PASS SUCH OTHER SUITABLE ORDERS. Digitally signed by SHARADA VANI B Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:5988-DB WA No. 960 of 2023 THIS WRIT APPEAL, COMING ON FOR PRELIMINARY HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT AND HON'BLE MR JUSTICE G BASAVARAJA ORAL JUDGEMENT (PER: HON'BLE MR JUSTICE KRISHNA S DIXIT) This Intra-Court Appeal by the Revenue seeks to call in question a learned Single Judge’s order dated 03.03.2023 whereby Assessee’s W.P.No.21146/2019 (T- IT) having been favoured, the Notice dated 05.02.2019 issued under Section 148 of the Income Tax Act, 1961 and the order dated 08.04.2019 overruling the preliminary objections have been quashed. 2. The learned Sr. Panel Counsel appearing for the Revenue seeks to falter the impugned order arguing that the income derived by the transfer of land by the Assessee to a Company had escaped Capital Gains tax and therefore, Section 148 Notice was issued followed by the order overruling the preliminary objections. He stresses - 3 - NC: 2025:KHC:5988-DB WA No. 960 of 2023 that it is not a case of simple change of opinion and therefore, contra view of the learned Single Judge is unsustainable. Learned counsel appearing for the Assessee resists the Appeal making in justification of the impugned order and the reasons on which it has been structured. 3. Having heard the learned counsel for the parties and having perused the Appeal Papers, we decline indulgence in the matter broadly agreeing with the observations of the learned Single Judge that the Assessee had disclosed all information relating to sale transaction in question it his Financial Statement; he had also disclosed revaluation of the subject property at Rs.21,57,75,680/- as the fare market value as was certified by an independent valuer. Even Revaluation Reserve was also mentioned in that. 4. At Paragraph Nos. 15 & 16 of the impugned order what the learned Single Judge has observed cannot be faltered. The same are as under: - 4 - NC: 2025:KHC:5988-DB WA No. 960 of 2023 “15. If the Assessing Officer has repeatedly asked pointed questions and clarifications about the transaction in the light of the declarations made in the Returns, but without additions while framing assessment under Section 143(3) of the I.T.Act, there must be a presumption that the Assessing Officer has applied his/her mind and has framed an opinion. In this regard, a useful reference could be made to the decision of the Full Bench of the High Court of Delhi in the Commissioner of Income-Tax, vs. Kelvinator of India Ltd., 2002 (64) DRJ 109 wherein it is exposited that in terms of clause (e) of section 114 of the Indian Evidence Act 1872 the judicial and official acts have been regularly performed. 16. It flows from the above that if repeated and detailed queries are asked after the issuance of noticed under Section14392) of the I.T.Act but without any addition, or disallowance, there is a deemed opinion and reassessment is proposed despite such opinion. It would be a case of change in opinion, and in that even reassessment would be impermissible. In the fact and circumstances of this case, this Court must opine that the respondent’s reasons to say that there is no change in the opinion because the details were not available until there was a scrutiny and survey proceedings, cannot be accepted and the proposed reassessment is based on clear change in opinion. Hence, the following: ORDER The petition is allowed. The impugned notice dated 05.02.2019 (Annexure-A) and the order dated 08.04.2019 (Annexure-B) are quashed.” - 5 - NC: 2025:KHC:5988-DB WA No. 960 of 2023 In the above circumstances, this Appeal being devoid of merits is liable to and accordingly is dismissed, costs having been made easy. Sd/- (KRISHNA S DIXIT) JUDGE Sd/- (G BASAVARAJA) JUDGE PMR/Bsv List No.: 1 Sl No.: 0 "