Andhonourable Mr. Justice Bhargav D. Karia v. Assistant Commissioner Of Income Tax Circle 1(3) ==========================================================Appearance

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 2491 of 2022 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE N.V.ANJARIA andHONOURABLE MR. JUSTICE BHARGAV D. KARIA ==========================================================1Whether Reporters of Local Papers may be allowedto see the judgment ?2To be referred to the Reporter or not ?3Whether their Lordships wish to see the fair copyof the judgment ?4Whether this case involves a substantial questionof law as to the interpretation of the Constitutionof India or any order made thereunder ?==========================================================RIA RAJ DHOLAKIA Versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(3) ==========================================================Appearance: MR TUSHAR HEMANI, SENIOR ADVOCATE WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1MR NIKUNT RAVAL WITH MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIAandHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 06/09/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Heard learned Senior Advocate Mr. TusharHemani assisted by learned advocate Ms. Vaibhavi Parikh for the petitioner and learned advocate Mr. Nikunt Raval with learned advocate Mrs. Kalpana K. Raval forthe respondent. 2.Having regard to the controversy involved inthis petition, with the consent of thelearned advocates for the respective parties,the petition is taken up for final hearing. 3.Rule returnable forthwith. Learned advocateMr. Nikunt Raval waives service of notice ofrule for the respondent. 4.The petitioner has preferred this petitionunder Article 226 of the Constitution ofIndia challenging the impugned notice dated 31.03.2021 issued under section 148 of theIncome Tax Act, 1961 (For short “the Act”)proposing to reopen the assessment for theAssessment Year 2015-2016. 5.Brief facts of the case are that the petitioner is an individual. During the yearunder consideration, the petitioner sold anagricultural land at village Bhesan bearingSurvey No.99/2, Block No.176, admeasuring14363 square meters, T. P. Scheme No.9, MudKhand No.116 for Rs.5,74,52,000/- on 04.10.2014 along with two other co-owners andshare of the petitioner in above referredsale consideration was Rs.3,44,71,200/-. Itis the case of the petitioner that thepetitioner utilized such sale considerationfor purchase of agricultural land and claimedexemption of Rs.1,94,62,745/- under section54B of the Act. Resultantly, the petitionerearned Short Term Capital Gain of Rs.13,18,257/- on sale of the land inquestion. 5.1) The petitioner filed return ofincome for the for the Assessment Year 2015-2016 on 31.08.2015 declaring total income atRs.54,25,340/- which included Short TermCapital Gain of Rs.13,18,257/- on sale ofland in question. 5.2) The case of the petitioner wasselected for scrutiny assessment by issuanceof notice dated 20.09.2016 under section143(2) of the Act. 5.3) The Assessing Officer, thereafter,issued notice dated 31.01.2017 under section142(1) of the Act, calling upon thepetitioner to furnish various details. 20.03.2017, furnished the details that werecalled for by the Assessing Officer. 5.5) The Assessing Officer, thereafter,issued notice dated 08.08.2017 under section142(1) of the Act, calling upon thepetitioner to produce necessary evidences tothe effect that the property at Bhesan wasbeing utilized for agricultural purposes inorder to substantiate the claim under section54B of the Act. 5.2) The case of the petitioner wasselected for scrutiny assessment by issuanceof notice dated 20.09.2016 under section143(2) of the Act. 5.3) The Assessing Officer, thereafter,issued notice dated 31.01.2017 under section142(1) of the Act, calling upon thepetitioner to furnish various details. 20.03.2017, furnished the details that werecalled for by the Assessing Officer. 5.5) The Assessing Officer, thereafter,issued notice dated 08.08.2017 under section142(1) of the Act, calling upon thepetitioner to produce necessary evidences tothe effect that the property at Bhesan wasbeing utilized for agricultural purposes inorder to substantiate the claim under section54B of the Act. 5.6) The petitioner, vide letter dated22.08.2017, furnished copy of agreement foragricultural land purchased for claimingbenefit under section 54B of the Act as wellas copy of relevant extract of notice undersection 135D of the Bombay Land RevenueCode,1879 for substantiating the claim thatthe land was an agricultural land. 5.7) The petitioner, vide letter dated20.09.2017 gave detailed explanation insupport of the fact that the land in questionwas used for agricultural purposes. 5.8) It is the case of the petitionerthat the Assessing Officer, after threadbareexamining the details furnished by petitionerfrom time to time, consciously chose not todisturb the claim of exemption under section54B of the Act while framing assessment undersection 143(3) of the Act vide order dated14.11.2017. 5.9) The respondent, thereafter, issuedthe impugned notice dated 31.03.2021 undersection 148 of the Act seeking to reopen thecase of the petitioner for Assessment Year2015-2016. 5.10) The petitioner filed the return of income in response to the impugned notice on16.04.2021 and further requested therespondent to supply copy of reasons recordedfor reopening the assessment. 5.11) The respondent supplied the copy ofreasons for reopening the assessment videletter dated 10.09.2021. The reasons recorded by the Assessing Officer for reopening the assessment under section 147 ofthe Act read as under: “1. Brief details of the Assessee:The assessee had filed her return ofincome for AY 2015-16 on 31.08.2015declaringtotalincomeatRs.54,25,340/-. The assessee hadshown income from Capital Gain,Profit from firm and income fromother sources during the year underconsideration. Subsequently, theassessment u/s 143(3) of the Act forAY 2015-16 was completed in thiscase on 14.11.2017 determining theincome at Rs.57,90,640/- by way ofmaking addition of Rs.3,65,300/- onaccount of STCG. 2. Brief details of Informationcollected/ received by the AO:During the year under consideration,the assessee had sold a land (village Bhesan bearing land surveyNo.99/2, Block No.176 area 1-43-63sq.mtr., T.P Scheme No.9, Mud KhandNo.116) for Rs 5,74,52,000/- on04.10.2014 along with two other co-sellers and received his portion ofshare of Rs.3,44,71,200/-. Further,the assessee had claimed exemptionu/s.548 of Rs.1,94,62,745/- onpurchase of agriculture land. Theassessee had sold the agricultureland after converting it to non-agriculture land. Further, theassessee has not carried out anyagricultural activity in the saidland for the two years immediatelypreceding the date on which transfertook place as provided in section54B of the Act, the exemption ofRs.1,94,62,745/- claimed by theassessee was required to bedisallowed and added to the long-term capital gain of the assessee.By not doing so resulted inunderassessment of income to thetune of Rs 1,94,62,745/-. 3.Analysisofinformationcollected/received: During the yearunder consideration, the assesseehad sold a land at Bhesan along withother two co-sellers on 04.10.2014and received her consideration ofRs.3,44,71,200/-. After deductingcost of acquisition and exemption u/s.54B of the Act, STCG ofRs.13,18,257/- was offered fortaxation by the assessee. Theassessee had sold the agricultureland after converting it into non-agriculture land on 23.09.2014 and thus before executing sale deed, theagricultural land was converted intonon-agriculturallandsothecondition of immediately precedingtwo years for agricultural activityno fulfilled. Further, the assesseehas not carried out any agriculturalactivity in the said land for thetwo years immediately preceding thedate on which transfer took place asprovided in section 54B of the Act,the exemption of Rs.1,94,62,745/-claimed by the assessee was requiredto be disallowed. 4. Enquiries made by the AO assequel to information collected/received: The assessee had sold aland (village Bhesan bearing landsurvey No.99/2, Block No.176 area 1-43-63 sq mtr. T.P. Scheme No.9, MudKhand No.116) for Rs 5,74,52,000/-on 04.10.2014 in which assesseebeing co-owner (other two co-owner 1Vallabhbhai Sambhubhai Dholakia, 2.Himmatbhai Laljibhai Paladia) andreceived his portion of share of Rs3,44,71,200/-. Further, the assesseehad claimed exemption u/s. 54B ofRs.1,94,82,745/- on purchase ofagriculture land. The said land wasregistered in the name of assesseeand others as co-owners on24.07.2015. Further, it was noticedthat the said land was convertedinto non-agriculture land by Dy.Collector, Olpad District, Surat,vide order No/-63-176/...4/1348/2014dated 23.09.2014 So status of theagricultural land was converted intonon-agricultural land. Thus, before executing sale deed the agriculturalland was converted into non-agricultural land so the conditionof immediately preceding two yearsfor agricultural activity notfulfilled. Further, as the land was in the nameof the owner, i.e., Shri Ria RajDholakia, however, process of theconversion of the land into non-agricultural land was in the name ofthepurchaser,i.e.,SankalpEnterprise, thus it seems thatpossession of the land was given bythe assessee to the SankalpEnterprise before executing saledeed. Without executing sale deedprocess, converting agriculturalland into non-agricultural landprovedthattheagriculturalactivities were not being carriedout by the assessee. For claimingexemption u/s 54B, the assessee hasto fulfill the basic condition,i.e., (a) The land transferredshould have been in use foragricultural purposes for at leasttwo years immediately preceding thedate of transfer by the individualor his parents if it is owned by theindividual. Since the assessee hasnot carried out any agriculturalactivity in the land underconsideration for the two yearsimmediately preceding the date onwhich transfer took place asprovided in Section 54B(1) of the ITAct, 1961; the exemption ofRs.1.94,62,745/- claimed by theassessee was required to be disallowed and added to the longterm capital gain of the assessee. disallowed and added to the longterm capital gain of the assessee. 5. Findings of the AO: As perprovisions of Section 54B relatingto capital gain on transfer of landused for agricultural purposes, anycapital gain arising from thetransfer of a capital asset beingland which, in the two yearsimmediately preceding the date onwhich the transfer took place, wasbeing used by the assessee or aparent of his for agriculturalpurposes, and the assesses has,within a period of two years afterthat date, purchased any other landfor being used for agriculturalpurposes, shall be exempt to theextent such capital gain is investedin the purchase of anotheragricultural purpose, provided thenew agricultural land purchased, isnot transferred within a period of 3years from the date of itsacquisition. In the instant case,the assessee had sold a land atvillage Bhesan with two other co-sellers and received her portion ofshare of Rs.3,44,71,200/- Further,the assessee had claimed exemptionu/s 54B of Rs.1,94,62,745/- onpurchase of agriculture land.However, the said and was convertedinto non-agriculture land by Dy.Collector, Olpad District, Surat,videorderNo/-63-176/...4/1348/2014 dated 23.09.2014 andtherefore status of the agriculturalland was converted into non-agricultural land by this order Thus, before executing sale deed theagricultural land was converted intonon-agriculturallandsothecondition of immediately precedingtwo years for agricultural activitydoes not get fulfilled. Accordingly,exemptionofRs.1,94,62,745/-claimed by the assessee was requiredto be disallowed and added to thelong term capital gain of theassessee.6 Basis of forming reason to believeand details of escapement of income:As discussed in the foregoingparagraphs, the assessee had sold aland at Bhesan along with other twoco-sellerson04.10.2014andreceived her consideration of Rs3,44,71,200/-. After deducting costof acquisition and exemption u/s.54Bof the Act, STCG of Rs.13,18,257/-was offered for taxation by theassessee. However, the assessee hadsold the agriculture land afterconverting it into non-agricultureland on 23.09.2014 and thus beforeexecutingsaledeed,theagricultural land was converted intonon-agriculturallandsothecondition of immediately precedingtwo years for agricultural activitydoes not get fulfilled. Further, asthe land was in the name of theowner, i.e., Shri Ria Raj Dholakia,however process of the conversion ofthe land into non-agricultural landwas in the name of the purchaser,i.e. Sankalp Enterprise, thus itseems that possession of the landwas given by the assessee to the Sankalp Enterprise before executingsale deed. Without executing saledeedprocess,convertingagriculturallandintonon-agricultural land proved that theagricultural activities were notbeing carried out by the assessee.Thus, the amount of Rs 1,94,62,745/-claimed as exemption under section54B of the Act was required to bedisallowed which was chargeable totax and has escaped assessment.Thus, this amount has remained outof ambit of taxation which isrequired to be brought to tax Hence,notice u/s 148 of the 1.T. Act 1951is to be issued for the AY 2015-16. 7 Seventh paragraph will includeescapement of income chargeable totax in relation to any assets(including financial interest in anyentity) located outside India: Nosuch assets. 8. Applicability of the provisionsof section 147/ 151 to the facts ofthe case: In this case a return ofincome was filed for the year underconsideration and regular assessmentu/s 143(3) was made on 14.11.2017.Since 4 years (extended time limit)from the end of the relevant yearhas not expired in this case, theonlyrequirementtoinitiateproceeding u/s. 147 of the Act isreason to believe which has beenrecordedintheforegoingparagraphs. It is pertinent tomention here that reasons to believe 7 Seventh paragraph will includeescapement of income chargeable totax in relation to any assets(including financial interest in anyentity) located outside India: Nosuch assets. 8. Applicability of the provisionsof section 147/ 151 to the facts ofthe case: In this case a return ofincome was filed for the year underconsideration and regular assessmentu/s 143(3) was made on 14.11.2017.Since 4 years (extended time limit)from the end of the relevant yearhas not expired in this case, theonlyrequirementtoinitiateproceeding u/s. 147 of the Act isreason to believe which has beenrecordedintheforegoingparagraphs. It is pertinent tomention here that reasons to believe that income has escaped assessmentfor the year under considerationhave been recorded above (Para 2 to6) It is pertinent to mention here thatin this case an assessment was madeas stipulated u/s. 2(40) of the Act.However as discussed in reasons tobelieve hereinabove in this case,income chargeable to tax has beenunder assessed by an amount of Rs.1,94,62,745/-. In view of the saidfacts, the provisions of clause (c)of explanation 2 to section 147 areapplicable to facts of this case andtheassessmentyearunderconsideration is deemed to be a casewhere income chargeable to tax hasescaped assessment.” 5.12) The petitioner, vide letter dated27.09.2021, raised the objections againstreopening the assessment. 5.13) The respondent, vide order dated14.12.2021 disposed of such objectionsholding that the reopening is justified. 5.14) Being aggrieved by the impugnedorder, the petitioner has preferred the present petition. 6.Learned Senior Advocate Mr. Tushar Hemani forthe petitioner submitted that the assessmentfor the year under consideration was alreadyframed under section 143(3) of the Act andnow the Assessing Officer is seeking toreopen such assessment beyond the period of four years from the end of the relevant assessment year. It was submitted thatassessment can be reopened beyond theprescribed period of four years if and onlyan income chargeable to tax has escapedassessment by reason of failure on part ofthe petitioner to file return under section139 in response to the notice issued undersection 142(1) or section 148 of the Act orif the petitioner has not disclosed fully andtruly all material facts necessary forassessment. It was submitted that from thedocuments on record such as computation of income, various notices issued by therespondents and letters addressed by thepetitioner as well as the assessment order,it is clear that there is no failure on partof the petitioner to disclose truly and fullyall material facts necessary for theassessment. 6.1) It was submitted that the noticeunder section 148 of the Act can be issuedonly if an Assessing Officer has the reasonto believe that income chargeable to tax hasescaped assessment. It was submitted thatwords “reason to believe” suggest thatfirstly, the belief must be of the AssessingOfficer, secondly, it must be based uponreasonable ground and not a mere change ofopinion and thirdly, there must be live linkor close nexus between the material beforethe Assessing Officer and the belief he hasformed regarding escapement of income. It was submitted that the case of the petitioner wasselected for scrutiny assessment and after examining the materials threadbare, the Assessing Officer framed the originalassessment. Thereafter, no new tangiblematerial has come in possession of therespondent after framing the assessment undersection 143(3) of the Act. Thus, it isapparent that the assessment is sought to bereopened merely on the basis of materialsthat were already available on record. Thus,reassessment is nothing but a mere change ofopinion which is unwarranted, invalid and badin law. submitted that the case of the petitioner wasselected for scrutiny assessment and after examining the materials threadbare, the Assessing Officer framed the originalassessment. Thereafter, no new tangiblematerial has come in possession of therespondent after framing the assessment undersection 143(3) of the Act. Thus, it isapparent that the assessment is sought to bereopened merely on the basis of materialsthat were already available on record. Thus,reassessment is nothing but a mere change ofopinion which is unwarranted, invalid and badin law. 6.2) Learned Senior Advocate Mr. Hemanisubmitted that the assessment mainly issought to be reopened on the basis oftransaction entered into for sale andpurchase of land by the petitioner andsubsequent claim of exemption under section 54B of the Act. The petitioner and other co-owners sold an agricultural land forRs.5,74,52,000/- on 04.10.2014 whereby Rs.3,44,71,200/- came to the share of thepetitioner out of such sale proceeds whichwas utilized by the petitioner for purchaseof another agricultural land. The petitionerclaimed exemption of Rs.1,94,62,745/- undersection 54B of the Act while filing thereturn and thereby the petitioner earnedShort Term Capital Gain of Rs.13,18,257/- onthe sale of land. The Assessing Officer wasof the view that the land in question was converted into non-agricultural land on23.09.2014 which was prior to transferringthe land in question and therefore, thecondition as to use of the land in questionfor agricultural purposes for immediatelypreceding two years does not get fulfilleddue to which the petitioner is not entitledto claim exemption under section 54B of the Act. It was submitted that vide conveyancedeed dated 4.10.2014, the petitioner sold theland in question to a partnership firm namely“Sankalp Enterprise”. Since the buyer was apartnership firm i.e. a non-agriculturist, anapplication was moved under section 63 of theGujarat Tenancy and Agricultural Lands Act,1948 for executing the sale deed and videorder dated 23.09.2014, such permission cameto be granted which fact is evident from theconveyance deed dated 4.10.2014. It wassubmitted that the order dated 23.09.2014 isnot at all with respect to conversion of landin question from agricultural land to non-agricultural land and therefore, the veryfoundation for reopening the assessmentitself is on an erroneous premise. It wasfurther submitted that the land in questionwas converted into non-agricultural land videorder dated 3.11.2016 which was much laterthan the date of transfer being 4.10.2014 and therefore, reopening the assessment on suchbasis is not justified. 6.3) Learned Senior Advocate Mr. Hemanisubmitted that as per section 151 of the Act,it is mandatory on part of the AssessingOfficer to obtain sanction from the PrincipalChief Commissioner or Chief Commissioner orPrincipal Commissioner which should not bemerely mechanical in nature and suchauthorities should recorded the satisfactionin a detailed manner and mere endorsement ofthe view taken by the Assessing Officer wouldnot meet the requirement of the provisions ofsection 151 of the Act. It was submitted thatin the present case since the reopening ofassessment is beyond a period of four years,sanction of the Principal Chief CommissionerorChiefCommissionerorPrincipalCommissioner or Commissioner was to bemandatorily obtained, however, there is no application of mind while sanctioning theissuance of notice under section 148 of theAct and reopening is sanctioned merely in amechanical manner and therefore, reopeningthe assessment is not justified. 6.4) Learned Senior Advocate Mr. Hemanifurther submitted that reopening of theassessment in case of petitioner is on thebasis of audit objection raised by the auditparty and it is well settled that anassessment cannot be reopened based on auditobjection. application of mind while sanctioning theissuance of notice under section 148 of theAct and reopening is sanctioned merely in amechanical manner and therefore, reopeningthe assessment is not justified. 6.4) Learned Senior Advocate Mr. Hemanifurther submitted that reopening of theassessment in case of petitioner is on thebasis of audit objection raised by the auditparty and it is well settled that anassessment cannot be reopened based on auditobjection. 7.On the other hand, learned advocate Mr. Nikunt Raval for the respondent submittedthat four years from the end of the relevantassessment year i.e., 2015-2016 falls on31.03.2020. Due to the outbreak of COVID-19pandemic, the Government brought the Taxationand Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 on 31.03.2020which extended time limits for completion ofproceedings and compliance of actions. The Ordinance was subsequently replaced by the Taxation and Other Laws (Relaxation andAmendment of Certain Provisions) Act (Forshort “Relaxation and Amendment Act”) on 29[th]September2020bytheParliament (Legislature). This Relaxation and AmendmentAct legislated upon several relaxations,notifications and amendments pertaining toIncome Tax Act, 1961. Clause (a) of section3(1) of the Relaxation and Amendment Actgranted relaxation till 31.03.2021 as a partof the original Legislation. However, itdelegated powers to the Central Governmentfor relaxation of time beyond 31.03.2021i.e., from 01.04.2021 and onwards forcompletion of various proceedings andissuance of notice to authorities under theAct. 7.1) It was submitted that Central Boardof Direct Taxes ("CBDT") as a constituent ofthe Central Government, exercised the powersdelegated to Central Government as persection 3(1) of the Relaxation and AmendmentAct and extended the time limit forcompleting various actions which includedreassessment proceedings from 31.03.2020 to31.03.2021 and subsequently to 30.06.2021. Itwas submitted that in case of the petitioner,time limit of four years was expiring on31.03.2020, however, as per section 3(1) ofRelaxation and Amendment Act, time limit fortaking action under section 148 of the Actwas extended till 30.06.2021 and therefore,the case of the petitioner was reopenedwithin the purview of section 147 of the Actwell within the period of four years from theend of relevant assessment year. 7.2) Relying upon section 147 of the Act,learned advocate Mr. Raval submitted that thebare reading of the section 147 explicitlyprovides that the only pre-condition orrequirement for the Assessing Officer toassume jurisdiction for reopening is to have"reason to believe". It was submitted thatfrom plain reading of the reasons recordedfor reopening the assessment, the AssessingOfficer has rightly formed opinion that theassessee had sold the agriculture land afterconverting it into non-agriculture land on23.09.2014 and thus before executing saledeed, the agricultural land was convertedinto non-agricultural land and therefore, thecondition of immediately preceding two yearsfor agricultural activity does not getfulfilled. It was further submitted thatprocess of the conversion of the land intonon-agricultural land was in the name of thepurchaser, i.e. Sankalp Enterprise which indicates that possession of the land wasgiven by the assessee to the SankalpEnterprise before executing sale deed andwithout executing sale deed process,converting agricultural land into non-agricultural land prove that the agriculturalactivities were not being carried out by theassessee. indicates that possession of the land wasgiven by the assessee to the SankalpEnterprise before executing sale deed andwithout executing sale deed process,converting agricultural land into non-agricultural land prove that the agriculturalactivities were not being carried out by theassessee. 7.3) It was further submitted that duringthe original assessment proceeding casualapproach was undertaken in respect ofconsidering the deduction/exemption undersection 54B of the Act. Though the materialwas available on record, at the time of firstassessment, when no conscious considerationof the material is made and a mistake hasbeen committed, it would not, in any casecreate an embargo on the power of theAssessing Officer to exercise powers underamended section 147 of the Act as there could not be change of opinion in the factualbackground of the case. 7.4) Relying upon the judgment of DelhiHigh Court in case of Rakesh Agrawal Vs. ACITreported in (1997) 225 ITR 496 Delhi, it wassubmitted that the Court held that under theamended section, power to reopen assessmentis much wider and can be exercised even if anassessee had disclosed fully and truly allmaterial facts. 7.5) Relying upon the judgment in case ofRaymond Woolen Mills Ltd. Vs. ITO reported in236 ITR 34, 35 , it was submitted thatthe Court held that for determining whetherinitiation of reassessment proceeding arevalid, it is only to be seen whether therewas prima facie some material on the basis ofwhich the department could reopen the case.The sufficiency or correctness of the material is not a thing to be considered atthis stage. 7.6) Relying upon the judgment of theHon'ble Supreme Court in case of ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd.reported in (2007) 291 ITR 500 (SC) it was submitted that in order to invoke theprovisions of Section 147 of the Act, if theAssessing Officer for whatever reason hasreason to believe that income has escapedassessment, then jurisdiction is conferred on the Assessing Officer to reopen theassessment. It was submitted that the onlyrequirement is to see that the escapement ofincome which exists in the instant case andtherefore, the notice issued under Section148 is a valid notice. 7.7) It was further submitted that the competent authority to sanction approval for reopening of assessment for the cases withinthe period of four years from the end of therelevant assessment year is Additional/JointCommissioner as per the provisions of section151 of the Act and necessary approval wasobtained from the Additional Commissioner ofIncome-tax, Range-1(3), Surat. Therefore, thenotice issued under Section 148 is a validnotice issued after obtaining valid approvalfrom the Competent Authority. 7.8) Relying upon the decision of Hon’ble Supreme Court in case of Commissioner of Income tax v. P.V.S. Beedies Pvt. Ltd.reported in (1999) 237 ITR 13, it wassubmitted that if the Assessing Officer onthe basis of audit information, forms anindependent belief that income chargeable totax has escaped assessment, there is nothing preventing him from exercising power ofreassessment. Reliance was also placed on decision in case of New Light Trading Co. vs. Commissioner of Income Tax reported in (2002)256 ITR 391 (Del), wherein Division Bench ofthe Delhi High Court referred to the decisionof Supreme Court in case of CIT vs. P. V.S.Beedies Pvt. Ltd., to submit that auditobjection can be a valid ground for reopeningof the assessment. 8.Considering the submissions made by thelearned advocates for both the sides, it isnot in dispute that during the original scrutiny assessment, the Assessing Officerhas thoroughly examined and scrutinised theissue regarding the capital gain on sale ofland made by the petitioner. preventing him from exercising power ofreassessment. Reliance was also placed on decision in case of New Light Trading Co. vs. Commissioner of Income Tax reported in (2002)256 ITR 391 (Del), wherein Division Bench ofthe Delhi High Court referred to the decisionof Supreme Court in case of CIT vs. P. V.S.Beedies Pvt. Ltd., to submit that auditobjection can be a valid ground for reopeningof the assessment. 8.Considering the submissions made by thelearned advocates for both the sides, it isnot in dispute that during the original scrutiny assessment, the Assessing Officerhas thoroughly examined and scrutinised theissue regarding the capital gain on sale ofland made by the petitioner. 9.The petitioner during the course of scrutinyassessment furnished the details comprisingof working of capital gain realised on saleof land after claiming deduction under section 54B of the Act. The petitioner alsofurnished the copy of conveyance deed forsale as well as subsequent purchase of landso as to claim the deduction under section54B of the Act. The Assessing Officer afterconsidering the details furnished by theassessee accepted the computation of capitalgain provided by the petitioner andthereafter passed the assessment order undersection 143(3) of the Act. 10.It appears that the respondent AssessingOfficer has misinterpreted the facts whichwere already existing on record ignoring thatby order dated 23.09.2014, permission wasgranted by the Collector under section 63 ofthe Gujarat Tenancy and Agricultural LandsAct, 1948 for executing the sale deed as theagricultural land was to be sold to the nonagriculturist partnership firm namely,“Sankalp Enterprise”. Thereafter the land in question was sold by a registered sale deed on 4.10.2014 and the land continued to be an agricultural land till the same was converted into non agricultural land vide order dated 3.11.2016. Therefore, the Assessing Officerwhile recording the reasons was not justified in considering the land to be a non agricultural land when the same was sold on 4.10.2014. Thus there is a clear change of opinion on part of the Assessing Officer to reopen the assessment though there is noreason to believe that there is escapement ofincome on the basis of material available on record, more particularly, when the issuewith regard to computation of the capital gain was considered in detail during the original assessment proceedings. 11. It is true that in view of the provisions of Taxation and other laws (Relaxation and Amendment of certain Provisions) Act, 2020, the time limit forissuance of notice under section 148 of theAct was extended upto 30.06.2021 and as such,the impugned notice issued on 31.03.2021cannot be said to be issued beyond a periodof four years. However, as discussed above,when the Assessing Officer during the courseof regular assessment proceedings hasconsidered the issue on the basis ofmaterial available on record and in absenceof any new material available for reopeningof the assessment and to form a reason tobelieve on the same material, issuance ofnotice under section 148 of the Act cannot besustained as the Assessing Officer could nothave any reason to believe on the samematerial to come to prima facie opinion thatincome chargeable to tax has escapedassessment. In facts of the case, entirematerial was available with the AssessingOfficer during the regular assessment which was duly considered and the assessment orderunder section 143(3) of the Act was passedand therefore, merely because of change ofopinion, the Assessing Officer cannot reopenthe assessment by misinterpreting the factswhich are already available on record.Moreover, it appears that notice for reopening is based on audit objection withoutthere being anything on record to suggestthat such notice was issued on account of newtangible material available on record. was duly considered and the assessment orderunder section 143(3) of the Act was passedand therefore, merely because of change ofopinion, the Assessing Officer cannot reopenthe assessment by misinterpreting the factswhich are already available on record.Moreover, it appears that notice for reopening is based on audit objection withoutthere being anything on record to suggestthat such notice was issued on account of newtangible material available on record. 12.In view of foregoing reasons, theimpugned notice under section 148 of the Actto reopen the assessment for the AssessmentYear 2015-2016 is nothing but a mere changeof opinion and the Assessing Officertherefore, cannot assume the jurisdiction toissue such notice. The Hon’ble Supreme Courtin case of Commissioner of Income tax v.Kelvinator of India Ltd. reported in (2010) 320 ITR 561(SC), has held that the words“reason to believe” would not give arbitrarypower to the Assessing Officer to reopen theassessment on the basis of “mere change ofopinion” which cannot be per-se reason toreopen the assessment. The Apex Court furtherobserved that the conceptual differencebetween the powers to review and powers toreassess has to be kept in mind and theAssessing Officer has no powers to review buthe has powers to reassess. Therefore, it washeld that the reassessment has to be based onfulfillment of certain pre-condition and ifthe concept of “change of opinion” is removedas contended on behalf of the department thenin garb of reopening the assessment, reviewwould take place and as such the concept of“change of opinion” has to be applied as aninbuilt test to check the abuse of power bythe Assessing Officer. 13.In view of the facts emerging from therecord as well as the settled legal position,the impugned notice under section 148 of theAct is nothing but a mere change of opinionby the Assessing Officer resulting intoreview of assessment order leading to make a roving inquiry into the facts which werealready considered by the Assessing Officerat the time of framing the regular assessment under section 143(3) of the Act. The Assessing Officer therefore, cannot be permitted to re-verify the facts forexercising the powers to reopen theassessment. The decisions relied upon by thelearned advocate for the respondents aretherefore, not applicable to the facts ofthis case, more particularly, when there isno new tangible material available on recordwhich would lead to a reason to believe thatincome has escaped the assessment. 14.For the foregoing reasons, the impugnednotice dated 31.03.2021 issued under section148 of the Act by the respondent exercisingthe powers to reopen the assessment for theAssessment Year 2015-2016 is illegal andliable to be set aside. Accordingly,impugned notice dated 31.03.2021 is herebyset aside. 15.The petition succeeds and is allowed.Rule is made absolute to the aforesaidextent. No order as to costs. (N.V.ANJARIA, J) RAGHUNATH R NAIR (BHARGAV D. KARIA, J)