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Issues involved: Reopening of assessment u/s 147 of the Income Tax Act, legality of reassessment proceedings, disclosure of material facts by the assessee, time limit for reopening assessment.
Summary: The cross-appeals were filed by the assessee and the Revenue challenging the reopening of the assessment. The main contention was that the assessment should not have been reopened after a lapse of four years as all material details were disclosed to the Assessing Officer (AO) during the original assessment u/s 143(3). The assessee argued that the reassessment was based on a mere change of opinion, which is not permissible in law. The AO's internal memo to the CIT seeking permission to reopen the case contained incorrect information, leading to unjustified sanction for reopening. The proviso to section 147 of the Income Tax Act states that if an assessment has been completed u/s 143(3), it should not be reopened after four years unless there is a failure on the part of the assessee to disclose all material facts. In this case, the assessee had disclosed all relevant details, and the AO had raised queries regarding the claimed interest and capital gains. The reassessment was deemed illegal as it was based on a change of opinion, not on new undisclosed facts. Citing previous court decisions, the Tribunal held that the reassessment beyond the time limit specified in the proviso to section 147 was illegal and quashed the reassessment. As a result of quashing the reassessment, the Tribunal did not delve into the merits raised by the parties and set aside the order of the CIT(A), annulling the reassessment proceedings. The appeal by the assessee was allowed, while the appeal by the Revenue was dismissed.
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