Reopening within four years – deemed rental income on stock in trade & Section 43CA on difference in Agreement value and stamp value – issues examined in original assessment proceedings- change of opinion – reopening is bad in law.

Reopening was done on two issues. The first issue was that petitioner has, in the profit and loss account and balance sheet, shown closing finished goods for two projects which has not been offered to tax under the head ‘Income from house property’ as held by the Delhi High Court. The second issue is, that out of 12 flats sold by petitioner for 9 flats market value is more than the agreement value and therefore, provisions of Section 43CA(1) of the Act applies.

On first issue it was observed that AO had enquired the issue of deemed rental income on closing stock in trade and AO had the benefit of Delhi High Court decision at the time of Assessment. On Second issue petitioner was called upon to furnish copies of Index II(s) of flats sold during the year and Petitioner provided copies of Index II of flats sold during the year and the subject matter of the market value of nine flats as against the agreement value was a subject matter of consideration by the Assessing Officer.

It was held that admittedly, the re-opening has been proposed before the expiry of four years from the end of relevant assessment year, and therefore, even proviso to Section 147 will not apply. At the same time, it is settled that if an assessment has been completed under Section 143(3), re-opening cannot be proposed on the basis of change of opinion.