HC Quashes Reassessment on Change of Opinion in Section 56(2)(x) Property Valuation Case

Suresh P. Bhadani (HUF) purchased an office property in Mumbai pursuant to an allotment originally made in 2011, which was later transferred and culminated in a registered sale deed in June 2017. For AY 2018-19, the assessee declared NIL income. Under scrutiny, and after a detailed assessment under Section 143(3), the return was accepted without any modification after examining the applicability of Section 56(2)(x) in respect of the difference between stamp duty valuation and purchase consideration.

The Assessing Officer initiated reassessment proceedings by issuing notice under Section 148A(d) and Section 148 on the very same issue, alleging that the allotment letter could not be treated as an agreement for the purposes of the proviso to Section 56(2)(x).

Issue Raised: Whether reassessment proceedings under Sections 148A(d) and 148 can be initiated on an issue already examined and concluded in an earlier scrutiny assessment, amounting to a mere change of opinion.

HC Held: The High Court allowed the writ petition and quashed the reassessment proceedings. The Court noticed that the AO had already examined the issue relating to Section 56(2)(x) during the original scrutiny assessment and had accepted the assessee’s explanation. Initiating reassessment on the same material was impermissible and constituted a review of the earlier assessment, which is not permitted under the law.

Relying on the Supreme Court’s decision in Kelvinator of India Ltd., the Court reaffirmed that reassessment cannot be based on a mere change of opinion. Thus, the order passed under Section 148A(d) and the consequential notice under Section 148 were set aside.

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