IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 6574/MUM/2024 Assessment Year: 2005-06 Assistant Commissioner of Mazagon Dock Shipbuilders Income Tax-7(1)(1), Ltd.

Mumbai Mazdock House, Dockyard Vs.

Road, Mazagon, Mumbai – 400010 (PAN: AAACM8029)

(Appellant) (Respondent)

Present for:

Assessee : Shri. Prateek Goyal, Advocate (Virtually appeared)

Revenue : Shri. Umashankar Prasad, CIT DR Date of Hearing : 15.07.2025 Date of Pronouncement : 18.09.2025

O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by Revenue is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-25/1069778604(1), dated 18.10.2024 passed against the assessment order by Assistant Commissioner of Income Tax, Range-6(3), Mumbai, u/s. 143(3) r.w.s 147 of the Income- tax Act, 1961 (hereinafter referred to as the “Act”), dated 24.01.2013 for Assessment Year 2005-06.

2. Grounds taken by the Revenue are reproduced as under:

I. Whether, on the facts and in the circumstances of the case and in law, the Ld. CITA) has erred in quashing the reassessment proceedings on the ground that there was no new material before the AO to reopen the case, without appreciating the fact that the issue of LTCG was not considered by the AO during the original assessment proceedings?

II. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT{A) has erred in quashing the reassessment proceedings on the ground that there was mere change of opinion on the part of AO without appreciating the fact that the market value of the lease land of Rs. 591/ per sq. mtr. considered by the assessee is well short of the prevailing market value of Rs. 3930/ per sq. mtr. which resulted in under assessment of taxable income.

3. Brief facts of the case are that assessee (Mazagon Dock Shipbuilders Ltd.) is a 100% Government of India Undertaking under the Ministry of Defence, Department of Defence Production. It filed its return of income on 28.10.2005 reporting total income at Rs.133,58,67,627/-. Assessment u/s. 143(3) was completed vide order dated 29.11.2007 with total assessed income at Rs.136,25,76,623/-. Subsequently, case of the assessee was reopened u/s. 147 by issuing notice u/s.148 on 26.03.2012. The reasons recorded for the reopening mentions that notes forming part of accounts attached to the auditors report at para-34 mentioned about transfer of land by assessee to employees cooperative housing societies for a consideration of Rs.318 lakhs. In the said reasons, ld. Assessing Officer further noted that capital gains in respect of the said transaction has been computed by adopting full value of consideration at an amount of Rs.318 lakhs. According to the ld. Assessing Officer, provisions of section 50C shall apply to the said transaction so as to take the value adopted by the Stamp Valuation Authority (SVA) as full value of consideration which has not been done by the assessee. He further noted that valuation as per the SVA will definitely be much more than the value adopted by the assessee. Since no details of transfer have been furnished during the assessment proceedings u/s. 143(3), the income chargeable to tax will definitely be in lakhs of rupees. He thus, arrived at a reason to believe that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.

3.1. It is important to take note of one specific para from the reasons to believe so recorded by the ld. Assessing Officer which reflects the casual mind for reopening the case, based merely on his apprehensions. The said para is extracted below:

“The valuation as per the Stamp Valuation Authority will definitely be much more than the value adopted by the assessee. Further, no details of the transfer had been furnished during the assessment proce