ITO vs. Haresh Chand Agarwal (HUF) ITAT Agra Bench Before A. Mohan Alankamony (AM) and Kul Bharat (JM) ITA No. 282/Agra/2013 A.Y.: 2004-05. Decided on: 20th December, 2013. Counsel for revenue/assessee: K. K. Mishra/ Deependra Mohan.

Facts:
While assessing the total income of the assessee the Assessing Officer (AO) lost sight of the provisions of section 50C of the Act and computed long term capital gains, arising on transfer of property, by adopting agreement value of Rs. 6 lakh to be the sale consideration. The stamp duty value of this property was Rs. 25,89,000.

Subsequently, the AO recorded reasons and reopened the assessment on the ground that income has escaped assessment. In reassessment proceedings, the AO rejected the contentions of the assessee that the property was rented and since the assessee was in need of funds he had to sell the property to its tenants. The AO adopted the stamp duty value to be full value of consideration. He also did not accept cost of construction declared by the assessee at Rs. 6,42,558 for computation of capital gains.

Aggrieved, the assessee filed an appeal to CIT(A) where it challenged the reopening and also the additions on merits. The CIT(A) held that reopening was bad in law since it was based on change of opinion as the AO did not have any tangible material in his possession except the sale deed which has already been produced before the AO at the stage of original assessment proceedings.

Aggrieved, the revenue preferred an appeal to the Tribunal. Held: The Tribunal after considering the ratio of the various decisions of the Apex Court and the High Courts held that it is clear that AO is not justified in reopening the assessment on mere change of opinion. It is admitted fact that there is no material available with the AO to form his opinion that income has escaped assessment. All material evidences were available at the stage of original assessment proceedings and the AO merely following the provisions of section 50C, as was not considered in the original assessment proceedings, reopened the assessment. The assessee has disclosed all the facts which were known all along to the Revenue. Section 50C is not final determination to prove that it is a case of escapement of income. The report of approved valuer may give estimated figure on the basis of facts of each case. Therefore, on mere applicability of section 50C would not disclose any escapement of income in the facts and circumstances of the case. The AO at the original assessment stage considered all the documents and material produced before him and has accepted the cost of property as was declared by the assessee. Therefore, on mere change of opinion, the AO was not justified in reopening the assessment. The CIT(A) on proper appreciation of facts and law correctly quashed the reassessment proceedings.

The appeal filed by the revenue was dismissed.