The assessee filed his return of income for the relevant assessment year in form ITR-5 and the said ITR was subject to scrutiny in regular assessment.  The income offered under the head “Capital Gain” on transfer of land has duly been scrutinized and accepted u/s 143(3) of the Act.  Subsequently, the AO received certain information that the assessee had purchased agriculture land which was converted into non-agricultural land for the residential and commercial purposes and opined that this is the trading activity liable to be taxed under the head “Business Income” and accordingly, on such reasons, issued the notice u/s 148 of the Act. 

On Writ, the Hon’ble Court noted that the reasons recorded by the AO were incorrect as the assessee had filed the return of income in Form ITR-5 and not in Form ITR-3 or, ITR-4, that the income offered in the ITR-5 including the income under the head “Capital Gain” was scrutinized in depth for passing the order u/s 143(3).  The Court further observed that the impugned notice was issued solely on the basis of audit objection, which is not permissible in law and thus, the AO has not arrived at an independent reasoning for reopening and more so, in the absence of any fresh, tangible material for reopening of the concluded assessment after four years in the absence of any failure on the part of the assessee to disclose truly and all the materials relevant to the assessment.  The notice u/s 148 was to be quashed. Referred   CIT v. P.V.S. Beedies (P.) Ltd. (1999) 103 Taxman 294/237 ITR 13 (SC)(AY. 2016-17)