AO couldn’t reopen case on basis of conclusion drawn by another AO
2019] 102 taxmann.com 69 (Bombay)
a) Assessee-company had shown a receipt on transfer of leasehold rights in a landed property in favour of Morarji Textiles. It paid capital gains tax arising out of such transfer after claiming indexed cost and other related deductions.
b) During scrutiny assessment, Assessing Officer (AO) did not disturb assessee’s treatment to said receipt. However, AO of Morarjee Textiles had held that leasehold rights belonged to Morarjee Textiles itself and, therefore, Morarjee was wrong in claiming that it had purchased such rights from assessee.
c) On basis of same, AO observed that assessee had filled inaccurate particulars and he issued reassessment notice by contending that income had escaped assessment.
d) Aggrieved-assessee challenged the re-opening of assessment before the High Court.
The High Court held in favour of assessee as under:
1) During the assessment proceedings, the source of receipt, working of capital gain and the sequence of the events that leasehold rights were transferred had been duly brought to the attention of the AO.
2) Written submissions were made to justify assessee’s claim of being the owner of such leasehold rights. Therefore, it couldn’t be said that the issue was not examined during the original assessment proceedings.
3) However, AO, after the completion of assessment, had referred to the assessment order passed by the AO of Morarjee Textiles Ltd. and formed a belief that the income chargeable to tax had escaped assessment.
4) The opinion formed by the AO of Morarjee Textiles could be seen to be another view point which could also be valid. However, the formation of the opinion by another AO on the same set of documents and materials couldn’t give justifiable ground to the AO of the assessee to contend that there was additional information or material at his command permitting him to have a relook into the assessment.