Reopening of assessment is on account of “change of opinion” and hence the reopening is not valid.

The Income Tax Appellate Tribunal ruled that the reopening of assessment for M/s. Rajarathnam's Jewels was invalid. The reopening was based on the Assessing Officer's 'change of opinion' regarding excess gold stock found during a survey. The Tribunal found that the stock belonged to customers and family members, held as a metal loan, and was not part of the assessee's business inventory. Therefore, the assessment could not be validly reopened on this basis.

IN THE INCOME TAX APPELLATE TRIBUNAL
“C’’BENCH: BANGALORE

BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND
SHRI B.R. BASKARAN, ACCOUNTANT MEMBER

ITA Nos.1344 to 1350/Bang/2017
 Assessment Years : 2006-07 to 2012-13

M/s. Rajarathnam’s Jewels
B-12, Devatha Plaza
Residency Road
Bangalore-560 025
PAN NO :AABFR5632E
APPELLANT 

Vs.

ACIT
Circle-1(1)
Bangalore
RESPONDENT

Appellant by : Shri H. Anil Kumar, A.R.
Respondent by : Smt. R. Premi, D.R.

Date of Hearing : 02.02.2021
Date of Pronouncement : 18.02.2021

O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

All these appeals filed by the assessee are directed against the common order dated 30.3.2017 passed by Ld. CIT(A)-7, Bengaluru and they relate to the assessment years 2006-07 to 2012-13. Allthese appeals were heard together and hence they are being disposed of by this common order, for the sake of convenience.

2. In the grounds of appeal, the assessee inter-alia haschallenged the validity of re-opening of the assessment in all the years under consideration. Both the parties were heard on this legal issue only. 

3. The facts that are necessary to adjudicate the above said legal issue are stated in brief. The assessee is carrying on jewellery business in Bengaluru. It deals in gold, silver and diamond jewelleries and also undertakes job work from its customers. Theassessee also runs a savings scheme titled as Akshaya Goldscheme. The assessee was subjected to survey operation u/s 133A of the Income-tax Act,1961 ['the Act' for short] on 25.9.2012.During the course of survey, excess stock of gold titled by the AO as“un-reconciled gold” was noticed. It was claimed by the assesseethat the gold and jewellery belonging to customers as well as family members weighing 17.319 kgs. were kept with it and the same was not included in its book stock. The assessee submitted that theabove said gold weighing 17.319 kgs were taken from family members and customers as metal loan for physical stock purposesonly, i.e., the value of gold was not considered as liability of the assessee firm. Since it does not belong to the assessee firm, thesame was not included in its stock. The A.O. was of the view that the excess gold stock of 17.319 kgs. referred above has to be brought to tax in the hands of the assessee. Accordingly, he reopened the assessment of assessment years 2006-07 to 2012-13 by issuing notices u/s 148 of the Act for the above said years. The assessee is challenging the validity of re-opening the assessment. 

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