By TIOL News Service

AHMEDABAD, OCT 04, 2018: THE ISSUE BEFORE THE BENCH IS - Whether when no scrutiny was undertaken in case of assessee, reopening of assessment by the AO cannot be said to be hit by principle of change of opinion, since the AO is not supposed to formed an opinion in such case. AND THE VERDICT IS YES.

Facts of the case

The assessee, an individual had filed return and the same was accepted without scrutiny. However, thereafter, she was subjected to inquiries by the AO regarding sale of non-agriculture land for a sum of Rs. 20 lacs to one Urmil Gandabhai Patel. accordingly, a notice was sent by the AO and assessee was asked to produce details of the capital accounts and necessary supporting evidence concerning the transaction. However, the assessee contended that such notice was sent to her old address which she did not receive. However, the AO initiated reassessment proceedings by rejecting the contentions of the assessee.

The High Court held that,

++ the return filed by the assessee was accepted without scrutiny. It is by now well settled that in such a situation, the Assessing Officer would have much wider latitude to reopen the assessment. Since in the original assessment no scrutiny was undertaken, the Assessing Officer cannot be stated to have formed an opinion. The principle of change of opinion therefore would not apply. Reference in this respect can be made to the decision of Supreme Court in case of Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P.Ltd reported which was later on reiterated in case of Deputy Commissioner of Income Tax and anr vs. Zuari Estate Development and Investment Company Ltd.

(See 2018-TIOL-2065-HC-AHM-IT)