Reopening of assessment under S.147 is valid when the Assessing Officer has a reasonable belief of income escapement supported by tangible material, even if initial returns were accepted, provided such information reveals new facts not thoroughly scrutinized during the original proceedings.

ORDER

PER YOGESH KUMAR U.S, JM :

The captioned appeals are filed by the assessee against the separate orders, both dated 14.10.2024 by Ld. Commissioner of Income Tax (A)-3, Noida [“Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the different assessment orders, both dated 16.03.2022 passed u/s 147 of the Act pertaining to Assessment Year 2015-16 and 2016-17 respectively.

2. The issues involved in both captioned appeals are common, therefore, they were heard together and accordingly, adjudicated by a common order.

3. First we take the appeal of the assessee in ITA No.196/DDN/2024 for Assessment Year 2015-16.

4. Brei facts are that the assessee owned half share in a piece of land i.e. 50% of 5.1740 Hectares at Rani Pokhari Grant at Dehradun district. During the year under appeal, the assessee has converted the said land into “Aawasiya” and sold it after dividing it into small plots of various sizes to various persons and received sale consideration of INR 2,03,39,500/- which was claimed as exempted being sale of agricultural land. The case of the assessee was re-opened on the basis of the information received that since the assessee has converted the land use of the land from agricultural to residential, claim of exempt income is incorrect. Thereafter, the AO made the addition of the entire sale consideration received as business income of the assessee.

5. In first appeal, Ld. CIT(A) though uphold the re-opening of assessment however, as against the addition of total sale consideration as business income hold the profit earned as taxable under the head “Long Term Capital Gain” (“LTCG”) and the addition is reduced to INR 60,78,202/- being LTCG from sale of land after allowing the benefit of indexations.

6. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal by taking various Grounds of appeal as mentioned in the appeal memo.

7. Ground of appeal No.1 raised by the assessee is with respect to the re-opening of assessment and Ground of appeal No.2 raised by the assessee is with regard to the confirmation of the addition of Rs. 60,78,202/- as LTCG.

8. In respect of Ground of appeal No.1, ld. AR for the assessee submits that assessee has disclosed all the material facts in the return of income filed where consideration received from the sale of agricultural income was claimed as exempt income which stood accepted in the order passed u/s 143(1) of the Act and no new fact was brought on record by the AO before recording the satisfaction of escapement of income. Therefore, the re-opening of assessment is bad in law.

9. On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessment was completed u/s 143(1) of the Act and therefore, there was no verification of the income declared on the part of the AO. Further, the assessee has converted the land use from agricultural to Awasiya and therefore, there was the intention of the assessee to explore the land for the purpose of profits which is clearly a case of adventure in the nature of trade and therefore, he requested for the confirmation of the order of Ld. CIT(A) on account of re-opening of assessment u/s 147 of the Act.

10. With respect to Ground of appeal No.2, Ld.AR for the assessee submits that the assessee owned the subject land as agricultural in nature therefore, the entire sale consideration and profit thereon was exempted however, Ld. CIT(A) has wrongly treated the same as capital assets and hold the profits as LTCG in which deserves to be deleted.

11. On the other hand, Ld. CIT DR for the Revenue submits that when land use was